BITOY JAVIER (DANILO P. JAVIER), Petitioner, vs. FLY ACE CORPORATION/FLORDELYN CASTILLO, Respondents.

Facts
• Javier filed a complaint before the NLRC for underpayment of salaries and other labor standard benefits. He
alleged that he was an employee of Fly Ace since September 2007, performing various tasks at the respondent’s
warehouse such as cleaning and arranging the canned items before their delivery to certain locations, except in
instances when he would be ordered to accompany the company’s delivery vehicles, as pahinante; that he
reported for work from Monday to Saturday from 7:00 o’clock in the morning to 5:00 o’clock in the afternoon;
that during his employment, he was not issued an identification card and payslips by the company; that on May
6, 2008, he reported for work but he was no longer allowed to enter the company premises by the security guard
upon the instruction of Ruben Ong (Mr. Ong), his superior; that after several minutes of begging to the guard to
allow him to enter, he saw Ong whom he approached and asked why he was being barred from entering the
premises; that Ong replied by saying, "Tanungin mo anak mo;" that he then went home and discussed the matter
with his family; that he discovered that Ong had been courting his daughter Annalyn after the two met at a fiesta
celebration in Malabon City; that Annalyn tried to talk to Ong and convince him to spare her father from trouble
but he refused to accede; that thereafter, Javier was terminated from his employment without notice; and that
he was neither given the opportunity to refute the cause/s of his dismissal from work.
• According to Fly Ace, no ER EE rel

Issue
• WON Javier is a regular employee. NO

Held
• It must be noted that the issue of Javier’s alleged illegal dismissal is anchored on the existence of an employer-
employee relationship between him and Fly Ace. This is essentially a question of fact.
• As the records bear out, the LA and the CA found Javier’s claim of employment with Fly Ace as wanting and
deficient. The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of Procedure of the
NLRC allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not
mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the
facts speedily and objectively with little regard to technicalities or formalities but nowhere in the rules are they
provided a license to completely discount evidence, or the lack of it. The quantum of proof required, however,
must still be satisfied. Hence, "when confronted with conflicting versions on factual matters, it is for them in the
exercise of discretion to determine which party deserves credence on the basis of evidence received, subject
only to the requirement that their decision must be supported by substantial evidence."Accordingly, the
petitioner needs to show by substantial evidence
• In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim
by the requisite quantum of evidence. Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto x x x." Sadly, Javier failed to adduce substantial evidence as basis for the grant
of relief.
• While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in the
company premises during weekdays arranging and cleaning grocery items for delivery to clients, no other proof
was submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in
strengthening Javier’s cause. the Court cannot ignore the inescapable conclusion that his mere presence at the
workplace falls short in proving employment therein.
• The Court is of the considerable view that on Javier lies the burden to pass the well -settled tests to determine
the existence of an employer -employee relationship, viz: (1) the selection and engagement o the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the power to control th employee’s conduct. Of these
elements, the most important criterion is whether the employer controls or has reserved the right to control the
employee not o nly as to the result of the work but also as to the means and methods by which the result is to
be accomplished.
• In this case, Javier was not able to persuade the Court that the above elements exist in his case.1avvphi1 He
could not submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his
wages as an employee, or that Fly Ace could dictate what his conduct should be while at work. In other words,
Javier’s allegations did not establish that his relationship with Fly Ace had the attributes of an employer -
employee relationship on the basis of the above -mentioned four-fold test.
• One final note. The Court’s decision does not contradict the settled rule that "payment by the piece is just a
method of compensation and does not define the essence of the relation." Payment on a piece-rate basis does
not negate regular employment. "The term ‘wage’ is broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time,
task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the
essence of the relations. Nor does the fact that the petitioner is not covered by the SSS affect the employer-
employee relationship. However, in determining whether the relationship is that of employer and employee or
one of an independent contractor, each case must be determined on its own facts and all the features of the
relationship are to be considered."Unfortunately for Javier, the attendant facts and circumstances of the instant
case do not provide the Court with sufficient reason to uphold his claimed status as employee of Fly Ace.

SOUTH EAST INTERNATIONAL RATTAN, INC. and/or ESTANISLAO AGBAY, Petitioners, vs. JESUS J. COMING,
Respondent.

FACTS
• Petitioner South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the business of
manufacturing and exporting furniture to various countries with principal place of business at Paknaan, Mandaue
City, while petitioner Estanislao Agbay, as per records, is the President and General Manager of SEIRI.
• On November 3, 2003, respondent Jesus J. Coming filed a complaint for illegal dismissal, underpayment of
wages, non-payment of holiday pay, 13th month pay and service incentive leave pay, with prayer for
reinstatement, back wages, damages and attorney’s fees.
• Respondent alleged that he was hired by petitioners as Sizing Machine Operator on March 17, 1984. His work
schedule is from 8:00 a.m. to 5:00 p.m. Initially, his compensation was on "pakiao" basis but sometime in June
1984, it was fixed at ₱150.00 per day which was paid weekly. In 1990, without any apparent reason, his
employment was interrupted as he was told by petitioners to resume work in two months time. Being an
uneducated person, respondent was persuaded by the management as well as his brother not to complain, as
otherwise petitioners might decide not to call him back for work. Fearing such consequence, respondent
accepted his fate. Nonetheless, after two months he reported back to work upon order of management.
• Despite being an employee for many years with his work performance never questioned by petitioners,
respondent was dismissed on January 1, 2002 without lawful cause. He was told that he will be terminated
because the company is not doing well financially and that he would be called back to work only if they need his
services again. Respondent waited for almost a year but petitioners did not call him back to work. When he finally
filed the complaint before the regional arbitration branch, his brother Vicente was used by management to
persuade him to withdraw the case.
• LA and CA — there is ER EE Relationship; NLRC no EE ER Rel

ISSUE
WON there’s ER EE Rel. Yes

HELD
• To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the
four-fold test, to wit: (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 con duct, or the so-called "control test." In resolving
the issue of whether such relationship exists in a given case, substantial evidence – that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion – is sufficient. 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.
• In support of their claim that respondent was not their employee, petitioners presented Employment Reports
to the SSS from 1987 to 2002, the Certifications issued by Mayol and Apondar, two affidavits of Vicente Coming,
payroll sheets (1999-2000), individual pay envelopes and employee earnings records (1999-2000) and affidavit
of Angelina Agbay (Treasurer and Human Resources Officer). The payroll and pay records did not include the
name of respondent. The affidavit of Ms. Agbay stated that after SEIRI started its business in 1986 purely on
export trading, it ceased operations in 1989 as evidenced by Certification dated January 18, 1994 from the
Securities and Exchange Commission (SEC); that when business resumed in 1992, SEIRI undertook only a little of
manufacturing; that the company never hired any workers for varnishing and pole sizing because it bought the
same from various suppliers, including Faustino Apondar; respondent was never hired by SEIRI; and while it is
true that Mr. Estanislao Agbay is the company President, he never dispensed the salaries of wo rkers
• CA gave more credence to the declarations of the five former employees of petitioners that respondent was
their co-worker in SEIRI. [affidavit passed by petitioner). It further noted that the names of the five affiants,
whom petitioners admitted to be their former employees, likewise do not appear in the aforesaid documents.
According to the CA, it is apparent that petitioners maintained a separate payroll for certain employees or
willfully retained a portion of the payroll.
• In Tan v. Lagrama, the Court held that the fact that a worker was not reported as an employee to the SSS is not
conclusive proof of the absence of employer-employee relationship. Otherwise, an employer would be rewarded
for his failure or even neglect to perform his obligation
• Nor does the fact that respondent’s name does not appear in the payrolls and pay envelope record submitted
by petitioners negate the existenc e of employer-employee relationship. For a payroll to be utilized to disprove
the employment of a person, it must contain a true and complete list of the employee. In this case, the exhibits
offered by petitioners before the NLRC consisting of copies of payrolls and pay earnings records are only for the
years 1999 and 2000; they do not cover the entire 18 - year period during which respondent supposedly worked
for SEIRI.
• Petitioners’ admission that the five affiants were their former employees is binding upon them. While they
claim that respondent was the employee of their suppliers Mayol and Apondar, they did not submit proof that
the latter were indeed independent contractors; clearly, petitioners failed to discha rge their burden of proving
their own affirmative allegation. There is thus no showing that the five former employees of SEIRI were motivated
by malice, bad faith or any ill-motive in executing their affidavit supporting the claims of respondent.
• In any controversy between a laborer and his master, doubts reasonably arising from the evidence are resolved
in favor of the laborer.
• As a regular employee, respondent enjoys the right to security of tenure under Article 279 of the Labor Code
and may only be dismissed for a just or authorized cause, otherwise the dismissal becomes illegal.
• Respondent, whose employment was terminated without valid cause by petitioners, is entitled to
reinstatement without loss of seniority rights and other privileges and to his full back wages, inclusive of
allowances and other benefits or their monetary equivalent, computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Where reinstatement is no longer viable as an
option, back wages shall be computed from the time of t he illegal termination up to the finality of the decision.
Separation pay equivalent to one month salary for every year of service should likewise be awarded as an
alternative in case reinstatement in not possible.

Tenazas vs R. Villegas Taxi Transport

• On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M. Francisco (Francisco) filed a complaint for illegal
dismissal against R. Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and Andy Villegas (Andy)
(respondents). At that time, a similar case had already been filed by Isidro G. Endraca (Endraca) against the same
respondents. The two (2) cases were subsequently consolidated.
• Tenazas alleged that on July 1, 2007, the taxi unit assigned to him was sideswiped by another vehicle, causing
a dent on the left fender near the driver seat. The cost of repair for the damage was estimated at P500.00. Upon
reporting the incident to the company, he was scolded by respondents Romualdo and Andy and was told to leave
the garage for he is already fired. He was even threatened with physical harm should he ever be seen in the
company’s premises again. Despite the warning, Tenazas reported for work on the following day but was told
that he can n longer drive any of the company’s units as he is already fired.
• Francisco, on the other hand, averred that his dismissal was brought about by the company’s unfounded
suspicion that he was organizing a labor union. He was instantaneously terminated, without the benefit of
procedural due process, on June 4, 2007.
• Endraca, for his part, alleged that his dismissal was instigated by an occasion when he fell short of the required
boundary for his taxi unit. He related that before he was dismissed, he brought his taxi unit to an auto shop for
an urgent repair. He was charged the amount of ?700.00 for the repair services and the replacement parts. As a
result, he was not able to meet his boundary for the day. Upon returning to the company garage and informing
the management of the incident, his driver’s license was confiscated and was told to settle the deficiency in his
boundary first before his license will be returned to him. He was no longer allowed to drive a taxi unit despite his
persistent pleas.
• respondents admitted that Tenazas and Endraca were employees of the company, the former being a regular
driver and the latter a spare driver. The respondents, however, denied that Francisco was an employee of the
company or that he was able to drive one of the company’s units at any point in time.
• respondents further alleged that Tenazas was never terminated by the company. They claimed that on July 3,
2007, Tenazas went to the company garage to get his taxi unit but was informed that it is due for overhaul
because of some mechanical defects reported by the other driver who takes turns with him in using the same.
He was thus advised to wait for further notice from the company if his unit has already been fixed. On July 8,
2007, however, upon being informed that his unit is ready for release, Tenazas failed to report back to work for
no apparent reason.
• As regards Endraca, the respondents alleged that they hired him as a spare driver in February 2001. They allow
him to drive a taxi unit whenever their regular driver will not be able to report for work. In July 2003, however,
Endraca stopped reporting for work without informing the company of his reason. Subsequently, the
respondents learned that a complaint for illegal dismissal was filed by Endraca against them.
• LA ruling - no illegal dismissal
• NLRC ruling - reversing the appealed decision of the LA, holding that the additional pieces of evidence belatedly
submitted by the petitioners sufficed to establish the existence of employer–employee relationship and their
illegal dismissal. Respondent Rom[u]aldo Villegas doing business under the name and style Villegas Ta xi
Transport is hereby ordered to pay the complainants the following (1) full backwages from the date of their
dismissal (July 3, 2007 for Tena[z]as, June 4, 2004 for Francisco, and March 6, 2006 for Endraca[)] up to the date
of the finality of this decision[;] (2) separation pay equivalent to one month for every year of service; and (3)
attorney’s fees equivalent to ten percent (10%) of the total judgment awards.
• CA ruling - affirming with modification the Decision dated June 23, 2009 of the NLRC. The CA agreed with the
NLRC’s finding that Tenazas and Endraca were employees of the company, but ruled otherwise in the case of
Francisco for failing to establish his relationship with the company. It also deleted the award of separation pay
and ordered for reinstatement of Tenazas and Endraca. The pertinent portions of the decision. AFFIRMED with
MODIFICATION in that the award of Jaime Francisco’s claims is DELETED. The separation pay granted in favor of
Bernard Tenazas and Isidro Endraca is, likewise, DELETED and their reinstatement is ordered instead.

HELD
• I]n 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.”
• In this case, however, Francisco failed to present any proof substantial enough to establish his relationship with
the respondents. He failed to present documentary evidence like attendance logbook, payroll, SSS record or any
personnel file that could somehow depict his status as an employee. Anent his claim that he was not issued with
employment records, he could have, at least, produced his social security records which state his contributions,
name and address of his employer, as his co –petitioner Tenazas did. He could have also presented testimonial
evidence showing the respondents’ exercise of control over the means and methods by which he undertakes his
work.
• Here, Francisco simply relied on his allegation that he w as an employee of the company without any other
evidence supporting his claim. Unfortunately for him, a mere allegation in the position paper is not tantamount
to evidence. Bereft of any evidence, the CA correctly ruled that Francisco could not be considered an employee
of the respondents.
• The CA’s order of reinstatement of Tenazas and Endraca, instead of the payment of separation pay, is also well
in accordance with prevailing jurisprudence. In Macasero v. Southern Industrial Gases Philippines, the Court
reiterated, thus:chanRoblesvirtualLawlibrary
• [A]n illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two. reliefs
provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed
employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and
backwages.
• The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority
rights, and payment of backwages computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month
salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition
to payment of backwages.
• This doctrine of strained relations, however, should not be used reckle ssly or applied loosely 43 nor be based
on impression alone. “It bears to stress that reinstatement is the rule and, for the exception of strained relations
to apply, it should be proved that it is likely that if reinstated, an atmosphere of antipathy and antagonism would
be generated as to adversely affect the efficiency and productivity of the employee concerned.
• Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence—
substantial evidence to show that the relationship between the employer and the employee is indeed strained
as a necessary consequence of the judicial controversy.
• After a perusal of the NLRC decision, this Court failed to find the factual basis of the award of separation pay
to the petitioners. The NLRC decision did not state the facts which demonstrate that reinstatement is no longer
a feasible option that could have justified the alternative relief of granting separation pay instead.
• Likewise, the filing of the complaint by the petitioners does not necessarily translate to strained relations
between the parties. As a rule, no strained relations should rise from a valid and legal act asserting one’s right.
Although litigation may also engender a certain degree of hostility, the understandable strain in the parties’
relation would not necessarily rule out reinstatement which would, otherwise, become the rule rather the
exception in illegal dismissal cases. Thus, it was a prudent call for the CA to delete the award of separation pay
and order for reinstatement instead, in accordance with the general rule stated in Article 279 of the Labor Code.

Sagun vs ANZ Global Services

• Petitioner was employed at Hongkong and Shanghai Banking Corporation Electronic Data Processing
(Philippines), Inc. (HSBC-EDPI) when he applied online for the position of Payments and Cash Processing Lead at
respondent ANZ Global Services and Operations (Manila), Inc. (ANZ), a domestic corporation whose businesses
involve a full range of banking products and services.
• After passing the interview and online examination, ANZ, through its Senior Vice President for Operations, Gay
Cruzada (Cruzada), offered petitioner the position of Customer Service Officer, Payments and Cash Resolution,
which the latter accepted on June 8, 2011.
• In the letter of confirmation of the offer which constituted petitioner's employment agreement with ANZ, the
terms and conditions of his employment required, among others, a satisfactory result of his pre-employment
screening.
• on June 11, 2011, petitioner tendered his resignation at HSBC-EDPI and the acknowledged copy thereof was
transmitted to ANZ together with his other pre-employment documentary requirements.
• On July 11, 2011, petitioner was instructed to report to ANZ and was handed a letter of retraction signed by
ANZ's Human Resources Business Partner, Paula Alcaraz (Alcaraz), informing him that the job offer had been
withdrawn on the ground that the company found material inconsistencies in his declared information and
documents provided after conducting a background check with his previous employer, particularly at Siemens.

HELD
• In this case, the Court agrees with the finding of the CA that there was already a perfected contract of
employment when petitioner signed ANZ's employment offer and agreed to the terms and conditions that were
embodied therein. Nonetheless, the offer of employment extended to petitioner con tained several conditions
before he may be deemed an employee of ANZ. Among those conditions for employment was the "satisfactory
completion of any checks (e.g. background, bankruptcy, sanctions and reference checks) that may be required
by ANZ." Accordingly, petitioner's employment with ANZ depended on the outcome of his background check,
which partakes of the nature of a suspensive condition, and hence, renders the obligation of the would-be
employer, i.e., ANZ in this case, conditional. Article 1181 of the Civil Code
• Jurisprudence states that when a contract is subject to a suspensive condition, its effectivity shall take place
only if and when the event which constitutes the condition happens or is fulfilled.
• In other words, a perfected contract may exist, although the obligations arising therefrom - if premised upon
a suspensive condition - would yet to be put into effect.
• Here, the subject employment contract required a satisfactory completion of petitioner's background check
before he may be deemed an employee of ANZ. Considering, however, that petitioner failed to explain the
discrepancies in his declared information and documents that were required from him relative to his work
experience at Siemens, namely: (a) that he was only a Level 1 and not a Level Technical Support Representative
that conducts troubleshooting for both computer hardware and software problems; and (b) that he was found
to have been terminated for cause and not merely resigned from his post, that rendered his background check
unsatisfactory, ANZ's obligations as a would -be employer were held in suspense and thus, had yet to acquire
any obligatory force. To reiterate, in a contract with a suspensive condition, if the condition does not happen,
the obligation does not come into effect. Thus, until and unless petitioner complied with the satisfactory
background check, there exists no obligation on the part of ANZ to recognize and fully accord him the rights
under the employment contract. In fact, records also show that petitioner failed to report for work on or before
July 11, 2011, which was also a suspensive condition mandated under sub-paragraph 4 of Schedule 1 of the
contract.
• Consequently, no employer-employee relationship was said to have been created between petitioner and ANZ
under the circumstances, and the dismissal of the farmer's complaint for ill egal termination from work, as held
by the NLRC, was correctly sustained by the CA.

maraguinot vs NLRC (VIVA CASE)

G.R. No. 120969. January 22, 1998
• Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18 July 1989
as part of the filming crew with a salary of P375.00 per week. About four months later, he was designated
Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00 in May 1990. In June 1991,
he was promoted to the rank of Electrician with a weekly salary of P475.00, which was increased to P593.00 in
September 1991.
• Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 as a member
of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 in May 1991, then to
P475.00 on 21 December 1991.
• Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting area as
instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the
lighting system, and performing other tasks that the cameraman and/or director may assign.
• Sometime in May 1992, petitioners sought the assistance of their supervisor, Mrs. Alejandria Cesario, to
facilitate their request that private respondents adjust their salary in accordance with the minimum wage law.
In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only
if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to
go on leave in June 1992, then refused to take him back when he reported for work on 20 July 1992. Meanwhile,
Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992.
He was again asked to sign a blank employment contract, and when he still refused, private respondents
terminated his services on 20 July 1992. Petitioners thus sued for illegal dismissal before the Labor Arbiter.
• Private respondents assert that they contracted persons called producers to produce or make movies for
private respondents and contend that petitioners are project employees of the associate producers, who act as
independent contractors. Thus, there is no ER-EE relationship. However, petitioners cited that their performance
of activities is necessary in the usual trade or business of respondents and their work in continuous.

ISSUE
1. WON there is an employer employee relationship. Yes
• As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere
agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of
VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the
instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA., who recruited crew
members from an "available group of free-lance workers which includes the complainants Maraguinot and
Enero."
• The relationship between VIVA and its producers or associate producers seems to be that of agency, as the
latter make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment relationship
between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct
employer.
• The employer-employee relationship between petitioners and VIVA can further be established by the "control
test." While four elements are usually considered in determining the existence of an employment relationship,
namely: (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 the same. These four elements are present here.

2. WON petitioners were illegally dismissed. Yes

• A project employee or a member of a work pool may acquire the status of a regular employee when the
following concur: 1) There is a continuous rehiring of project employees even after cessation of a project; and 2)
The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual
business or trade of the employer.
• The import of this decision is not to impose a positive and sweeping obligation upon the employer to re-hire
project employees. What this decision merely accomplishes is a judicial recognition of the employment status of
a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the
employer of project or work pool employees who perform tasks necessary or desirable to the employer's usual
business or trade. Let it not be said that this decision "coddles" labor, for as Lao has ruled, project or work pool
employees who have gained the status of regular employees are subject to the "no work-no pay" principle
• All that we hold today is that once a project or work pool employee has been: (1) continuously, as opposed to
intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital,
necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed
a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence.
• In closing then, as petitioners had already gained the status of regular employees, their dismissal was
unwarranted, for the cause invoked by private respondents for petitioners' dismissal, viz., completion of project,
was not, as to them, a valid cause for dismissal under Article 282 of the Labor Code. As such, petitioners are now
entitled to back wages and reinstatement, without loss of seniority rights and other benefits that may have
accrued. Nevertheless, following the principles of "suspension of work" and "no pay" between the end of one
project and the start of a new one, in computing petitioners' back wages, the amounts corresponding to what
could have been earned during the periods from the date petitioners were dismissed until their reinstatement
when petitioners' respective Shooting Units were not undertaking any movie projects, should be deducted.

Teng vs Pahagac
G.R. No. 169704. November 17, 2010

• Albert Teng Fish Trading is engaged in deep sea )shing and, for this purpose, owns boats (basnig ), equipment,
and other )shing paraphernalia. As owner of the business, Teng claims that he customarily enters into joint
venture agreements with master )shermen ( maestros) who are skilled and are experts in deep sea )shing; they
take charge of the management of each )shing venture, including the hiring of the members of its complement.
He avers that the maestros hired the respondent workers as checkers to determine the volume of the fish caught
in every fishing voyage.
• On February 20, 2003, the respondent workers )led a complaint for illegal dismissal against Albert Teng Fish
Trading, Teng, and Chua before the NCMB, Region Branch No. IX, Zamboanga City.
• The respondent workers alleged that Teng hired them, without any written employment contract, to serve as
his "eyes and ears" aboard the )shing boats; to classify the )sh caught by bañera; to report to Teng via radio
communication the classes and volume of each catch; to receive instructions from him as to where and when to
unload the catch; to prepare the list of the provisions requested by the maestro and the mechanic for his
approval; and, to procure the items as approved by him. 5 They also claimed that they received regular monthly
salaries, 13th month pay, Christmas bonus, and incentives in the form of shares in the total volume of fish caught.
• Teng expressed his doubts on the correct volume of )sh caught in every )shing voyage. 6 In December 2002,
Teng informed them that their services had been terminated. 7
• In his defense, Teng maintained that he did not have any hand in hiring the respondent workers; the maestros,
rather than he, invited them to join the venture.
• The VA rendered a decision 9 in Teng's favor and declared that no employer-employee relationship existed
between Teng and the respondent workers.
• The respondent workers received the VA's decision on June 12, 2003 . 11 They )led a motion for
reconsideration, which was denied in an order dated June 27, 2003 and which they received on July 8, 2003 . 12
The VA reasoned out that Section 6, Rule VII of the 1989 Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings (1989 Procedural Guidelines) does not provide the remedy of a motion for
reconsideration to the party adversely affected by the VA's order or decision.
• CA reversed the VA's decision after )nding sufficient evidence showing the existence of employer-employee
relationship:
ISSUE
1. WON the VA's decision is not subject to a motion for reconsideration. YES
2. WON no employer-employee relationship existed between Teng and the respondent workers.. YES

1. YES
• On March 21, 1989, Republic Act No. 6715 23 took effect, amending, among others, Article 263 of the Labor
Code which was originally worded as: Art. 263 . . . Voluntary arbitration awards or decisions shall be )nal,
unappealable, and executory .
• As amended, Article 263 is now Article 262-A, which states: Art. 262-A. . . . [T]he award or decision . . . shall
contain the facts and the law on which it is based. It shall be )nal and executory after ten (10) calendar days from
receipt of the copy of the award or decision by the parties .
• Notably, Article 262-A deleted the word " unappealable" from Article 263. The deliberate selection of the
language in the amendatory act differing from that of the original act indicates that the legislature intended a
change in the law, and the court should endeavor to give effect to such intent.
• We consequently rule that the respondent workers seasonably )led a motion for reconsideration of the VA's
judgment, and the VA erred in denying the motion because no motion for reconsideration is allowed.
• The Court notes that despite our interpretation that Article 262-A does not preclude the )ling of a motion for
reconsideration of the VA's decision, a contrary provision can be found in Section 7, Rule XIX of the Department
of Labor's Department Order (DO) No. 40, series of 2003. Section 7. Finality of Award/Decision . — The decision,
order, resolution or award of the voluntary arbitrator or panel of voluntary arbitrators shall be )nal and executory
after ten (10) calendar days from receipt of the copy of the award or decision by the parties and it shall not be
subject of a motion for reconsideration .
• Presumably on the basis of DO 40-03, the 1989 Procedural Guidelines was revised in 2005 (2005 Procedural
Guidelines), 33 whose pertinent provisions provide that: Section 7. Motions for Reconsideration . — The decision
of the Voluntary Arbitrator is not subject of a Motion for Reconsideration .
• By allowing a 10-day period, the obvious intent of Congress in amending Article 263 to Article 262-A is to
provide an opportunity for the party adversely affected by the VA's decision to seek recourse via a motion for
reconsideration or a petition for review
• Indeed, a motion for reconsideration is the more appropriate remedy in line with the doctrine of exhaustion of
administrative remedies
• By disallowing reconsideration of the VA's decision, Section 7, Rule XIX of DO 4003 and Section 7 of the 2005
Procedural Guidelines went directly against the legislative intent behind Article 262-A of the Labor Code. These
rules deny the VA the chance to correct himself 40 and compel the courts of justice to prematurely intervene
with the action of an administrative agency entrusted with the adjudication of controversies coming under its
special knowledge, training and speci)c )eld of expertise.

2. YES
• We agree with the CA's )nding that suNcient evidence exists indicating the existence of an employer-employee
relationship between Teng and the respondent workers.
• While Teng alleged that it was the maestros who hired the respondent workers, it was his company that issued
to the respondent workers identi)cation cards ( IDs) bearing their names as employees and Teng's signature as
the employer. Generally, in a business establishment, IDs are issued to identify the holder as a bona )de employee
of the issuing entity.
• For the 13 years that the respondent workers worked for Teng, they received wages on a regular basis, in
addition to their shares in the fish caught. 44 The worksheet showed that the respondent workers received
uniform amounts within a given year, which amounts annually increased until the termination of their
employment in 2002.
• More importantly, the element of control — which we have ruled in a number of cases to be a strong indicator
of the existence of an employer-employee relationship is present in this case. Teng not only owned the tools and
equipment, he directed how the respondent workers were to perform their job as checkers; they, in fact, acted
as Teng's eyes and ears in every fishing expedition.
• Teng cannot hide behind his argument that the respondent workers were hired by the maestros. To consider
the respondent workers as employees of the maestros would mean that Teng committed impermissible labor-
only contracting.
• ART. 106. Contractor or Subcontractor- xxx There is " labor-only" contracting where the person supplying
workers to an employer does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by such persons are
performing activities which are directly related to the principal business of such employer .
• Section 5 of the DO No. 18-02, provides: which implements Article 106 of the Labor Code, Section 5. Prohibition
against labor-only contracting. — Labor-only contracting is hereby declared prohibited . For this purpose, labor-
only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies
or places workers to perform a job, work or service for a principal, and any of the following elements are present:
1. The contractor or subcontractor does not have substantial capital or investment which relates to the job, work
or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor
are performing activities which are directly related to the main business of the principal; or 2. The contractor
does not exercise the right to control over the performance of the work of the contractual employee.
• In the present case, the maestros did not have any substantial capital or investment. Teng admitted that he
solely provided the capital and equipment, while the maestros supplied the workers. The power of control over
the respondent workers was lodged not with the maestros but with Teng. As checkers, the respondent workers'
main tasks were to count and classify the )sh caught and report them to Teng. They performed tasks that were
necessary and desirable in Teng's )shing business. Taken together, these incidents con)rm the existence of a
labor-only contracting which is prohibited in our jurisdiction, as it is considered to be the employer's attempt to
evade obligations afforded by law to employees.
• A )nding that the maestros are labor-only contractors is equivalent to a )nding that an employer-employee
relationship exists between Teng and the respondent workers.
• The dismissal of an employee, which the employer must validate, has a twofold requirement: one is
substantive, the other is procedural. 47 Not only must the dismissal be for a just or an authorized cause, as
provided by law; the rudimentary requirements of due process — the opportunity to be heard and to defend
oneself — must be observed as well. 48 The employer has the burden of proving that the dismissal was for a just
cause; failure to show this, as in the present case, would necessarily mean that the dismissal was unjustified and,
therefore, illegal. 49
• The respondent worker's allegation that Teng summarily dismissed them on suspicion that they were not
reporting to him the correct volume of the )sh caught in each )shing voyage was never denied by Teng.
Unsubstantiated suspicion is not a just cause to terminate one's employment under Article 282.

HSY Marketing vs Villastique (virgilio)

• On January 3, 2003, petitioner hired respondent as a >eld driver for Fabulous Jeans & Shirt & General
Merchandise 7 (Fabulous Jeans), tasked to deliver ready-to-wear items and/or general merchandise for a daily
compensation of P370.00. 8 On January 10, 2011, respondent >gured in an accident when the service vehicle (a
2010model Mitsubishi Strada pick up) he was driving in Iligan City bumped a pedestrian, Ryan Dorataryo
(Dorataryo). 9 Fabulous Jeans shouldered the hospitalization and medical expenses of Dorataryo in the amount
of P64,157.15, which respondent was asked to reimburse, but to no avail. 10 On February 24, 2011, 11
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. 12
Convinced that he was already terminated on February 26, 2011, 13 he lost no time in >ling a complaint for illegal
dismissal with money claims 14 against petitioner, Fabulous Jeans,
• In their defense, 15 petitioner, et al. 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 involving Dorataryo. 16 After they paid for Dorataryo's
hospitalization and medical expenses, respondent went on absence without leave, presumably to evade liability
for his recklessness. 17 Since respondent was the one who refused to report for work, he should be considered
as having voluntarily severed his own employment. Thus, his money claims cannot prosper as he was not
terminated.
• LA - LA dismissed the charge of illegal dismissal, >nding no evidence to substantiate respondent's claim that he
was dismissed from his job on February 26, 2011. 20 The LA declared that neither was there a notice of
termination issued to him, nor was he prevented from showing up in petitioner's place of business. 21 There was
likewise no evidence submitted by petitioner that respondent had indeed voluntarily resigned. 22 According to
the LA, mere absence or failure to report for work, even after a notice to return, is not tantamount to
abandonment. 23 However, it was not even shown that respondent was noti>ed in writing to report for work, or
warned that his continued failure to report would be construed as abandonment or resignation. 24 Thus, the LA
ruled that the employer-employee relationship between the parties should be maintained. 25 Nonetheless, since
the LA pronounced that there were strained relations between the parties, petitioner was not ordered to
reinstate respondent, and instead, was directed to pay the latter the amount of P86,580.00 as separation pay.
• NLRC - the NLRC af>rmed the >nding of the LA that there was no illegal dismissal to speak of, stressing the
failure of respondent to discharge the burden of proof, which shifted to him when his employer denied having
dismissed him. 33 Similarly, the NLRC found no evidence of deliberate or unjusti>ed refusal on the part of
respondent to resume his employment, or of overt acts unerringly pointing to the fact that respondent did not
want to work anymore.
• CA
◦ CA af>rmed in toto the NLRC Resolutions, observing that the failure of petitioner, et al. to present the
alleged resignation letter of respondent belied their claim that he voluntarily resigned; and that the fact of >ling
by respondent of the labor complaint was inconsistent with the charge of abandonment.
◦ On the issue of respondent's entitlement to service incentive leave pay, the CA declared that
respondent was not a >eld personnel but a regular employee whose task was necessary and desirable to the
usual trade and business of his employer, which thus, entitled him to the benefit in question

ISSUE
1. WON employment relationship existed between the parties in this case. YES
2. WON respondent did not voluntarily resign from work and petitioner did not dismiss him from employment,
and consequently, awarded respondent separation pay. NO
3. WON respondent to be a regular employee and thus, awarded him service incentive leave pay.. YES

1. considering that the LA, the NLRC, and the CA consistently found petitioner liable as the employer of
respondent, the Court sees no compelling reason to depart from their judgment on this score.
• In fact, it is even worth noting that respondent claimed in his Position Paper 55 before the LA that he was hired
by petitioner and was required to report for work at its store in Cagayan de Oro City. 56 This was con>rmed by
petitioner in its own Position Paper, 57 declaring respondent to be "a >eld driver for the Cagayan de Oro Branch
of (petitioner) HSY MARKETING LTD., CO., (NOVO JEANS & SHIRT)." 58 Clearly, petitioner should be bound by
such admission and must not be allowed to continue to deny any employer-employee relationship with
respondent.
• To add, the Court had already exposed the practice of setting up "distributors" or "dealers" which are, in reality,
dummy companies that allow the mother company to avoid employer-employee relations and, consequently,
shield the latter from liability from employee claims in case of illegal dismissal, closure, unfair labor practices,
and the like.
2. NO
• The Court likewise upholds the unanimous conclusion of the lower tribunals that respondent had not been
dismissed at all. Other than the latter's unsubstantiated allegation of having been verbally terminated from his
work, no substantial evidence was presented to show that he was indeed dismissed or was prevented from
returning to his work. In the absence of any showing of an overt or positive act proving that petitioner had
dismissed respondent, the latter's claim of illegal dismissal cannot be sustained, as such supposition would be
self-serving, conjectural, and of no probative value. Similarly, petitioner's claims of respondent's voluntary
resignation and/or abandonment deserve scant consideration, considering petitioner's failure to discharge the
burden of proving the deliberate and unjusti>ed refusal of respondent to resume his employment without any
intention of returning. It was incumbent upon petitioner to ascertain respondent's interest or non-interest in the
continuance of his employment, 63 but to no avail.
• Hence, since there is no dismissal or abandonment to speak of, the appropriate course of action is to reinstate
the employee (in this case, herein respondent) without, however, the payment of backwages.
• Court agrees with petitioner that the LA, the NLRC, and the CA erred in awarding separation pay in spite of the
>nding that respondent had not been dismissed. Properly speaking, liability for the payment of separation pay is
but a legal consequence of illegal dismissal where reinstatement is no longer viable or feasible . As a relief granted
in lieu of reinstatement, it goes without saying that an award of separation pay is inconsistent with a >nding that
there was no illegal dismissal. 66 This is because an employee who had not been dismissed, much less illegally
dismissed, cannot be reinstated . 67 Moreover, as there is no reinstatement to speak of, respondent cannot
invoke the doctrine of strained relations 68 to support his prayer for the award of separation pay. In the case of
Capili v. NLRC
• Capili vs NLRC “When there is no illegal dismissal, even if the relations are strained, separation pay has no legal
basis .”
• petitioner is ordered to reinstate respondent to his former position without the payment of backwages. If
respondent voluntarily chooses not to return to work, he must then be considered as having resigned from
employment. This is without prejudice, however, to the willingness of both parties to continue with their former
contract of employment or enter into a new one whenever they so desire.
3.
• the Court nonetheless sustains the award of service incentive leave pay in favor of respondent, in accordance
with the >nding of the CA that respondent was a regular employee of petitioner and is, therefore, entitled to
such benefit.
• The Court has already held that company drivers who are under the control and supervision of management
of>cers — like respondent herein — are regular employees entitled to bene>ts including service incentive leave
pay . 73 "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.

Sonza vs ABS-CBN
G.R. No. 138051. June 10, 2004

• 1994, respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement ("Agreement") with
the Mel and Jay Management and Development Corporation ("MJMDC"). ABS-CBN was represented by its
corporate officers while MJMDC was represented by SONZA, as President and General Manager, and Carmela
Tiangco ("TIANGCO"), as EVP and Treasurer. 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. ABS-CBN would pay the talent fees on the 10th and 25th days
of the month.
• On April 1996, Sonza wrote a letter to ABS-CBN where he irrevocably resigned in view of the recent events
concerning his program and career. After the said letter, Sonza filed with the Department of Labor and
Employment a complaint alleging that ABS-CBN did not pay his salaries, separation pay, service incentive
pay,13th month pay, signing bonus, travel allowance and amounts under the Employees Stock Option Plan
(ESOP). ABS-CBN contended that no employee-employer relationship existed between the parties. However,
ABS-CBN continued to remit Sonza’s monthly talent fees but opened another account for the same purpose.
• The Labor Arbiter dismissed the complaint and found that there is no employee-employer relationship. NLRC
affirmed the decision of the Labor Arbiter. CA also affirmed the decision of NLRC.

ISSUE
1. WON Sonza is an employee. NO
• The existence of an employer-employee relationship is a question of fact. Substantial evidence means such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
• Case law has consistently held that the elements of an employer-employee relationship are: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the 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.
• For violation of any provision of the Agreement, either party may terminate their relationship. SONZA failed to
show that ABS-CBN could terminate his services on grounds other than breach of contract, such as retrenchment
to prevent losses as provided under labor laws.
• Power of control. Applying the control test to the present case, we find that SONZA is not an employee but an
independent contractor. The control test is the most important test our courts apply in distinguishing an
employee from an independent contractor. This test is based on the extent of control the hirer exercises over a
worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an
employee. The converse holds true as well — the less control the hirer exercises, the more likely the worker is
considered an independent contractor.
• Clearly, ABS-CBN's right not to broadcast SONZA's show, burdened as it was by the obligation to continue
paying in full SONZA's talent fees, did not amount to control over the means and methods of the performance
of SONZA's work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of
performance of his work — how he delivered his lines and appeared on television — did not meet ABS-CBN's
approval. This proves that ABS-CBN's control was limited only to the result of SONZA's work, whether to
broadcast the final product or not. In either case, ABS-CBN must still pay SONZA's talent fees in full until the
expiry of the Agreement.
• In Vaughan, et al. v. Warner, et al ., 36 the United States Circuit Court of Appeals ruled that vaudeville
performers were independent contractors although the management reserved the right to delete objectionable
features in their shows. Since the management did not have control over the manner of performance of the skills
of the artists, it could only control the result of the work by deleting objectionable features.

2. WON NLRC have jurisdiction. No

• 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. We agree with
the findings of the Labor Arbiter and the Court of Appeals that SONZA's claims are all based on the May 1994
Agreement and stock option plan, and not on the Labor Code. 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.
In effect, SONZA's cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the
regular courts.
Francisco vs NLRC
G.R. No. 170087. August 31, 2006

• In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as
Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She
was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and
other licenses for the initial operation of the company.
• In 1996, petitioner was designated Acting Manager.
• In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. 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.

Issue
1. WON there is an employer employee relationship. Yes
• Generally, courts have relied on the so-called right of control test where the person for whom the services are
performed reserves a right to control not only the end to be achieved but also the means to be used in reaching
such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between
the parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an
employer-employee relationship.
• However, in certain cases the control test is not sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a relationship where several positions have been held by
the worker. There are instances when, aside from the employer's power to control the employee with respect
to the means and methods by which the work is to be accomplished, economic realities of the employment
relations help provide a comprehensive analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer some other capacity.
• The better approach would therefore be to adopt 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.
• This two-tiered test would provide us with a framework of analysis, which would take into consideration the
totality of circumstances surrounding the true nature of the relationship between the parties. This is especially
appropriate in this case where there is no written agreement or terms of reference to base the relationship on;
and due to the complexity of the relationship based on the various positions and responsibilities given to the
worker over the period of the latter's employment.
• 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

2. WON there was constructive dismissal. Yes

• 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.
• A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive
dismissal is an involuntary resignation resulting in cessation of work resorted to when continued employment
becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when
a clear discrimination, insensibility or disdain by an employer becomes unbearable to an employee. In Globe
Telecom, Inc. v. Florendo-Flores, we ruled that where an employee ceases to work due to a demotion of rank or
a diminution of pay, an unreasonable situation arises which creates an adverse working environment rendering
it impossible for such employee to continue working for her employer. Hence, her severance from the company
was not of her own making and therefore amounted to an illegal termination of employment.

Malting Industrial and Commercial Corp. vs Coros

• After his dismissal by Matling as its Vice President for Finance and Administration, the respondent filed on
August 10, 2000 a complaint for illegal suspension and illegal dismissal against Matling and some of its corporate
officers
• The petitioners moved to dismiss the complaint, 4 raising the ground, among others, that the complaint
pertained to the jurisdiction of the Securities and Exchange Commission (SEC) due to the controversy being intra-
corporate inasmuch as the respondent was a member of Matling's Board of Directors aside from being its
VicePresident for Finance and Administration prior to his termination.
• The respondent opposed the petitioners' motion to dismiss, 5 insisting that his status as a member of Matling's
Board of Directors was doubtful, considering that he had not been formally elected as such;
• LA granted the petitioners' motion to dismiss, ruling that the respondent was a corporate officer because he
was occupying the position of Vice President for Finance and Administration and at the same time was a Member
of the Board of Directors of Matling; and that, consequently, his removal was a corporate act of Matling and the
controversy resulting from such removal was under the jurisdiction of the SEC
• NLRC set aside the dismissal, concluding that the respondent's complaint for illegal dismissal was properly
cognizable by the LA, not by the SEC, because he was not a corporate o<cer by virtue of his position in Matling,
albeit high ranking and managerial, not being among the positions listed in Matling's Constitution and By-Laws.
• CA - For a position to be considered as a corporate o<ce, or, for that matter, for one to be considered as a
corporate o<cer, the position must, if not listed in the by-laws, have been created by the corporation's board of
directors, and the occupant thereof appointed or elected by the same board of directors or stockholders. Coros'
alleged illegal dismissal is within the jurisdiction of the labor arbiter.

ISSUE
WON respondent was a regular employee and within the jurisdiction of LA. YES

• As a rule, the illegal dismissal of an o<cer or other employee of a private employer is properly cognizable by
the LA.
• Where the complaint for illegal dismissal concerns a corporate o<cer, however, the controversy falls under the
jurisdiction of the Securities and Exchange Commission (SEC), because the controversy arises out of intra-
corporate or partnership relations between and among stockholders, members, or associates, or between any
or all of them and the corporation, partnership, or association of which they are stockholders, members, or
associates, respectively;
• Effective on August 8, 2000, upon the passage of Republic Act No. 8799, 15 otherwise known as The Securities
Regulation Code, the SEC's jurisdiction over all intra-corporate disputes was transferred to the RTC
• Considering that the respondent's complaint for illegal dismissal was commenced on August 10, 2000, it might
come under the coverage of Section 5.2 of RA No. 8799, supra, should it turn out that the respondent was a
corporate, not a regular, officer of Matling.
• The petitioners argue that the power to create corporate o<ces and to appoint the individuals to assume the
o<ces was delegated by Matling's Board of Directors to its President through By-Law No. V, as amended; and
that any o<ce the President created, like the position of the respondent, was as valid and effective a creation as
that made by the Board of Directors, making the o<ce a corporate o<ce. In justiCcation, they cite Tabang v.
National Labor Relations Commission , 17 which held that "other o<ces are sometimes created by the charter or
by-laws of a corporation, or the board of directors may be empowered under the by-laws of a corporation to
create additional officers as may be necessary."
• The respondent counters that Matling's By-Laws did not list his position as Vice President for Finance and
Administration as one of the corporate o<ces; that Matling's By-Law No. III listed only four corporate o<cers,
namely: President, Executive Vice President, Secretary, and Treasurer; 18 that the corporate o<ces contemplated
in the phrase "and such other o<cers as may be provided for in the by-laws" found in Section 25 of the
Corporation Code should be clearly and expressly stated in the By-Laws; that the fact that Matling's By-Law No.
III dealt with Directors & Officers while its By-Law No. V dealt with O<cers proved that there was a differentiation
between the o<cers mentioned in the two provisions, with those classiCed under By-Law No. V being ordinary or
non-corporate officers; and that the o<cer, to be considered as a corporate o<cer, must be elected by the Board
of Directors or the stockholders, for the President could only appoint an employee to a position pursuant to By-
Law No. V. We agree with respondent.
• Conformably with Section 25, a position must be expressly mentioned in the ByLaws in order to be considered
as a corporate o<ce. Thus, the creation of an o<ce pursuant to or under a By-Law enabling provision is not enough
to make a position a corporate o<ce. Guerrea v. Lezama , 19 the Crst ruling on the matter, held that the only
o<cers of a corporation were those given that character either by the Corporation Code or by the By-Laws; the
rest of the corporate o<cers could be considered only as employees or subordinate officials
• t is relevant to state in this connection that the SEC, the primary agency administering the Corporation Code,
adopted a similar interpretation of Section 25 of the Corporation Code in its Opinion dated November 25, 1993,
21 to wit: Thus, pursuant to the above provision (Section 25 of the Corporation Code), whoever are the corporate
o<cers enumerated in the by-laws are the exclusive O<cers of the corporation and the Board has no power to
create other O<ces without amending Crst the corporate By-laws. However, the Board may create appointive
positions other than the positions of corporate O<cers, but the persons occupying such positions are not
considered as corporate o<cers within the meaning of Section 25 of the Corporation Code and are not
empowered to exercise the functions of the corporate O<cers, except those functions lawfully delegated to
them. Their functions and duties are to be determined by the Board of Directors/Trustees .
• the Board of Directors of Matling could not validly delegate the power to create a corporate o<ce to the
President, in light of Section 25 of the Corporation Code requiring the Board of Directors itself to elect the
corporate o<cers. Verily, the power to elect the corporate o<cers was a discretionary power that the law
exclusively vested in the Board of Directors, and could not be delegated to subordinate o<cers or agents. 22 The
o<ce of Vice President for Finance and Administration created by Matling's President pursuant to By Law No. V
was an ordinary, not a corporate, office.
• Viray vs CA “The better policy in determining which body has jurisdiction over a case would be to consider not
only the status or relationship of the parties but also the nature of the question that is the subject of their
controversy. Not every conOict between a corporation and its stockholders involves corporate matters that only
the SEC can resolve in the exercise of its adjudicatory or quasi-judicial powers.”
• The criteria for distinguishing between corporate o<cers who may be ousted from o<ce at will, on one hand,
and ordinary corporate employees who may only be terminated for just cause, on the other hand, do not depend
on the nature of the services performed, but on the manner of creation of the o<ce.
• Obviously enough, the respondent was not appointed as Vice President for Finance and Administration because
of his being a stockholder or Director of Matling. He had started working for Matling on September 8, 1966, and
had been employed continuously for 33 years until his termination on April 17, 2000, Crst as a bookkeeper, and
his climb in 1987 to his last position as Vice President for Finance and Administration had been gradual but
steady,
• Even though he might have become a stockholder of Matling in 1992, his promotion to the position of Vice
President for Finance and Administration in 1987 was by virtue of the length of quality service he had rendered
as an employee of Matling. His subsequent acquisition of the status of Director/stockholder had no relation to
his promotion. Besides, his status of Director/stockholder was unaffected by his dismissal from employment as
Vice President for Finance and Administration.
• In Prudential Bank and Trust Company v. Reyes , 30 a case involving a lady bank manager who had risen from
the ranks but was dismissed, the Court held that her complaint for illegal dismissal was correctly brought to the
NLRC, because she was deemed a regular employee of the bank.
 ◦ "the primary standard of determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the employer.
Additionally, "an employee is regular because of the nature of work and the length of service, not because of the
mode or even the reason for hiring them."

Malcaba vs Prohealth Pharma Phils Inc.

• ProHealth Pharma Philippines, Inc. (ProHealth) is a corporation engaged in the sale of pharmaceutical products
and health food on a wholesale and retail basis. Generoso Del Castillo (Del Castillo) is the Chair of the Board of
Directors and Chief Executive O@cer while Dante Busto (Busto) is the Executive Vice President. Malcaba, Tomas
Adona, Jr. (Adona), Nepomuceno, and Palit-Ang were employed as its President, Marketing Manager, Business
Manager, and Finance Officer, respectively.
• Malcaba had been employed with ProHealth since it started in 1997. He was one of its incorporators together
with Del Castillo and Busto, and they were all members of the Board of Directors in 2004.
• Malcaba alleged that Del Castillo did acts that made his job di@cult. He asked to take a leave on October 23,
2007. When he attempted to return on November 5, 2007, Del Castillo insisted that he had already resigned and
had his things removed from his o@ce. He attested that he was paid a lower salary in December 2007 and his
bene7ts were withheld. 6 On January 7, 2008, Malcaba tendered his resignation effective February 1, 2008. 7
• Nepomuceno, for his part, alleged that he was initially hired as a medical representative in 1999 but was
eventually promoted to District Business Manager for South Luzon. On March 24, 2008, he applied for vacation
leave for the dates April 24, 25, and 28, 2008, which Busto approved. When he left for Malaysia on April 23, 2008,
ProHealth sent him a Memorandum dated April 24, 2008 asking him to explain his absence. He replied through
email that he tried to call ProHealth to inform them that his Eight was on April 22, 2008 at 9:00 p.m. and not on
April 23, 2008 but was unable to connect on the phone.
• On May 7, 2008, Nepomuceno was given a notice of termination, which was effective May 5, 2008, on the
ground of fraud and willful breach of trust.
• Palit-Ang, on the other hand, was hired to join ProHealth's audit team in 2007. She was later promoted to
Finance O@cer. 10 On November 26, 2007, Del Castillo instructed Palit-Ang to give P3,000.00 from the training
funds to Johnmer Gamboa (Gamboa), a District Business Manager, to serve as cash advance.
• On November 27, 2007, Busto issued a show cause memorandum for Palit-Ang's failure to release the cash
advance. Palit-Ang was also relieved of her duties and reassigned to the Office of the Personnel and
Administration Manager
• On December 17, 2007, she was handed a notice of termination effective December 31, 2007, for disobeying
the order of ProHealth's highest official. 17
• Malcaba, Nepomuceno, Palit-Ang, and Adona separately 7led Complaints 18 before the Labor Arbiter for illegal
dismissal, nonpayment of salaries and 13th month pay, damages, and attorney's fees.
• LA (all 4 illegally dismissed)
◦ The Labor Arbiter found that Malcaba was constructively dismissed. He found that ProHealth never
controverted the allegation that Del Castillo made it di@cult for Malcaba to effectively ful7ll his duties. He
likewise ruled that ProHealth's insistence that Malcaba's leave of absence in October 2007 was an act of
resignation was false since Malcaba continued to perform his duties as President through December 2007.
◦ The Labor Arbiter declared that Nepomuceno's failure to state the actual date of his Eight was an
excusable mistake on his part, considering that this was his 7rst infraction in his nine (9) years of service. He
noted that no administrative proceedings were conducted before Nepomuceno's dismissal, thereby violating his
right to due process
◦ Palit-Ang's dismissal was also found to have been illegal as delay in complying with a lawful order was
not tantamount to disobedience. The Labor Arbiter further noted that delay in giving a cash advance for car
maintenance would not have affected the company's operations. He declared that Palit-Ang's dismissal was too
harsh of a penalty.
• NLRC - National Labor Relations Commission rendered its Decision, 25 a@rming the Labor Arbiter's April 5,
2009 Decision with modifications.
◦ 3 illegally dismissed
◦ a) complainant Adona is declared to have voluntarily resigned and is entitled only to his 13th month
pay;
• CA - reverse decision of NLRC
◦ On the procedural issues, the Court of Appeals found that ProHealth substantially complied with the
requirement of an appeal bond despite it not appearing in the records of the surety company since ProHealth
believed in good faith that the bond it secured was genuine. 31
◦ On the substantive issues, the Court of Appeals held that there was no employer-employee relationship
between Malcaba and ProHealth since he was a corporate o@cer. Thus, he should have 7led his complaint with
the Regional Trial Court, not with the Labor Arbiter, since his dismissal from service was an intra-corporate
dispute. 32
◦ The Court of Appeals likewise concluded that ProHealth was justi7ed in dismissing Nepomuceno and
Palit-Ang since both were given opportunities to fully explain their sides. 33 It found that Nepomuceno's failure
to diligently check the true schedule of his Eight abroad and his subsequent lack of effort to inform his superiors
were enough for his employer to lose its trust and con7dence in him. 34 It likewise found that Palit-Ang displayed
"arrogance and hostility" when she de7ed the lawful orders of the company's highest ranking o@cer; thus, her
insubordination was just cause to terminate her services.
◦ While the Court of Appeals ordered the return of the amounts given to Malcaba, it allowed
Nepomuceno and Palit-Ang to keep the amounts given considering that even if the 7nding of illegal dismissal
were reversed on appeal, the employer was still obliged to reinstate and pay the wages of a dismissed employee
during the period of appeal.
• Petitioners argue that the Court of Appeals should have dismissed outright the Petition for Certiorari since
respondents failed to post a genuine appeal bond before the National Labor Relations Commission. They allege
that when Sheriff Ramon Nonato P. Dayao attempted to enforce the judgment award against the appeal bond,
he was informed that the appeal bond procured by respondents did not appear in the records of Alpha Insurance
and Surety Company, Inc. (Alpha Insurance). They also claim that respondents were noti7ed by the National
Labor Relations Commission four (4) times that their appeal bond was not genuine, showing that respondents
did not comply with the requirement in good faith.
• Petitioners contend that petitioner Malcaba properly 7led his Complaint before the Labor Arbiter since he was
an employee of respondent ProHealth, albeit a high-ranking one. They argue that respondents merely alleged
that petitioner Malcaba is a corporate o@cer but failed to substantiate this allegation. 41 They maintain that
petitioner Malcaba did not resign on September 24, 2007 considering that the General Information Sheet for
2007 submitted on October 11, 2007 listed him as respondent ProHealth's President. They submit that
respondent Del Castillo's action took a toll on petitioner Malcaba's well-being; hence, the latter merely took a
leave of absence and returned to work in November 2007. They claim that respondents made it di@cult for
petitioner Malcaba to continue his work upon his return, resulting in his resignation in January 2008. Thus, they
argue that petitioner Malcaba was constructively dismissed.
• Petitioners likewise argue that petitioners Nepomuceno and Palit-Ang were illegally dismissed. They claim that
petitioner Nepomuceno committed an "honest and negligible mistake" 43 that should not have warranted
dismissal considering his loyal service for nine (9) years. They contend that petitioner Nepomuceno's absence
did not injure respondent ProHealth's business since he turned over all pending work to a reliever before he left
and even surpassed his sales quota for the month. 44 They likewise claim that his dismissal was done in violation
of his right to due process since he was not given any opportunity to explain his side and was only given a notice
of termination two (2) days after he was actually dismissed.
• Petitioners maintain that petitioner Palit-Ang believed in good faith that Gamboa would just claim his cash
advance the day after he tried to claim it and that there was nothing in her actions that would prove that she
intended to disobey or defy respondent Del Castillo's instructions. They insist that delay in complying with orders
is not tantamount to disobedience and would not constitute just cause for petitioner Palit-Ang's dismissal. They
likewise submit that while petitioner Palit-Ang was subjected to a fact-finding investigation, respondents failed
to inform her of her right to be assisted by counsel.
• Respondents, on the other hand, counter that a liberal application of the procedural rules was necessary in
their case since they acted in good faith in posting their appeal bond. 47 They likewise contend that the issue
should have already been considered moot since petitioners "were able to garnish and collect the amounts
allegedly due to them.

ISSUE
1. WON respondents failed to perfect their appeal when it was discovered that their appeal bond was a forged
bond, which this Court will address before proceeding with the substantive issues. The substantive issues raised,
however, are dependent on the factual circumstances applicable to each petitioner. YES
2. WON Labor Arbiter and National Labor Relations Commission had jurisdiction over petitioner Nicanor F.
Malcaba's termination dispute considering the allegation that he was a corporate officer, and not a mere
employee. NO
3. WON Christian C. Nepomuceno was validly dismissed for willful breach of trust when he failed to inform
respondents ProHealth Pharma Philippines, Inc., Generoso R. Del Castillo, Jr., and Dante M. Busto of the actual
dates of his vacation leave. NO
4. WON Laura Mae Fatima F. Palit-Ang was validly dismissed for willful disobedience when she failed to
immediately comply with an order of her superior. NO

1. YES
• In labor cases, an appeal by an employer is perfected only by filling a bond equivalent to the monetary award
• The purpose of requiring an appeal bond is "to guarantee the payment of valid and legal claims against the
employer." 61 It is a measure of financial security granted to an illegally dismissed employee since the resolution
of the employer's appeal may take an indeterminable amount of time.
• Procedural rules require that the appeal bond 7led be "genuine." An appeal bond determined by the National
Labor Relations Commission to be "irregular or not genuine" shall cause the immediate dismissal of the appeaL
• Thus, while the procedural rules strictly require the employer to submit a genuine bond, an appeal could still
be perfected if there was substantial compliance with the requirement.
• the National Labor Relations Commission certi7ed that respondents 7led a security deposit in the amount of
P6,512,524.84 under Security Bank check no. 0000045245, 72 showing that the premium for the appeal bond
was duly paid and that there was willingness to post it. 73 Respondents likewise attached documents proving
that Alpha Insurance was a legitimate and accredited bonding company.
• Despite their failure to collect on the appeal bond, petitioners do not deny that they were eventually able to
garnish the amount from respondents' bank deposits. 75 This ful7lls the purpose of the bond, that is, "to
guarantee the payment of valid and legal claims against the employer[.]" 76 Respondents are considered to have
substantially complied with the requirements on the posting of an appeal bond.

2. NO
• Labor Arbiter exercises original and exclusive jurisdiction over termination disputes between an employer and
an employee while the National Labor Relations Commission exercises exclusive appellate jurisdiction over these
cases
• Petitioner Malcaba alleges that the Court of Appeals erred in dismissing his complaint for lack of jurisdiction,
insisting that he was an employee of respondent, not a corporate officer.
• At the time of his alleged dismissal, petitioner Malcaba was the President of respondent corporation.
• Under Section 25 of the Corporation Code, 80 the President of a corporation is considered a corporate o@cer.
The dismissal of a corporate o@cer is considered an intra-corporate dispute, not a labor dispute.
• The mere designation as a high-ranking employee, however, is not enough to consider one as a corporate
o@cer.
• The clear weight of jurisprudence clari7es that to be considered a corporate o@cer, first, the o@ce must be
created by the charter of the corporation, and second, the officer must be elected by the board of directors or
by the stockholders.
• Petitioner Malcaba was an incorporator of the corporation and a member of the Board of Directors. 86
Respondent corporation's By-Laws creates the o@ce of the President.
• A corporation's President, however, is explicitly stated as a corporate officer.
• Finding that petitioner Malcaba is the President of respondent corporation and a corporate o@cer, any issue
on his alleged dismissal is beyond the jurisdiction of the Labor Arbiter or the National Labor Relations Commission
• As a matter of equity, petitioner Malcaba must, therefore, return all amounts received as judgment award
pending 7nal adjudication of his claims. This Court's dismissal of petitioner Malcaba's claims, however, is without
prejudice to his filing of the appropriate case in the proper forum.

3. NO
• Article 294 [279] of the Labor Code provides that an employer may terminate the services of an employee only
upon just or authorized causes. 94 Article 297 [282] enumerates the just causes for termination, among which is
"[f]raud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative[.]"
• Loss of trust and con7dence is a just cause to terminate either managerial employees or rank-and-7le
employees who regularly handle large amounts of money or property in the regular exercise of their functions.
• For an act to be considered a loss of trust and con7dence, it must be first, work-related, and second, founded
on clearly established facts
• The breach of trust must likewise be willful, that is, "it is done intentionally, knowingly and purposely, without
justi7able excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.
• Petitioner Nepomuceno alleges that he was illegally dismissed merely for his failure to inform his superiors of
the actual dates of his vacation leave. Respondents, however, contend that as District Business Manager,
petitioner Nepomuceno lost the corporation's trust and con7dence by failing to report for work during a crucial
sales period.
• As found by the National Labor Relations Commission, petitioner Nepomuceno had 7led for leave, which was
approved, for April 24, 25, and 28, 2008 to go on vacation in Malaysia. However, he left for Malaysia on the
evening of April 22, 2008, and thus, failed to report for work on April 23, 2008.
• Petitioner Nepomuceno claims that he only knew that his Eight was for the evening of April 22, 2008 on the
day of his Eight.
• n industries that mainly rely on sales, employers are free to discipline errant employees who deliberately fail
to report for work during a crucial sales period. It would have been reasonable for respondents to discipline
petitioner Nepomuceno had he been a problematic employee who unceremoniously refused to do his work.
• However, as found by the Labor Arbiter and the National Labor Relations Commission, petitioner Nepomuceno
turned over all of his pending work to a reliever before he left for Malaysia. He was able to reach his sales quota
and surpass his sales target even before taking his vacation leave. Respondents did not suffer any 7nancial
damage as a result of his absence. This was also petitioner Nepomuceno's 7rst infraction in his nine (9) years of
service with respondents. 101 None of these circumstances constitutes a willful breach of trust on his part. The
penalty of dismissal, thus, was too severe for this kind of infraction.
• The manner of petitioner Nepomuceno's dismissal was likewise suspicious. In all cases of employment
termination, the employee must be granted due process.
• Here, petitioner Nepomuceno received a memorandum on April 23, 2008, asking him to explain why no
administrative investigation should be held against him. He submitted an explanation on the same day and
another explanation on May 2, 2008. On May 7, 2008, he was given his notice of termination, which had already
taken effect two (2) days earlier, or on May 5, 2008. 102
• It is true that "[t]he essence of due process is simply an opportunity to be heard." 103 Petitioner Nepomuceno
had two (2) opportunities within which to explain his actions. This would have been su@cient to satisfy the
requirement. The delay in handing him his notice of termination, however, appears to have been an
afterthought.
• Considering that petitioner Nepomuceno's dismissal was done without just cause, he is entitled to
reinstatement and full backwages. 104 If reinstatement is not possible due to strained relations between the
parties, he shall be awarded separation pay at the rate of one (1) month for every year of service

4. NO
• Under Article 297 [282] of the Labor Code, an employer may terminate the services of an employee who
commits willful disobedience of the lawful orders of the employer
• For disobedience to be considered as just cause for termination, two (2) requisites must concur: first, "the
employee's assailed conduct must have been wilful or intentional," and second, "the order violated must have
been reasonable, lawful, made known to the employee and must pertain to the duties which he [or she] had
been engaged to discharge." 106 For disobedience to be willful, it must be "characterized by a wrongful and
perverse mental attitude rendering the employee's act inconsistent with proper subordination."
• The conduct complained of must also constitute "harmful behavior against the business interest or person of
his [or her] employer."
• When Gamboa went to collect the money from petitioner Palit-Ang, he was told to return the next day as she
was still busy. When petitioner Palit-Ang found out that the money was to be used for a car tune-up, she
suggested to Gamboa to just get the money from his mobilization fund and that she just would reimburse it after.
111 The Court of Appeals found that these circumstances characterized petitioner Palit-Ang's "arrogance and
hostility," 112 in failing to comply with respondent Del Castillo's order, and thus, warranted her dismissal.
• On the contrary, there was no ill will between Gamboa and petitioner Palit-Ang. Petitioner Palit-Ang's failure
to immediately give the money to Gamboa was not the result of a perverse mental attitude but was merely
because she was busy at the time. Neither did she pro7t from her failure to immediately give the cash advance
for the car tune-up nor did respondents suffer 7nancial damage by her failure to comply. The severe penalty of
dismissal was not commensurate to her infraction.
• Petitioner Palit-Ang likewise assails the failure of respondents to inform her of her right to counsel when she
was being investigated for her infraction. As previously discussed, "[t]he essence of due process is simply an
opportunity to be heard," not that the employee must be accompanied by counsel at all times. A hearing was
conducted and she was furnished a notice of termination explaining the grounds for her dismissal. She was not
denied due process.
• Petitioner Palit-Ang, nonetheless, is considered to have been illegally dismissed, her penalty not having been
proportionate to the infraction committed. Thus, she is entitled to reinstatement and full backwages. If
reinstatement is not possible due to strained relations between the parties, she shall be awarded separation pay
at the rate of one (1) month for every year of service.