Case Digests - Prelim Coverage

Labor Relations 1
Case Digests: Prelims Coverage
CAPITOL MEDICAL CENTER, INC. v. DR. CESAR E. Issue: Whether there was illegal dismissal?
MERIS Held: Yes, work is a necessity that has economic
G.R. No. 155098 significance deserving legal protection. Employers
September 16, 2005 are also accorded rights and privileges to assure
Carpio Morales, J. their self-determination and independence and
reasonable return of capital. Although they may be
Facts: On January 16, 1974, petitioner Capitol broad and unlimited in scope, the State has the
Medical Center, Inc. (Capitol) hired Dr. Cesar Meris right to determine whether an employer’s privilege
(Dr. Meris), as in charge of its Industrial Service is exercised in a manner that complies with the
Unit (ISU). Until the closure of the ISU, Dr. Meris legal requirements and does not offend the
performed medical services to Capitol’s more than protected rights of labor.
500 employees and health workers. After 18 years
of service, Dr. Meris was notified that the ISU will The right to close the operation of an
be abolished and that his services will be establishment or undertaking is explicitly
terminated. recognized under the Labor Code as one of the
authorized causes in terminating employment of
The ISU was not, in fact, abolished. It workers, the only limitation being that the closure
continued to operate with Dr. Clemente as head. must not be for the purpose of circumventing the
Dr. Meris then filed a complaint for illegal dismissal provisions on termination of employment
but the Labor Arbiter dismissed the same. embodied in the Labor Code.
Labor Relations 2
BITOY JAVIER v. FLY ACE CORPORATION Held: No, the onus probandi falls on petitioner to
G.R. No. 192558 establish or substantiate such claim. Whoever
February 15, 2012 claims entitlement to the benefits provided by law
Mendoza, J. should establish his or her right thereto.
Facts: Javier an employee of Fly Ace performing Sadly, Javier failed to adduce substantial
various work for the latter filed a complaint for evidence as basis for the grant of relief. All that
underpayment of salaries and other labor standard Javier presented were his self-serving statements
benefits. He alleged that when he reported for purportedly showing his activities as an employee
work he was no longer allowed to enter the of Fly Ace. While Javier remains firm in his position,
company premises upon the instruction of Ruben he was made only to work in the company
Ong (Mr. Ong). When he asked Mr. Ong, the latter premises during weekdays arranging and cleaning
replied “Tanungin mo anak mo”. He discovered grocery items for delivery to clients.
that Ong had been courting his daughter.
Thereafter, Javier was terminated from his The Court is of the considerable view that
employment without notice. on Javier lays the burden to pass the well-settled
tests to determine the existence of an employer-
For its part, Fly Ace denied the existence of employee relationship: (1) the selection and
employer-employee relationship between them engagement of the employee; (2) the payment of
and Javier as the latter was only called roughly 5 to wages; (3) the power of dismissal; and (4) the
6 times whenever the vehicle of its contracted power to control the employees conduct. The most
hauler was not available. important criterion the employer controls or the
right to control the employee not only as to the
Issue: Whether an employer-employee relationship result of the work but also as to the means and
exist between Javier and Fly Ace? methods by which the result is to be accomplished.
Labor Relations 3
BERNARD A. TENAZAS v.
R. VILLEGAS TAXI TRANSPORT The respondents, however, denied that
G.R. No. 192998 Francisco was an employee of the company.
April 2, 2014
REYES, J. Issue: Who has the burden in proving the existence
of employer-employee relationship?
Facts: Bernard A. Tenazas (Tenazas) and Jaime M.
Francisco (Francisco) filed a complaint for illegal Held: The burden of proof rests upon the party
dismissal against R. Villegas Taxi Transport. Tenazas who asserts the affirmative of an issue. In
alleged that after he met an accident involving the determining the presence or absence of an
taxi unit assigned to him, he was thereafter told employer-employee relationship, the Court has
that he can no longer drive any of the company’s consistently looked for the following incidents: (a)
units as he is already fired. the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal;
As for Francisco, he averred that his and (d) the employer’s power to control the
dismissal was brought about by the company’s employee on the means and methods by which the
suspicion that he was organizing a labor union. He work is accomplished. The last element, the so-
was instantaneously terminated, without the called control test, is the most important element.
benefit of procedural due process.
In this case, however, Francisco failed to
The respondents admitted that Tenazas present any proof substantial enough to establish
was an employee of the company. They alleged his relationship with the respondents. He failed to
that Tenazas was never terminated by the present documentary evidence like attendance
company and that it was the latter who failed to logbook, payroll, SSS record or any personnel file.
report back to work for no apparent reason.
Labor Relations 4
ALILEM CREDIT COOPERATIVE v. SALVADOR M. Issue: Whether respondent was properly dismissed
BANDIOLA, JR. from employment?
G.R. No. 173489
February 25, 2013 Held: Yes, before the services of an employee can
be validly terminated, the employer must furnish
Peralta, J.:
him two written notices: A written notice served
on the employee specifying the grounds for
Facts: Petitioner's Board of Directors received a
termination, and giving the employee reasonable
letter from a certain Napoleon Gao-ay reporting
opportunity to explain his side; and A written
the alleged immoral conduct of respondent
notice of termination served on the employee
Bandiola by having an illicit relationship with
indicating that upon due consideration of all the
Napoleon’s sister, Thelma Palma. Respondent
circumstances, grounds have been established to
denied the accusation claiming that such was a
justify his termination.
result of the insecurity felt by some members of
the cooperative.
While respondent’s act of engaging in extra-
-marital affairs may be personal to him and does
The Ad Hoc Committee concluded that
not directly affect the performance of his assigned
respondent was involved in an extra-marital affair
task as bookkeeper, the act was specifically
with Thelma. Thereafter, the Chairman of the
provided for by petitioner’s Personnel Policy as one
Board sent a letter to respondent informing him of
of the grounds for termination of employment.
the existence of a prima facie case against him for
Said act raised concerns to petitioner as the Board
"illicit marital affair” an act that brings discredit to
received numerous complaints and petitions for
the cooperative organization and a cause for
the removal of respondent because of his immoral
termination per AMPC (Alilem Multi-Purpose
conduct.
Cooperative) Personnel Policy.
In a Memorandum, respondent was

informed of Board’s decision to terminate his
services.
Labor Relations 5
CHERRY J. PRICE v. INNODATA PHILS. INC., G.R. being ambiguous, but also for appearing to be
No. 178505 tampered with.
September 30, 2008
Chico- Nazario, J. The Certificate of Employment issued by
the HRAD Manager of Innodata indicated that
Facts: Petitioners were employed as formatters by petitioners were employed by Innodata on 17
Innodata. Thereafter, an employment contract, February 1999. However, respondents asserted
"Contract of Employment for a Fixed Period," that petitioners’ employment contracts were
stipulating that the contract shall be for a period of effective only on 6 September 1999. They later on
one year was executed. admitted that petitioners were originally hired on
16 February 1999 but the project for which they
On 16 February 2000, the HRAD Manager of were employed was completed before the
Innodata wrote petitioners informing them of their expiration of one year.
last day of work thru a letter. Petitioners filed a
Complaint for illegal dismissal against respondents. The Court notes that such modification and
Petitioners claimed that they should be considered denial by respondents as to the real beginning date
regular employees since their positions as of petitioners’ employment contracts render the
formatters were necessary and desirable to the said contracts ambiguous.
usual business of Innodata as an encoding,
conversion and data processing company. Court adheres to its pronouncement in
Villanueva v. National Labor Relations Commission,
Issue: Whether the terms fixed in the employment to the effect that where a contract of employment,
contract were meant to circumvent petitioner’s being a contract of adhesion, is ambiguous, any
right to security of tenure? ambiguity therein should be construed strictly
against the party who prepared it.
Held: Yes, the contracts of employment submitted
by respondents are highly suspected for not only
Labor Relations 6
BANK OF THE PHILIPPINE ISLANDS, v. BANK OF Held: No, the CBA in this case contains no provision
THE PHILIPPINE ISLANDS EMPLOYEES UNION on the "no negative data bank policy" as a
G.R. No. 175678 prerequisite in the entitlement of the benefits set
August 22, 2012 forth for the employees. In fact, a close reading of
Peralta, J. the CBA would show that the terms and conditions
contained therein relative to the availment of the
Facts: Bank of the Philippine Islands Employees loans are plain and clear, thus, all they need is the
Union-Metro Manila (BPIEU-MM) and BPI have an proper implementation in order to reach their
existing Collective Bargaining Agreement which objective.
provides for loan benefits and relatively low
interest rates. Thereafter, BPI issued a "no negative The CA was, therefore, correct when it
data bank policy" for the implementation of the ruled that, although it can be said that petitioner is
loans which the BPIEU-MM objected to, thus, authorized to issue rules and regulations pertinent
resulting into labor-management dialogues. to the availment of the loans under the CBA, the
additional rules and regulations, must not impose
BPI alleged that the "No NDB policy" is a new conditions which are not contemplated in the
valid and reasonable requirement that is consistent CBA and should be within the realm of
with sound banking practice and is meant to reasonableness. The "no negative data bank policy"
inculcate among officers and employees the need is a new condition which is never contemplated in
for fiscal responsibility and discipline, especially in the CBA and at some points, unreasonable to the
an industry where the element of trust is employees.
paramount.
Article 1702 of the New Civil Code provides
Issue: Whether the “NDB Policy” is in conformity that, in case of doubt, all labor legislation and all
with the existing CBA? labor contracts shall be construed in favor of the
safety and decent living of the laborer.
Labor Relations 7
PHILIPPINE JOURNALISTS INC. v. JOURNAL Issue: Whether the petitioner is correct in asserting
EMPLOYEES UNION that, notwithstanding the silence of the CBA, the
G.R. No. 192601 term legal dependent should follow the definition
June 3, 2013 of it under R.A No. 8282 or the Social Security Law?
Bersamin, J.
Held: No, under Section 8(e) of the Social Security
Facts: Respondent Michael L. Alfante worked with Law; Section 4(f) of R.A 7875; and Section 2(f) of
Philippine Journalists, Inc. as computer technician. P.D 1146 as amended by R.A 8291, provides that a
Later on, Alfante received a memorandum, dependent shall be the following, namely: (a) the
requiring him to explain his side on the evaluation legal spouse entitled by law to receive support
of his performance submitted by manager Rico from the member; (b) the legitimate, legitimated,
Pagkalinawan. One week after complainant or legally adopted, and illegitimate child who is
submitted his explanation, he was handed his unmarried, not gainfully employed and has not
notice of dismissal on the ground of "poor reached 21 of age, or, if over 21 years of age, is
performance". Alfante maintained that he did not congenitally or while still a minor has been
commit any act of unfair labor practices. permanently incapacitated and incapable of self-
support, physically or mentally; and (c) the parent
Labor Arbiter Corazon C. Borbolla rendered who is receiving regular support from the member.
her decision that the charge of illegal dismissal by
Alfante was dismissed for lack of merit. In its It is clear from these statutory definitions of
petition for review, petitioner questioned the non- dependent that the controlling factor is the fact
adjustment of longevity pay and burial aid of PJI. that the spouse, child, or parent is actually
He maintained that under Section 4, Article XIII of dependent for support upon the employee.
the CBA, funeral and bereavement aid should be
granted upon the death of a legal dependent of a
regular employee.
Labor Relations 8
NATIONAL UNION OF WORKERS IN HOTEL charges are due are only applicable to airline
RESTAURANT AND ALLIED INDUSTRIES v. contracts only?
PHILIPPINE PLAZA HOLDINGS, INC.,
G.R. No. 177524 Held: No, as a contract and the governing law
July 23, 2014 between the parties, the general rules of statutory
Brion, J. construction of CBA apply in the interpretation of
its provisions. Thus, if the terms of the CBA are
Facts: The PPHI and the Union executed the "Third plain, clear and leave no doubt on the intention of
Rank-and-File Collective Bargaining Agreement as the contracting parties, the literal meaning of its
Amended". The CBA provided, among others, for stipulations, as they appear on the face of the
the collection, by the PPHI, of a ten percent service contract, shall prevail. Only when the words used is
charge on the sale of food, beverage, ambiguous and doubtful or leading to several
transportation, laundry and rooms. interpretations of the parties’ agreement that a
resort to interpretation and construction is called
Later on, the Union’s Service Charge for.
Committee informed the Union President, through
an audit report of uncollected service charges of No service charges were due from the
the following items: (1) "Journal Vouchers;" (2) specified transactions; they either fall within the
"Banquet Other Revenue;" and (3) "Staff and CBA-excepted "Negotiated Contracts" and "Special
Promo." PPHI disputes what it considers as the Rates" or did not involve "a sale of food, beverage,
Union’s strained interpretation of the CBA etc."
exception of "Negotiated Contracts" as applicable
to airline contracts only. The CBA does not confine its application to
"airline contracts". Thus, as correctly declared by
Issue: Whether the excepted "Negotiated the CA, the term "negotiated contracts" should be
Contracts" and "Special Rates" from which service read as applying to all types of negotiated
contracts and not to "airlines contracts" only.
Labor Relations 9
MITSUBISHI MOTORS PHILIPPINES SALARIED Held: No, the Voluntary Arbitrator erred applying
EMPLOYEES UNION v. the view that the covered employees are entitled
MITSUBISHI MOTORS PHILIPPINES CORPORATION to full payment of the hospital expenses, including
G.R. No. 175773 the amounts already paid by other health
June 17, 2013 insurance companies based on the theory of
Del Castillo, J. collateral source rule.
Facts: The Collective Bargaining Agreement of the The condition that payment should be
parties provides that the company shoulder the direct to the hospital and doctor implies that
hospitalization expenses of the dependents of MMPC is only liable to pay medical expenses
covered employees subject to certain limitations actually shouldered by the employees’
and restrictions. Accordingly, covered employees dependents. It follows that MMPC’s liability is
pay part of the hospitalization insurance premium limited, that is, it does not include the amounts
through monthly salary deduction while the paid by other health insurance providers. This
company, upon hospitalization of the covered condition is obviously intended to thwart not only
employees' dependents, shall pay the fraudulent claims but also double claims for the
hospitalization expenses incurred for the same. same loss of the dependents of covered
employees.
On separate occasions, three members of
MMPSEU, filed claims for reimbursement of It is well to note at this point that the CBA
hospitalization expenses of their dependents. constitutes a contract between the parties, the
MMPC paid only a portion of their hospitalization terms of the subject provision are clear and
insurance claims, not the full amount. provide no room for any other interpretation. As
there is no ambiguity, the terms must be taken in
Issue: Whether the members of MMPSEU are their plain, ordinary and popular sense.
entitled to full reimbursement?
Labor Relations 10
BEST WEAR GARMENTS v. Held: No, the respondents are not

ADELAIDA B. DE LEMOS and CECILE M. OCUBILLO illegally/constructively dismissed and are not
G.R. No. 191281 entitled to separation pay.
December 5, 2012
Villarama, J. The right of employees to security of tenure
does not give them vested rights to their positions
Facts: De Lemos and Ocubillo filed a complaint for to the extent of depriving management of its
illegal dismissal with prayer for backwages and prerogative to change their assignments or to
other accrued benefits among others. Both alleged transfer them. Thus, an employer may transfer or
that Sitosta arbitrarily transferred them to other assign employees from one office or area of
areas of operation of the garments company, operation to another, provided there is no
which they claimed to be constructive dismissal as demotion in rank or diminution of salary, benefits,
it resulted in fewer earnings for them. De Lemos and other privileges, and the action is not
claims that her transfer was because of her refusal motivated by discrimination, made in bad faith, or
to render overtime work. Meanwhile, Ocubillo was effected as a form of punishment or demotion
due to her incurred excessive absences since 2001 without sufficient cause.
which was due to her sickly father and his untimely
demise. She claimed that Sitosta assigned her to Being piece-rate workers assigned to
different machines “whichever is available” and individual sewing machines, respondents’ earnings
that there were times where she could not earn depended on the quality and quantity of finished
anything because there were no available products. That their work output might have been
machines to work for. affected by the change in their specific work
assignments does not necessarily imply that any
Issue: Whether the respondents were illegally resulting reduction in pay is tantamount to
dismissed from employment and are entitled to constructive dismissal.
separation pay?
Labor Relations 11
TOYOTA MOTOR PHILS. CORP. WORKERS Issue: Whether the mass actions committed by the
ASSOCIATION v. NATIONAL LABOR RELATIONS Union are illegal strikes?
COMMISSION
G.R. Nos. 158786 & 158789 October 19, Held: Yes, a strike means any temporary stoppage
2007 of work by the concerted action of employees as a
Velasco, JR., J. result of an industrial or labor dispute. The protest
actions undertaken by the Union officials and
Facts: The Union submitted its Collective members are not valid and proper exercises of
Bargaining Agreement proposals to Toyota, but the their right to assemble but are illegal strikes in
latter refused to negotiate. Consequently, the breach of the Labor Code.
Union filed a notice of strike based on Toyota’s
refusal to bargain. Union officers and members It is obvious that the concerted actions
failed to render the required overtime work, and were undertaken without satisfying the
instead marched to and staged a picket in front of prerequisites for a valid strike under Article 263 of
the BLR office. the Labor Code. The Union failed to comply with
the following requirements: (1) notice of strike
Thereafter, Toyota sent individual letters to filed with the DOLE 30 days before the date of
some employees requiring them to explain why strike, or 15 days in case of unfair labor practice;
they should not be dismissed for their defiance of (2) strike vote approved by a majority of the total
the company’s directive to render overtime work. union membership by secret ballot and (3) notice
The Union submitted an explanation in compliance given to the DOLE of the results of the voting at
with the notices sent by Toyota. However, Toyota least seven days before the intended strike. These
terminated the employment of 227 employees for requirements are mandatory and the failure of a
participation in concerted actions in violation of its union to comply with them renders the strike
Code of Conduct and for misconduct under Article illegal.
282 of the Labor Code.
Labor Relations 12
MA. WENELITA S. TIRAZONA v. PHILIPPINE EDS Held: No, Tirazona is not entitled to the award of
TECHNO- SERVICE INC. separation pay.
G.R. No. 169712
January 20, 2009 As a general rule, an employee who has
Chico-Nazario, J. been dismissed for any of the just causes
enumerated under Article 282 of the Labor Code is
Facts: Tirazona, being the Administrative Manager not entitled to separation pay. In Sy v.
of Philippine EDS Techno-Service, Inc. (PET), was a Metropolitan Bank & Trust Company, the Court
managerial employee who held a position of trust declared that only unjustly dismissed employees
and confidence. PET officers called her attention to are entitled to retirement benefits and other
her improper handling of a situation involving a privileges including reinstatement and backwages.
rank-and-file employee. Thereafter, she was
terminated on the ground that she willfully Separation pay shall be allowed as a
breached the trust and confidence reposed in her measure of social justice only in those instances
by her employer. The NLRC ruled that Tirazona was where the employee is validly dismissed for causes
validly terminated. Tirazona argued that the Court other than serious misconduct or those reflecting
failed to consider the length of her service to PET in on his moral character.
affirming her termination. She prayed that her
dismissal be declared illegal. Should the Court Tirazona was not just "gracelessly expelled"
uphold the legality of her dismissal, Tirazona or "simply terminated" from the company. She was
pleaded that she be awarded separation pay. found to have violated the trust and confidence
reposed in her by her employer when she
Issue: Whether Tirazona is entitled to the award of arrogantly and unreasonably demanded from PET
separation pay? and its officers damages coupled with a threat of a
lawsuit if the same was not promptly paid within
five days.
Labor Relations 13
REYNALDO HAYAN MOYA v. FIRST SOLID RUBBER Held: No. Moya is not entitled to separation pay.
INDUSTRIES, INC. Payment of separation pay cannot be justified by
GR No. 184011 his length of service.
September 18, 2013 Moya’s dismissal is based on one of the
Perez, J. grounds under Art. 282 of the Labor Code which is
willful breach by the employee of the trust reposed
Facts: First Solid is a business engaged in in him by his employer. Also, he is outside the
manufacturing of tires and rubbers allegedly protective mantle of the principle of social justice
terminated Moya. First Solid denied the illegal as his act of concealing the truth from the company
dismissal and maintained that Moya’s severance is clear disloyalty to the company which has long
from the company was due to a valid exercise of employed him.
management prerogative. They countered that
Moya failed to exercise the diligence required of Indeed, Moya’s length of service should be
him to see to it that the machine operator properly taken against him. Length of service is not a
operated the machine. Moya was found to have bargaining chip that can simply be stacked against
failed to disclose the real situation that the the employer. After all, an employer-employee
operator was at fault as admitted in his letter but relationship is symbiotic where both parties benefit
denied any willful intention to conceal the truth or from mutual loyalty and dedicated service.
cover up the mistake of his employee.
An employee who has been dismissed for
Issue: Whether petitioner employee is entitled to any of the just causes enumerated under Article
separation pay based on his length of service? 282 of the Labor Code, including breach of trust, is
not entitled to separation pay. This is further
bolstered by Section 7, Rule I, Book VI of the
Omnibus Rules Implementing the Labor Code.
Labor Relations 14
Republic of the Phils vs. Asiapro Cooperative elements are considered: (1) the selection and
G.R. No. 172101 engagement of the workers; (2) the payment of
November 23, 2007 wages by whatever means; (3) the power of
Chico- Nazario, J. dismissal; and (4) the power to control the
worker‘s conduct, with the latter assuming primacy
Facts: Respondent Asiapro Cooperative’s primary in the overall consideration. All the aforesaid
objective is to provide savings and credit facilities elements are present in this case.
and livelihood services. In discharge of said
objectives, Asiapro entered into several service The most important element is the
contracts with Stanfilco. Sometime later, the employer’s control of the employees conduct, not
cooperative owners-members requested only as to the result of the work to be done, but
Stanfilco’s help in registering them with SSS. also as to the means and methods to accomplish.
Petitioner SSS informed Asiapro that being actually The power of control refers to the existence of the
a manpower contractor, it must be the one to power and not necessarily to the actual exercise
register itself with SSS as an employer and remit thereof. It is not essential for the employer to
the contributions. Respondent continuously actually supervise the performance of duties of the
ignoring the demand of SSS the latter filed before employee; it is enough that the employer has the
the SSC. Asiapro alleges that there exists no right to wield that power.
employer-employee relationship between it and its
owners-members. In the present case, it is not disputed that
the respondent cooperative had registered itself
Issue: Whether an employer-employee relationship with the Cooperative Development Authority. In its
exists between Asiapro and its owners-members? by-laws, its Board of Directors directs, controls, and
supervises the business and manages the property
Held: Yes, in determining the existence of an of the respondent cooperative.
employer-employee relationship, the following
Labor Relations 15
LEGEND HOTEL v. HERNANI S. REALUYO employee. He was undeniably employed as a

G.R. No. 153511 pianist in petitioner’s Madison Coffee
July 18, 2012 Shop/Tanglaw Restaurant from September 1992
Bersamin, J. until his services were terminated on July 9, 1999.
Facts: Respondent Pianist, whose stage name was First of all, petitioner actually wielded the
Joey R. Roa, filed a complaint for alleged unfair power of selection at the time it entered into the
labor practice. Respondent averred on July 9, 1999, service contract dated September 1, 1992 with
the management had notified him that as a cost- respondent.
cutting measure his services as a pianist would no
longer be required. Secondly, petitioner was paying respondent
wages. Petitioner’s argument that the
In its defense, petitioner denied the remuneration denominated as ‘talent fees’ is not
existence of an employer-employee relationship wages must fail.
with respondent, insisting that he had been only a
talent engaged to provide live music at Legend Thirdly, the power of the employer to
Hotel’s Madison Coffee Shop and stated that the control the work of the employee is considered the
economic crisis that had hit the country most significant determinant of the existence of an
constrained management to dispense with his employer-employee relationship. This is the so-
services. called control test, and is premised on whether the
person for whom the services are performed
Issue: Whether respondent pianist Joey Roa is an reserves the right to control both the end achieved
employee of petitioner Legend Hotel? and the manner and means used to achieve that
end.
Held: Yes, a review of the circumstances reveals
that respondent was, indeed, petitioner’s
Labor Relations 16
HACIENDA LEDDY v. PAQUITA VILLEGAS

G.R. No. 179654 While length of time may not be the
September 22, 2014 controlling test to determine if Villegas is indeed a
Peralta, J. regular employee, it is vital in establishing if he was
hired to perform tasks which are necessary and
Facts: Villegas is an employee at the Hacienda indispensable to the usual business or trade of the
Leddy. During his employment up to the time of his employer.
dismissal, Villegas performed sugar farming job 8
hours a day. Gamboa went to Villegas' house and Clearly, even assuming that Villegas'
told him that his services were no longer needed employment was only for a specific duration, the
without prior notice or valid reason. Hence, fact that he was repeatedly re-hired over a long
Villegas filed the instant complaint for illegal period of time shows that his job is necessary and
dismissal with the NLRC. indispensable to the usual business or trade of the
employer.
Issue: Whether there exists an employer-
employee relationship between petitioner
Hacienda Leddy and respondent Villegas?
Held: Yes, in Integrated Contractor and Plumbing

Works, Inc. v. National Labor Relations
Commission, we held that the test to determine
whether employment is regular or not is the
reasonable connection between the particular
activity performed by the employee in relation to
the usual business or trade of the employer. If the
employee has been performing the job for at least
one year, even if the performance is not
continuous or merely intermittent, the law deems
the repeated and continuing need for its
performance as sufficient evidence of the
necessity. Clearly, with more than 20 years of
service, Villegas, without doubt, passed this test to
attain employment regularity.
Labor Relations 17
PEOPLE'S BROADCASTING v. THE SECRETARY OF limitation on the power of the Secretary of Labor.
THE DEPARTMENT OF LABOR AND EMPLOYMENT The rationale underlying this limitation is to
G.R. No. 179652 eliminate the prospect of competing conclusions of
May 8, 2009 the Secretary of Labor and the NLRC, on a matter
Velasco Jr. J. fraught with questions of fact and law.
Facts: Jandeleon Juezan filed against People’s A mere assertion of absence of employer-
Broadcasting Service, Inc. a complaint for illegal employee relationship does not deprive the DOLE
deduction. DOLE Regional Office ruled in favor of of jurisdiction over the claim under Article 128 of
private respondent. DOLE Regional Director Atty. the Labor Code. At least a prima facie showing of
Rodolfo M. Sabulao ruled that respondent is an such absence of relationship, as in this case, is
employee of petitioner, and that the former is needed to preclude the DOLE from the exercise of
entitled to his money claims. Petitioner argues that its power.
the National Labor Relations Commission (NLRC),
and not the DOLE Secretary, has jurisdiction over A preliminary determination, based on the
respondent’s claim, in view of Articles 217 and 128 evidence offered, and noted by the Labor Inspector
of the Labor Code. during the inspection as well as submitted during
the proceedings before the Regional Director puts
Issue: Whether the Secretary of Labor has the in genuine doubt the existence of employer-
power to determine the existence of an employer- employee relationship. From that point on, the
employee relationship? prudent recourse on the part of the DOLE should
have been to refer respondent to the NLRC for the
Held: No, the existence of an employer-employee proper dispensation of his claims.
relationship is a statutory prerequisite to and a
Labor Relations 18
Meteoro et al v. Creative Creatures Issue: Which body has jurisdiction over petitioners
G.R. No. 171275 money claims?
July 13, 2009 Held: The instant case falls within the exclusive
Nachura, J. jurisdiction of the NLRC. The power of the Regional
Director to hear and decide the monetary claims of
Facts: Respondent is a domestic corporation employees is not absolute. The last sentence of
engaged in the business of producing, providing, or Article 128 (b) of the Labor Code, otherwise known
procuring the production of set designs for as the exception clause, provides an instance when
television exhibitions, concerts and the like. On the the Regional Director or his representatives may be
other hand, petitioners were hired by respondent divested of jurisdiction over a labor standards case.
on various dates as artists, carpenters and welders.
Sometime in 1999, petitioners filed their respective The key requirement for the Regional
complaints for non-payment of salaries and Director and the DOLE Secretary to be divested of
benefits against respondent, before the jurisdiction is that the evidentiary matters be not
Department of Labor and Employment. verifiable in the course of inspection. Respondent
contested the findings of the labor inspector during
During inspection, the labor inspector and after the inspection and raised issues the
noted that the records were not made available at resolution of which necessitated the examination
the time of the inspection and that respondent of evidentiary matters not verifiable in the normal
claimed that petitioners were contractual course of inspection. Hence, the Regional Director
employees and or independent talent workers. was divested of jurisdiction and should have
endorsed the case to the appropriate Arbitration
Branch of the NLRC.
Labor Relations 19
Indophil Textile Mills v. Adviento regular courts. The jurisdiction of the LA and the
G.R. No. 171212 NLRC is outlined in Article 217 of the Labor Code,
August 4, 2014 as amended by Section 9 of Republic Act (R.A.) No.
Peralta, J. 6715.
Facts: Respondent consulted a physician due to It is a basic tenet that jurisdiction over the
recurring weakness and dizziness. Few days later, subject matter is determined upon the allegations
he was diagnosed with Chronic Poly Sinusitis. He made in the complaint, irrespective of whether or
was advised by his doctor to totally avoid house not the plaintiff is entitled to recover upon the
dust mite and textile dust as it will transmute into claim asserted therein, which is a matter resolved
health problems. Subsequently, respondent filed only after and as a result of a trial. Neither can
complaint with the Regional Trial Court, alleging jurisdiction of a court be made to depend upon the
that he contracted such occupational disease by defense made by a defendant in his answer or
reason of the gross negligence of petitioner to motion to dismiss.
provide him with a safe, healthy and workable
environment. In this case, a perusal of the complaint
would reveal that the subject matter is one of
Issues: Which court has jurisdiction? claim for damages arising from quasi-delict, which
is within the ambit of the regular court's
Held: The Regular Courts have jurisdiction. The jurisdiction.
Supreme court held that jurisdiction rests on the
Labor Relations 20
Smart Communications v. Astorga, Held: Yes, redundancy in an employer’s personnel

G.R. No. 148132 force necessarily or even ordinarily refers to
January 27, 2008 duplication of work. The characterization of an
Nachura, J. employee’s services as superfluous or no longer
necessary and, therefore, properly terminable, is
Facts: Smart launched an organizational an exercise of business judgment on the part of the
realignment to achieve more efficient operations. employer.
Part of the reorganization was the outsourcing of
the marketing and sales force. Astorga landed last An employer is not precluded from
in the performance evaluation, thus, she was not adopting a new policy conducive to a more
recommended by Smart. Smart, nonetheless, economical and effective management even if it is
offered her a supervisory position in the Customer not experiencing economic reverses. In this light,
Care Department, but she refused the offer we must acknowledge the prerogative of the
because the position carried lower salary rank and employer to adopt such measures as will promote
rate. greater efficiency.
Despite the abolition of the CSMG/FSD, However, Smart failed to comply with the
Astorga continued reporting for work. But Smart mandated one (1) month notice prior to
issued a memorandum advising Astorga of the termination. The record is clear that Astorga
termination of her employment on ground of received the notice of termination only on March
redundancy. 16, 1998 or less than a month. Likewise, the
Department of Labor and Employment was notified
Issue: Whether the dismissal of Regina Astorga was of the redundancy program only on March 6, 1998.
illegal?
Labor Relations 21
GRANDTEQ INDUSTRIAL STEEL PRODUCTS, INC. v. The Court rigorously disapproves contracts
EDNA MARGALLO that demonstrate a clear attempt to exploit the
G.R. No. 181393 employee and deprive him of the protection
July 28, 2009 sanctioned by both the Constitution and the Labor
Chico- Nazario, J. Code. The Constitution and the Labor Code
mandate the protection of labor.
Facts: Margallo claimed that she availed herself of
the car loan program offered to her by Grandteq as
a reward for being "Salesman of the Year." She
paid the down payment. The monthly amortization
for the car was to be her share and the share of
Grandteq.
Thereafter, Margallo averred that De Leon

asked her to just resign, promising that if she did,
she would still be paid her commissions and other
benefits. Relying on De Leon’s promise, Margallo
tendered her irrevocable resignation, effective
immediately. However, it never happened.
Issue: Whether Margallo is entitled to the

reimbursement of her car loan payments?
Held: Yes, the principle against unjust enrichment

obliges Grandteq and Gonzales to refund to
Margallo the car loan payments she had made,
since she has not actually acquired the car. To
relieve Grandteq and Gonzales of their obligation
to reimburse Margallo would, indeed, be to
sanction unjust enrichment in favor of the first two
and cause unjust poverty to the latter.
Labor Relations 22
ROBERTO T. DOMONDON v. NATIONAL LABOR In the case at bar, petitioner claims illegal
RELATIONS COMMISSION dismissal. The cause of action clearly falls within
G.R. No. 154376 the jurisdiction of the Labor Arbiter. The transfer of
September 30, 2005 the ownership of the company car to petitioner is
Puno, J. connected with his resignation and arose out of the
parties’ employer- employee relationship.
Facts: Petitioner Roberto T. Domondon filed a Accordingly, private respondents’ claim for
complaint against private respondent Van Melle damages falls within the jurisdiction of the Labor
Phils., Inc.. He alleged that his termination is an Arbiter.
illegal dismissal. Petitioner alleged that private
respondent VMPI hired him as Materials Manager.
Petitioner claimed that things worked out well for
him in the beginning until he was transferred to
China and was replaced by private respondent.
On the other hand, private respondents

stated that petitioner informed them about his
intention to resign to which the private
respondents granted. Subsequently, however,
petitioner proposed the transfer of ownership of
the car assigned to him in lieu of the financial
assistance from the company. Private respondents
averred that petitioner effected the registration of
the car in his name.
Issue: Whether the Labor Arbiter has the

jurisdiction to hear and decide the question on the
transfer of ownership of the car assigned to
petitioner?
Held: Yes, the jurisdiction of Labor Arbiters is

provided under Article 217(a) of the Labor Code.
Labor Relations 23
PRUDENTIAL BANK v. CLARITA T. REYES Court held that an employee is regular because of
G.R. No. 141093 the nature of the work and the length of service,
February 20, 2001 not because of the mode or even the reason for
Gonzaga- Reyes, J. hiring him.
Facts: Clarita Tan Reyes filed a complaint for illegal It appears that private respondent was
suspension and illegal dismissal against Prudential appointed Accounting Clerk by the Bank on July 14,
Bank and Trust Company. Prior to her dismissal, 1963. From that position she rose to become
private respondent Reyes held the position of supervisor. Then in 1982, she was appointed
Assistant Vice President in the foreign department Assistant Vice-President which she occupied until
of the Bank, tasked with the duties to collect her illegal dismissal on July 19, 1991.
checks drawn against overseas banks payable in
foreign currency. It has been stated that “the primary
standard of determining regular employment is the
Prudential Bank allege that Reyes’ ground reasonable connection between the particular
of dismissal was when she deliberately held the activity performed by the employee in relation to
clearing of Checks of Hongkong and Shanghai the usual trade or business of the employer.
Banking Corporation by giving instructions to the
collection clerk not to send the checks for
collection. And when the said checks were finally
sent to clearing after the lapse of 15 months from
receipt of said checks, they were returned for the
reason ‘Account closed.’ To date, the value of said
checks have not been paid.
Issue: Whether the amount of backwages and

separation pay was awarded properly?
Held: Yes because contrary to the bank’s

contention that she merely holds an elective
position and that in effect she is not a regular
employee is belied by the nature of her work and
her length of service with the Bank. The Supreme
Labor Relations 24
ARSENIO Z. LOCSIN v. NISSAN LEASE PHILS., INC. of his relationship with Nissan. A corporate
G.R. No. 185567 officer’s dismissal is always a corporate act, or an
October 20, 2010 intra-corporate controversy which arises between
Brion, J. a stockholder and a corporation. In the context of

the present case, the Labor Arbiter does not have
Facts: Locsin held the position of Executive Vice jurisdiction over the termination dispute Locsin
President and Treasurer for 13 years under brought, and should not be allowed to continue to
Respondent Nissan Lease Philippines Inc. On act on the case after the absence of jurisdiction has
August 5, 2005, the NCLPI Board during their become obvious. In more practical terms, a
meeting conducted an election of a new set of contrary ruling will only cause substantial delay and
officers. Unfortunately, Locsin was neither re- inconvenience as well as unnecessary expenses, to
elected Chairman nor reinstated to his previous the point of injustice, to the parties.
position.
Locsin filed a complaint for illegal dismissal

with prayer for reinstatement, payment of
backwages before the Labor Arbiter against NCLPI
and Banson, who was then President of NCLPI.
Issue: Whether Locsin’s position as Executive Vice-

President and Treasurer makes him a corporate
officer thereby excluding him from the coverage of
the Labor Code?
Held: Yes, even as Executive Vice-President and

Treasurer, Locsin already acted as a corporate
officer because the position of Executive Vice-
President and Treasurer is provided for in Nissan’s
By-Laws.
Given Locsin’s status as a corporate officer,

the RTC, not the Labor Arbiter or the NLRC, has
jurisdiction to hear the legality of the termination
Labor Relations 25
RENATO REAL v. SANGU PHILIPPINES, G.R. No. With the elements of intra-corporate
168757 controversy being absent in this case, the SC held
January 19, 2011 that petitioner’s complaint for illegal dismissal
Del Castillo, J. against respondents is not intra-corporate. Rather,
it is a termination dispute and, consequently, falls
Facts: In 2001, Real was removed from his position under the jurisdiction of the Labor Arbiter pursuant
as Manager through a board resolution adopted by to Section 2173 of the Labor Code.
Sangu Philippine’s Board of Directors. Real claimed
that he was not notified of the said nor was he
formally charged of any infraction.
Sangu Philippine claims that Real

committed gross acts of misconduct detrimental to
the company. They claim that Real was frequently
absent and had neglected to supervise the
employees resulting to several client complaints.
Issue: Whether the petitioner’s complaint for

illegal dismissal is an intra-corporate controversy
thus beyond the jurisdiction of the Labor Arbiter?
Held: No. The present case is not an intra-

corporate controversy, thus it is a termination
dispute well within the jurisdiction of the Labor
Arbiter.
In Speed Distribution Inc. v. Court of

Appeals: ‘To determine whether a case involves an
intra-corporate controversy and is to be heard and
decided by the branches of the RTC, two elements
must concur: (a) the status or relationship of the
parties, and (2) the nature of the question that is
the subject of their controversy.
Labor Relations 26
RAUL C. COSARE v. BROADCOM ASIA been regarded in its broad sense to pertain to
G.R. No. 201298. disputes that involve any of the following
February 5, 2014 relationships: (1) between the corporation,
Reyes, J. partnership or association and the public; (2)
between the corporation, partnership or
Facts: In December 2000, Arevalo set up the association and the state in so far as its franchise,
company Broadcom, still to continue the business permit or license to operate is concerned; (3)
of trading communication and broadcast between the corporation, partnership or
equipment. Cosare was named an incorporator of association and its stockholders, partners,
Broadcom. Cosare was promoted to the position of members or officers; and (4) among the
Assistant Vice President for Sales and Head of the stockholders, partners or associates, themselves.
Technical Coordination.
Settled jurisprudence, however, qualifies
Thereafter, Cosare sent a confidential that when the dispute involves a charge of illegal
memo to Arevalo to inform him of the anomalies dismissal, the action may fall under the jurisdiction
which were allegedly being committed by Abiog, of the Labor Arbiters upon whose jurisdiction, as a
his superior. Apparently, Arevalo failed to act on rule, falls termination disputes and claims for
Cosare’s accusations. Cosare claimed that he was damages arising from employer-employee
instead called for a meeting by Arevalo, wherein he relations as provided in Article 217 of the Labor
was asked to tender his resignation. Cosare refused Code.
to comply with the directive. Cosare then received
from Broadcom’s Manager for Finance and
Administration, a memo signed by Arevalo,
charging him of serious misconduct and willful
breach of trust.
Issues: Whether the case instituted by Cosare was

an intra-corporate dispute that was within the
original jurisdiction of the RTC and not of the Labor
Arbiter?
Held: No, an intra-corporate controversy, which

falls within the jurisdiction of regular courts, has
Labor Relations 27
PURIFICACION Y. MANLIGUEZ v. COURT OF petitioners and the other parties, and no issue is
APPEALS involved which may be resolved by reference to
G.R. No. 92598 the Labor Code, other labor statutes, or any
May 20, 1994 collective bargaining agreement. Neither can we
Puno, J. characterize petitioner's action before the trial
court as arising out of a labor dispute. It was not
Facts: Petitioners filed a complaint which sought brought to reverse or modify the judgment of the
the lifting of the levy over, and annulment of the Department of Labor and Employment.
sale of, the Tipolo properties. Petitioners therein
alleged that: they are the owners of the Lot 109 What is to be litigated in Civil Case No. Ceb-
and that they entered into a lease agreement with 6917 is the issue of ownership over the Tipolo
Inductocast Cebu over Lot 109. Atty. Danilo Pilapil properties. Clearly, it is the RTC and not the labor
filed a motion to dismiss on the ground that the department which can take cognizance of the case,
trial court had no jurisdiction over the case. as provided by B.P. Blg. 129 or "An Act
Reorganizing the Judiciary, Appropriating Funds
Petitioners questioned the dismissal of their therefor, and For Other Purposes".
Complaint to the respondent Court of Appeals. The
appellate court denied the petition, as it held that
the Department of Labor is the agency upon which
devolves the jurisdiction over disputes emanating
from labor controversies to the exclusion of the
regular courts.
Issue: Whether the regular courts have jurisdiction

over the case filed by the petitioners?
Held: Yes. The regular courts have jurisdiction over
the case filed by the petitioners.
Respondent court erred in holding that the

trial court does not have jurisdiction over the case
filed by petitioners. It is at once evident that the
Civil Case No. Ceb-6917 is not a labor case. No
employer-employee relationship exists between
Labor Relations 28
GEORG GROTJAHN GMBH & CO. v. HON. LUCIA agreement. Although a controversy is between an
VIOLAGO ISNANI employer and an employee, the Labor Arbiters
G.R. No. 109272 have no jurisdiction if the Labor Code is not
August 10, 1994 involved.
Puno, J.
Where the claim to the principal relief
Facts: Private respondent Romana R. Lanchinebre sought is to be resolved not by reference to the
was a sales representative of petitioner Georg Labor Code or other labor relations statute or a
Grotjahn Gmbh & Co.. Thereafter, she secured a collective bargaining agreement but by the general
loan from petitioner. On March 26 and June 10, civil law, the jurisdiction over the dispute belongs
1992, she made additional cash advances. Despite to the regular courts of justice and not to the Labor
demand, private respondent Romana failed to Arbiter and the NLRC.
settle her obligation with petitioner. Private
respondent Romana Lanchinebre filed with the In such situations, resolutions of the dispute
Arbitration Branch of the National Labor Relations requires expertise, not in labor management
Commission, a Complaint for illegal suspension. relations nor in wage structures and other terms
Petitioner in turn filed against private respondent a and conditions of employment, but rather in the
Complaint for damages. application of the general civil law.
Issue: Whether the regular courts have jurisdiction

over the case filed by the petitioner?
Held: Yes, the regular courts have jurisdiction over

the case filed by the petitioner. 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. The jurisdiction of labor
arbiters and the NLRC under Article 217 of the
Labor Code is limited to disputes arising from an
employer-employee relationship which can only be
resolved by reference to the Labor Code, other
labor statutes, or their collective bargaining
Labor Relations 29
EDUARDO G. EVIOTA v. Court of Appeals Not every controversy or money claim by

G.R. No. 152121 an employee against the employer or vice-versa is
July 29, 2003 within the exclusive jurisdiction of the labor
Callejo, Sr. J. arbiter. A money claim by a worker against the
employer or vice-versa is within the exclusive
Facts: Respondent Standard Chartered Bank and jurisdiction of the labor arbiter only if there is a
petitioner Eduardo G. Eviota executed a contract of “reasonable causal connection” between the claim
employment under which the petitioner was asserted and employee-employer relation. Absent
employed by the respondent bank as such a link, the complaint will be cognizable by the
Compensation and Benefits Manager. However, regular courts of justice.
the petitioner abruptly resigned from the
respondent bank barely a month after his It is evident that the causes of action of the
employment. private respondent against the petitioner do not
involve the provisions of the Labor Code of the
Respondent bank filed a complaint against Philippines and other labor laws but the New Civil
the petitioner with the RTC. That Eviota indicated Code. Thus, the said causes of action are
his conformity with the Banks Offer of Employment intrinsically civil. There is no causal relationship
by signing a written copy of such an Employment between the causes of action of the private
Contract and the Bank promptly proceeded to respondent’s causes of action against the
carry out the terms of the Employment Contract as petitioner and their employer-employee
well as to facilitate his integration into the relationship.
workforce.
Issue: Whether court has the jurisdiction of the

case?
Held: Yes, case law has it that the nature of an

action and the subject matter thereof, as well as
which court has jurisdiction over the same, are
determined by the material allegations of the
complaint and the reliefs prayed for in relation to
the law involved.
Labor Relations 30
ASIAN ALCOHOL CORPORATION v. NATIONAL by the social justice policy of the Constitution. But
LABOR RELATIONS COMMISSION while tilting the scales of justice in favor of
G.R. No. 131108 workers, the fundamental law also guarantees the
March 25, 1999 right of the employer to reasonable returns from
Puno, J. his investments.
Facts: The Parsons family, who originally owned Corollary, the law allows an employer to
the controlling stocks in Asian Alcohol, were driven downsize his business to meet clear and continuing
business losses to sell their majority rights to prior economic threats. Thus, this Court has upheld
Holdings, Inc.. To thwart further losses, Prior reductions in the work force to forestall business
Holdings implemented a reorganizational plan. The losses or stop the haemorrhaging of capital.
employees received individual notices of
termination as well as the monetary equivalent of
the services that they rendered. All of them
executed sworn releases, waivers and quitclaims.
The six private respondents files with the NLRC
complaints for illegal dismissal. They alleged that
Asian Alcohol used the retrenchment program to
single them out by reason for their active
participation in the union.
Issue: Whether retrenchment is within the ambit

of management prerogative?
Held: Yes, the right of management to dismiss

workers during periods of business recession and
to install labor saving devices to prevent losses is
governed by Art. 283 of the Labor Code.
Out of its concern for those with less

privilege in life, this Court has inclined towards the
worker and upheld his cause in his conflicts with
the employer. This favored treatment is directed
Labor Relations 31
MANILA ELECTRIC COMPANY v. The employer has the ultimate

SECRETARY OF LABOR determination of whether services should be
G.R. No. 127598 performed by its personnel or contracted to
February 22, 2000 outside agencies. While there should be mutual
Ynares- Santiago, J. consultation, eventually deference is to be paid to
what management decides. Contracting out of
Facts: The Supreme Court promulgated a decision services is an exercise of business judgment or
directing the parties to execute a Collective management prerogative. Absent proof that
Bargaining Agreement which provided for increase management acted in a malicious or arbitrary
in wages and retroactive application of arbitral manner, the Court will not interfere with the
awards. exercise of judgment by an employer.
Meralco filed this petition arguing that an

increase in wages will result in higher rates of
electricity which will be passed to the consumers.
The union asked for reconsideration. The union
also questioned the right given to Mercalco in
contracting out jobs without need to consult the
union.
Issue: Whether contracting out of services is an

exercise of management prerogative?
Held: Yes, an employer is allowed to contract out

services for six months or more. However, a line
must be drawn between management prerogatives
regarding business operations per se and those
which affect the rights of employees, and in
treating the latter, the employer should see to it
that its employees are at least properly informed
of its decision or modes of action in order to attain
a harmonious labor-management relationship and
enlighten the workers concerning their rights.
Labor Relations 32
Aliviado v. Procter and Gamble Where labor-only contracting exists, the

G.R. No. 160506 Labor Code itself establishes an employer-
June 6, 2011 employee relationship between the employer and
Del Castillo, J. the employees of the labor-only contractor. The
statute establishes this relationship for a
Facts: SAPS and Promm-Gem imposed disciplinary comprehensive purpose: to prevent a
measures on erring merchandisers for reasons such circumvention of labor laws. The contractor is
as habitual absenteeism, dishonesty or changing considered merely an agent of the principal
day-off without prior notice. To enhance consumer employer and the latter is responsible to the
awareness and acceptance of the products, P&G employees of the labor-only contractor as if such
entered into contracts with Promm-Gem and SAPS employees had been directly employed by the
for the promotion and merchandising of its principal employer.
products. In December 1991, petitioners filed a
complaint against P&G for regularization, service
incentive leave pay and other benefits with
damages.
Issue: Whether P and G is the employer of

petitioners?
Held: Clearly, the law and its implementing rules

allow contracting arrangements for the
performance of specific jobs, works or services.
However, in order for such outsourcing to be valid,
it must be made to an independent contractor
because the current labor rules expressly prohibit
labor-only contracting.
Considering that SAPS has no substantial

capital or investment and the workers it recruited
are performing activities which are directly related
to the principal business of P&G, we find that the
former is engaged in “labor-only contracting”.
Labor Relations 33
GOYA, INC., v. GOYA, INC. recall of work, presupposing the existence of

G.R. No. 170054 employer-employee relationship.
January 21, 2013
Peralta, J. This management prerogative of
contracting out services, however, is not without
Facts: Petitioner Goya, Inc.,, hired contractual limitation. In contracting out services, the
employees from Peso Resources Development management must be motivated by good faith and
Corporation to perform temporary and occasional the contracting out should not be resorted to
services in its factory. This prompted respondent circumvent the law or must not have been the
Goya, Inc. Employees Union FFW to request for a result of malicious arbitrary actions.
grievance conference on the ground that the
contractual workers do not belong to the In the case at bench, the CBA of the parties
categories of employees stipulated in the existing has already provided for the categories of the
Collective Bargaining Agreement. employees in the Company’s establishment. With
the provision on casual employees, the hiring of
The Union asserted that the hiring of PESO contractual employees, therefore, is not in
contractual employees from Peso is not a keeping with the spirit and intent of their CBA.
management prerogative and in gross violation of
the CBA tantamount to unfair labor practice. The
Company was directed to observe and comply with
its commitment under the CBA.
Issue: Whether the hiring of contractual employees

is a valid exercise of management prerogative?
Held: Yes, the company’s engagement of Peso was

indeed a management prerogative. A management
prerogative refers to the right of the 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
Labor Relations 34
FONTERRA BRANDS PHILS., INC., v. LEONARDO Thus, A.C. Sicat is engaged in legitimate job
LARGADO and TEOTIMO ESTRELLADO contracting and was able to prove its status as a
G.R. No. 205300 legitimate job contractor for having substantial
March 18, 2015 capital.
Velasco Jr. J.
The appellate court further correctly held that
Facts: Petitioner Fonterra Brands Phils., Inc. Fonterra’s issuance of Merchandising Guidelines
contracted the services of Zytron Marketing and for compliance and use of A.C. Sicat’s employees
Promotions Corp. for the marketing and promotion does not establish that Fonterra exercises control
of its milk and dairy products. Pursuant to the over A.C. Sicat. We agree with the CA’s conclusion
contract, Zytron provided Fonterra with trade that these were imposed only to ensure the
merchandising representatives. effectiveness of the promotion services to be
rendered by the merchandisers as it would be
When respondents’ 5-month contracts with risky, if not imprudent, for any company to
A.C. Sicat were about to expire, they allegedly completely entrust the performance of the
sought renewal thereof, but were allegedly operations it has contracted out.
refused. This prompted them to file complaints for
illegal dismissal, regularization, non-payment of
service incentive leave and 13th month pay, and
actual and moral damages, against petitioner,
Zytron, and A.C. Sicat.
Issue: Whether Zytron and A.C. Sicatare labor-only

contractors making Fonterra the employer of
herein respondents?
Held: Yes, in labor-only contracting, the law creates

an employer-employee relationship between the
principal and the labor-only contractor’s employee
as if such employees are directly employed by the
principal employer, and considers the contractor as
merely the agent of the principal.
Labor Relations 35
Alilin v. Petron Generally the contractor is presumed to be

GR No. 177592 a labor-only contractor, unless such contractor
June 9, 2014 overcomes the burden of proving that it has the
Del Castillo, J. substantial capital, investment, tool and the like.
However where the principal is the one claiming
Facts: Romualdo D. Gindang Contractor started that the contractor is a legitimate contractor, as in
recruiting laborers for fielding to Petron’s the present case, said principal has the burden of
Mandaue Bulk Plant. Romeo his son through RDG, proving. It is thus incumbent upon Petron,and not
took over the business and continued to provide upon petitioners as Petron insist, to prove the RDG
manpower services to Petron. RDG and Petron is an independent contractor.
entered into Contract for Services and such
Contract. Petitioners filed a complaint for illegal In the case at bench Petron failed to
dismissal against petron and RDG when the said discharge the burden of proving that RDG is a
petitioners were barred from continuing their Legitimate Contractor. Furthermore Petron’s
services on October 16,2002. RDG denied liability power of control over the petitioners exists in this
over petitioners’ claim of illegal dismissal and case. In the four-fold test it is the power to control
further argued that Petron cannot capitalized on it is the power of control which is the most crucial
the service contract to escape liability. and most determinative.
Petron, on the other hand, maintained that

RDG is an independent contractor and the real
employer of the petitioners. It was RDG which
hired and selected petitioners, paid their salaries
and wages, and directly supervised their work.
Issue: Whether Petron is the real Employer of the

Petitioners?
Held: Yes, in distinguishing between Labor-only

and Permissible job contracting, the totality of the
facts and the surrounding circumstances of the
case shall be considered.
Labor Relations 36
Garden of Memories Park v. NLRC of proving that Requio has sufficient capital or
GR No. 160278 investment since it is claiming the supposed status
February 8, 2012 of Requio as independent contractor. Garden of
Mendoza, J. Memories, however, failed to adduce evidence
purporting to show that Requio had sufficient
Facts: Petitioner is engaged in a business of capitalization. Neither did it show that she invested
operating a memorial park. Respondent on the in the form of tools, equipment, machineries, work
other hand worked at the petitioner’s Memorial premise and other materials which are necessary in
Park as a utility worker. Cruz had misunderstanding the completion of the service contract.
with a co-worker. When the misunderstanding
came to the knowledge of Requio the latter Furthermore, Requio was not a licensed
instructed them to go home and not to return contractor. Her explanation her business was a
anymore. 3 days after cruz return to work but she mere livelihood program akin to a cottage industry
was told that she had been replaced by another provided by Garden of Memories as part of its
worker. Cruz argued that as a regular employee she contribution to the upliftment of the
could not be terminated without just or valid underprivileged residing near the memorial park
cause. prive that her capital investment was not
substantial.
Garden of Memories denied liability and
asserted that she was not its employee but that of
Requio, its independent service contractor. It
insisted that there was no Employer- Employee
relationship between them because she was
employed by its service contractor.
Issue: Whether Petitioner is the real Employer of

Cruz?
Held: Yes, generally the presumption is that the
contractor is a labor-only contracting unless such
contractor overcomes the burden of proving that it
has the substantial capital, investment, tools and
the like. In the present case, though Garden of
memories is not the contractor, it has the burden
Labor Relations 37
Corporation v. NLRC substantial capital, investment or assets to perform

G.R. No. 148490 the work contracted for, the presumption that
November 22, 2006 Universal is a labor-only contractor stands.
Austria- Martinez, J.
Thus, petitioner, the principal employer, is
Facts: 7K Corporation and Universal Janitorial and solidarily liable with Universal, the labor-only
Allied Services entered into a service contract contractor, for the rightful claims of the
where Universal bound itself to provide petitioner employees. Under this set-up, Universal, as the
with drivers. labor-only contractor, is deemed an agent of the
principal, herein petitioner, and the law makes the
A controversy arose when the overtime principal responsible to the employees of the
paid by the accounting department of petitioner labor-only contractor as if the principal itself
was short of the actual overtime rendered by the directly hired or employed the employees.
private respondents. After their grievances were
repeatedly ignored, respondents filed separate
complaints for illegal dismissal against Universal.
Issue: Whether Universal is a labor-only contractor,

hence petitioner is the employer and therefore
solidary liable?
Held: Yes, the presumption is that a contractor is a

labor-only contractor unless such contractor
overcomes the burden of proving that it has
substantial capital, investment, tools and the like.
The employees, in this case, private respondents,
should not be expected to prove the negative fact
that the contractor does not have substantial
capital, investment and tools to engage in job-
contracting.
Since neither petitioner nor Universal was

able to adduce evidence that Universal had any
Labor Relations 38
Fuji Television Network, Inc. v. Arlene S. Espiritu parties for the commencement and termination of
GR No. 204944-45 the employment relationship."
December 3, 2014
Leonen, J. For regular employees, the necessity and
desirability of their work in the usual course of the
Facts: Arlene S. Espiritu was engaged by Fuji employer’s business are the determining factors.
Television Network, Inc. as a news correspondent. On the other hand, independent contractors do
Sometime in January 2009, Arlene was diagnosed not have employer-employee relationships with
with lung cancer. She informed Fuji about her their principals. Hence, before the status of
condition. In turn, the Agency of Fuji, informed employment can be determined, the existence of
Arlene "that the company will have a problem an employer-employee relationship must be
renewing her contract" since it would be difficult established.
for her to perform her job. She "insisted that she
was still fit to work as certified by her attending
physician."
The day after Arlene signed the non-

renewal contract, she filed a complaint for illegal
dismissal. She alleged that she was forced to sign
the non-renewal contract when Fuji came to know
of her illness and that Fuji withheld her salaries and
other benefits.
Issue: Whether Arlene was a regular employee not

an independent contractor?
Held: Yes, Arlene is not an independent contractor.

Employees under fixed-term contracts cannot be
independent contractors because in fixed-term
contracts, an employer-employee relationship
exists. The test in this kind of contract is not the
necessity and desirability of the employee’s
activities, "but the day certain agreed upon by the
Labor Relations 39
MARTICIO SEMBLANTE and DUBRICK PILAR v. of wages; (3) the power of dismissal; and (4) the
COURT OF APPEALS power to control the employee’s conduct, which is
G.R. No. 196426 the most important element.
August 15, 2011
Velasco, Jr., J. As found by both the NLRC and the CA,
respondents had no part in petitioners’ selection
Facts: Petitioners Marticio Semblante and Dubrick and management; Petitioners’ compensation was
Pilar assert that they were hired by respondents- paid out of the arriba (which is a percentage
spouses Vicente and Maria Luisa Loot, the owners deducted from the total bets), not by respondents;
of Gallera de Mandaue, as the official masiador and and Petitioners performed their functions as
sentenciador. On November 14, 2003, petitioners masiador and sentenciador free from the direction
were denied entry into the cockpit and were and control of respondents. In the conduct of their
informed of the termination of their services work, petitioners relied mainly on their "expertise
effective that date. This prompted petitioners to that is characteristic of the cockfight gambling,"
file a complaint for illegal dismissal against and were never given by respondents any tool
respondents. needed for the performance of their work.
Respondents on their answer denied that

petitioners were their employees and alleged that
they were associates of respondents’ independent
contractor, Tomas Vega. Respondents claimed that
petitioners have no regular working time or day
and they are free to decide for themselves whether
to report for work or not on any cockfighting day.
Issue: Whether an employer- employee

relationship exists between herein Petitioners and
Respondents?
Held: No, petitioners are not employees of

respondents, since their relationship fails to pass
the four-fold test of employment: (1) the selection
and engagement of the employee; (2) the payment
Labor Relations 40
TEMIC AUTOMOTIVE PHILIPPINES, INC., v. arbitration decision: “As forwarders they act as
TEMIC AUTOMOTIVE PHILIPPINES, INC. travel agents for cargo. They have the expertise
EMPLOYEES UNION-FFW that allows them to prepare and process the
G.R. No. 186965 documentation and perform related activities
December 23, 2009 pertaining to international shipments. As an
Brion, J. analogy, freight forwarders have been called travel
agents for freight.”
Facts: By practice, the petitioner contracts out
some of the work in the warehouse department, Significantly, both the voluntary arbitrator
specifically those in the receiving and finished and the CA recognized that the petitioner was
goods sections, to three independent service within its right in entering the forwarding
providers or forwarders. The regular employees of agreements with the forwarders as an exercise of
the petitioner and those of the forwarders share its management prerogative. The petitioner’s
the same work area and use the same equipment, declared objective for the arrangement is to
tools and computers all belonging to the petitioner. achieve greater economy and efficiency in its
operations.
This arrangement gave rise to a union
grievance on the issue of the scope and coverage
of the collective bargaining unit, specifically to the
question of “whether or not the functions of the
forwarders’ employees are functions being
performed by the regular rank-and-file employees
covered by the bargaining unit.”
Issue: Whether the company validly contracted out

or outsourced the services involving forwarding,
packing, loading and clerical activities related
thereto?
Held: Yes, the voluntary arbitration decision itself

established, without objection from the parties,
the description of the work of forwarding as a basic
premise for its ruling. To quote the voluntary
Labor Relations 41
JOSE Y. SONZA v. ABS-CBN BROADCASTING control the employee on the means and methods
CORPORATION by which the work is accomplished.
G.R. No. 138051
June 10, 2004 Applying the control test to the present
Carpio, J. case, we find that SONZA is not an employee but
an independent contractor. The control test is the
Facts: Respondent ABS-CBN signed an Agreement most important test our courts apply in
with the Mel and Jay Management and distinguishing an employee from an independent
Development Corporation. ABS-CBN was contractor.
represented by its corporate officers while MJMDC
was represented by SONZA. SONZA wrote a letter
to ABS-CBNs President expressing his intent to
rescind their Agreement but Sonza reserves the
right to seek recovery of the other benefits under
said Agreement. Prior to the said letter, Sonza
already resigned.
SONZA filed a complaint against ABS-CBN

before the Department of Labor and Employment.
SONZA complained that ABS-CBN did not pay his
salaries. ABS-CBN filed a Motion to Dismiss on the
ground that no employer-employee relationship
existed between the parties.
Issue: Whether an employer-employee relationship

existed between petitioner Sonza and respondent
ABS-CBN?
Held: No, the elements of an employer-employee

relationship are: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employers power to
Labor Relations 42
ABS-CBN BROADCASTING CORPORATION v. reason being that a customary appointment is not

MARLYN NAZARENO indispensable before one may be formally declared
G.R. No. 164156 as having attained regular status. Under Article 280
September 26, 2006 of the Labor Code.
Callejo Sr, J.
The primary standard, therefore, of
Facts: Petitioner employed respondents Nazareno, determining regular employment is the reasonable
Gerzon, Deiparine, and Lerasan as production connection between the particular activity
assistants. Petitioner and the ABS-CBN Rank-and- performed by the employee in relation to the usual
File Employees executed a Collective Bargaining trade or business of the employer. The test is
Agreement. However, since petitioner refused to whether the former is usually necessary or
recognize PAs as part of the bargaining unit, desirable in the usual business or trade of the
respondents were not included to the CBA. employer. The connection can be determined by
Respondents filed a Complaint for Recognition of considering the nature of work performed and its
Regular Employment Status. relation to the scheme of the particular business or
trade in its entirety.
Petitioner ABS-CBN contends that
respondents are considered as its talents, hence,
not regular employees of the broadcasting
company. Petitioner claims that the functions
performed by the respondents are not at all
necessary, desirable, or even vital to its trade or
business.
Issue: Whether respondents were regular

employees of petitioner?
Held: Yes, respondents were regular employees of

petitioner. 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
Labor Relations 43
Farley Fulache et al v. ABS-CBN ABS-CBN forgot that it had an existing CBA

G.R. No. 183810 with a union, which agreement must be respected
January 21, 2010 in any move affecting the security of tenure of
Brion, J. affected employees. It similarly forgot that an
exercise of management prerogative can be valid
Facts: Petitioners filed two separate complaints for only if it is undertaken in good faith and with no
regularization, unfair labor practice and several intent to defeat or circumvent the rights of its
money claims against ABS-CBN. That ABS-CBN employees under the laws or under valid
executed a collective bargaining agreement agreements.
considering them temporary employees, in
violation of the Labor Code. That they had already
rendered more than a year of service in the
company and, therefore, should have been
recognized as regular employees. ABS-CBN alleged
these contracted persons are called talents and are
considered independent contractors paid in a pre-
arranged talent fee taken from the budget of a
particular program. Their contracts are terminated
once the program is completed. That talents were
not entitled to regularization in these capacities.
Issue: Whether petitioners were illegally

dismissed?
Held: Yes, their dismissal was unjust and in bad

faith since it dismissed the petitioners already
recognized as regular employees for refusing to
sign up with its service contractor. ABS-CBN took
matters into its own hands and terminated the
petitioners services, cited redundancy as an
exercise of its management prerogative.
Labor Relations 44
NELSON BENIGNO v. ABS-CBN most crucial and determinative indicator of the

G.R. No. 199166 said relationship.
April 20, 2015
Perez, J. Under this test, an employer-employee
relationship is said to exist where the person for
Facts: Petitioners filed against Respondents a whom the services are performed reserves the
complaint for regularization before the NLRC's right to control not only the end result but also the
Arbitration branch. In support of their complaint, manner and means utilized to achieve the same.
Petitioners claimed that they worked under the
direct control of Respondent Villafuerte - they Notwithstanding the nomenclature of their
were mandated to wear company IDs, they were Talent Contracts and or Project Assignment Forms
provided the necessary equipment, they were and the terms and condition embodied therein,
informed about the news to be covered the petitioners are regular employees of ABS-CBN. As
following day, and they were bound by the cameramen, editors and reporters, it appears that
company’s policy on attendance and punctuality. Petitioners were subject to the control and
supervision of Respondents which provided them
Respondents countered that, pursuant to with the equipment essential for the discharge of
their Talent Contracts and Project Assignment their functions.
Forms, Petitioners were hired as talents to act as
reporters, editors and/or cameramen.
Respondents further claimed they never imposed
control as to how Petitioners discharged their
duties. At most, they were briefed regarding the
general requirements of the project to be
executed.
Issue: Whether Petitioners are regular employees

of Respondents?
Held: Yes, of the criteria to determine whether

there is an employer-employee relationship, the
so-called "control test" is generally regarded as the
Labor Relations 45
INSULAR LIFE ASSURANCE CO v. NATIONAL LABOR should, however, be obvious that not every form of
RELATIONS COMMISSION control that the hiring party reserves to himself
G.R. No. 84484 over the conduct of the party hired in relation to
November 15, 1989 the services rendered may be accorded the effect
of establishing an employer-employee relationship
Narvasa, J.
between them in the legal or technical sense of the
term.
Facts: Petitioner Insular Life entered into a contract
with respondent Basiao where the latter is
authorized to solicit for insurance policies.
Sometime later, the parties entered into another
contract which caused Basiao to organize an
agency in order to fulfill its terms. The contract
being subsequently terminated by petitioner,
Basiao sued the latter which prompted also for the
termination of their engagement under the first
contract.
Basiao thus filed before the Ministry of

Labor seeking to recover alleged unpaid
commissions. Petitioner contends that Basiao is not
an employee but an independent contractor for
which they have no obligation to pay said
commissions.

existed between petitioner and Basiao?
Held: No, in determining the existence of

employer-employee relationship, the following
elements are generally 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 employees’ conduct. It
Labor Relations 46
GREGORIO V. TONGKO v. whenever the existence of an employment

THE MANUFACTURERS LIFE INSURANCE CO. relationship is in dispute, four elements constitute
G.R. No. 167622 the reliable yardstick: (a) the selection and
June 29, 2010 engagement of the employee; (b) the payment of
BRION, J. wages; (c) the power of dismissal; and (d) the
employer’s power to control the employee’s
Facts: The contractual relationship between conduct.
Tongko and Manulife had two basic phases. The
first phase began on July 1, 1977, under a Career In the case at bar, the absence of evidence
Agent’s Agreement, which provided that “the showing Manulife’s control over Tongko’s
Agent is an independent contractor. The second contractual duties points to the absence of any
phase started in 1983 when Tongko was named employer-employee relationship between Tongko
Unit Manager in Manulife’s Sales Agency and Manulife. In the context of the established
Organization. Metro North Sales Managers evidence, Tongko remained an agent all along;
Meeting expressing dissatisfaction of Tongko’s although his subsequent duties made him a lead
performance in their agent recruiting business. On agent with leadership role, he was nevertheless
December 18, 2001, de Dios wrote Tongko a letter only an agent whosebasic contract yields no
which served as notice of termination of his Agency evidence of means-and-manner control.
Agreement with the company. Tongko filed an
illegal dismissal complaint with the National Labor
Relations Commission alleging that despite the
clear terms of the letter terminating his Agency
Agreement, that he was Manulife’s employee
before he was illegally dismissed.

existed between Tongko and Manulife?
Held: No, in the determination of whether an

employer-employee relationship exists between 2
parties, this court applies the four-fold test to
determine the existence of the elements of such
relationship. Jurisprudence is firmly settled that
Labor Relations 47
RAMY GALLEGO v. BAYER PHILIPPINES Held: No, the Court finds substantial evidence that
G.R. No. 179807 Product Image is a legitimate job contractor. This is
July 31, 2009 evidenced by a Certificate of Registration.
Carpio Morales, J.
The DOLE certificate having been issued by
Facts: Ramy Gallego was contracted in April 1992 a public officer, it carries with it the presumption
by Bayer Philippines, Inc. as crop protection that it was issued in the regular performance of
technician. Petitioner’s employment with Bayer official duty. Petitioner’s bare assertions fail to
came to a halt, prompting him to seek employment rebut this presumption.
with another company. Bayer eventually
reemployed petitioner, however, in 1997 through Further, since the DOLE is the agency
Product Image and Marketing Services, Inc. of primarily responsible for regulating the business of
which respondent Edgardo Bergonia was the independent job contractors, the Court can
President and General Manager petitioner alleges presume, in the absence of evidence to the
that he was directed to submit a resignation letter, contrary, that it had thoroughly evaluated the
but he refused. Hence petitioner instituted a requirements submitted by Product Image before
complaint for illegal dismissal with the National issuing the Certificate of Registration.
Labor Relations Commission against herein
respondents.
Respondents BAYER and Guillermo denied

the existence of an employer-employee
relationship between Bayer and petitioner. They
added that as an independent contractor, Product
Image retained the exclusive power of control over
petitioner.
Issue: Whether Product Image is a labor-only

contractor and BAYER should be deemed
petitioner’s principal employer?
Labor Relations 48
COCA COLA BOTTLERS INC v. DELA CRUZ have substantial capital or investment in the form
G.R. No. 184977 of tools, equipment, machineries, work premises,
December 7, 2009 among others, and the workers recruited and
Brion, J. placed by such persons are performing activities
which are directly related to the principal business
Facts: Respondents Dela Cruz et.al. filed complaints of such employer.
for regularization with money claims against Coca-
Cola Bottlers. The respondents alleged they are Peerless and Excellent were mere suppliers
route helpers who go from the Coca- Cola sales of labor who had no sufficient capitalization and
offices or plants to customer outlets, and doing equipment to undertake sales and distribution of
such, their jobs are necessary and desirable in its softdrinks as independent activities separate from
main business. Coca-cola, the petitioner, the manufacture of softdrinks, and who had no
contended that it entered into contracts of services control and supervision over the contracted
with Peerless and Excellent Partners to provide personnel. Consequently, the contracted
allied services and that the contractors shall pay personnel, engaged in component functions in the
the salaries of all personnel assigned to the main business of the company under the latter’s
petitioner. It claimed that its main business is supervision and control, cannot but be regular
softdrinks manufacturing and the respondents’ company employees.
tasks of sale and distribution are not part of the
manufacturing process.
Issue: Whether Excellent and Peerless were labor-

only contractors?
Held: Yes, Article 106 which provides: “Whenever,

an employer enters into a contract with another
person for the performance of the former’s work,
the employees of the contractor and of the latter’s
subcontractor shall be paid in accordance with the
provisions of this Code.”
There is “labor- only” contracting where the

person supplying workers to an employer does not
Labor Relations 49
COCA-COLA BOTTLERS PHILS., INC. v. ALAN M. intermediary shall be considered merely as an

AGITO agent of the employer who shall be responsible to
G.R. No. 179546 the workers in the same manner and extent as if
February 13, 2009 the latter were directly employed by him.
Chico- Nazario, J.
A legitimate job contract, wherein an
Facts: Agito, et al. are salesmen assigned at the employer enters into a contract with a job
Lagro Sales Office of Coca-Cola for a number of contractor for the performance of the formers
years but were not regularized. Their employment work, is permitted by law. Thus, the employer-
was terminated without just cause and due employee relationship between the job contractor
process. They filed complaints against Coca-Cola, and his employees is maintained.
Interserve, Peerless Integrated Services, Inc. Better
Builders, Inc., and Excellent Partners, Inc. However, On the other hand, labor-only contracting is
they failed to state a reason for filing complaints an arrangement wherein the contractor merely
against Interserve, Peerless, Better Builders and acts as an agent in recruiting and supplying the
Excellent Partners. principal employer with workers for the purpose of
circumventing labor law provisions setting down
Coca-Cola averred that Agito, et al. were the rights of employees. It is not condoned by law.
employees of Interserve who were tasked to
perform contracted services in accordance with the
provision of the Contract of Services.
Issue: Whether Interserve is a legitimate job

contractor?
Held: There is labor-only contracting where the

person supplying workers to an employee does not
have substantial capital or investment in the form
of tools, equipment, machineries, work premises,
among others, and the workers recruited and
placed by such persons are performing activities
which are directly related to the principal business
of such employer. In such cases, the person or
Labor Relations 50
DULCE M. ABANILLA v. petitioners invocation of the CBA, in justifying the

COMMISSION ON AUDIT receipt by the MCWD personnel of benefits and
G.R. No. 142347 privileges, is utterly misplaced. Thus, we sustain
August 25, 2005 the disallowance by respondent COA.
Sandoval- Gutierrez, J.
In government employment, however, it is
Facts: Pursuant to Presidential Decree 198 or the the legislature and, where properly given
Provincial Water Utilities Act of 1973 a local water delegated power, the administrative heads of
district was organized as a government-owned government which fix the terms and conditions of
corporation with original charter. Subsequently, employment. And this is effected through statutes
MCWD, through its Board of Directors, issued the or administrative circulars, rules, and regulations,
following Resolutions giving benefits and privileges not through collective bargaining agreements.
to its personnel, one of whom is Dulce M. Abanilla.
An audit team headed by Bernardita T. Jabines of

the COA Regional Office No. VII at Cebu City,
conducted an audit of the accounts and
transactions of MCWD. Thereafter, the Regional
Director sent MCWD several notices disallowing
the benefits. Aggrieved, petitioner interposed an
appeal to respondent COA at Quezon City. She
cited COA Memorandum Circular No. 002-94
providing that all benefits provided under the duly
existing CBAs entered into.
Issue: Whether COA acted with grave abuse of

discretion in disallowing the benefits and privileges
and contravened the Labor Code provisions on
non-diminution of benefits?
Held: No, in light of this Court’s ruling in Davao City

Water District that the officers and employees of a
water district are covered by the Civil Service Law,
Labor Relations 51
LUZ LUMANTA v. NATIONAL LABOR RELATIONS, distinguished from corporations organized under
COMMISSION and FOOD TERMINAL, INC., our general incorporation statute the Corporation
G.R. No. 82819 Code.
February 8, 1989
Feliciano, J. However, in the case at bar, since 1980, FTI
is in the category of "government-owned or
Facts: Petitioner Luz Lumanta, joined by fifty-four controlled corporations." It served as the
other retrenched employees, filed a complaint for marketing arm of the National Grains Authority
unpaid retrenchment or separation pay against (now known as the National Food Authority). FTI
private respondent Food Terminal, Inc.. Private was previously a privately owned enterprise,
respondent FTI moved to dismiss the complaint on created and organized under the general
the ground of lack of jurisdiction. It argued that incorporation law, with the corporate name
being a government-owned and controlled "Greater Manila Food Terminal Market, Inc."
corporation, its employees are governed by the
Civil Service Law not by the Labor Code, and that Because respondent FTI is government-
claims arising from employment fall within the owned and controlled corporation without original
jurisdiction of the Civil Service Commission and not charter, it is the Department of Labor and
the Department of Labor and Employment. Employment, and not the Civil Service Commission,
which has jurisdiction over the dispute.
Issue: Whether a labor law claim against a
government-owned and controlled corporation
falls within the jurisdiction of the Department of
Labor and Employment?
Held: Yes, the Court, in National Service

Corporation v. National Labor Relations
Commission quoting extensively from the
deliberations of the 1986 Constitutional
Commission in respect of the intent and meaning
of the new phrase “with original charter,” in effect
held that government-owned and controlled
corporations with original charter refer to
corporations chartered by special law as
Labor Relations 52
SAN MIGUEL BREWERY SALES FORCE UNION v. So long as a company's management

HON. BLAS F. OPLE prerogatives are exercised in good faith for the
G.R. No. L-53515 advancement of the employer's interest and not
February 8, 1989 for the purpose of defeating or circumventing the
Grino- Aquino, J. rights of the employees under special laws or
under valid agreements, this Court will uphold
Facts: A collective bargaining agreement was them. San Miguel Corporation's offer to
entered into by petitioner San Miguel Corporation compensate the members of its sales force who
Sales Force Union and the private respondent, San will be adversely affected by the implementation of
Miguel Corporation. The company introduced a the CDS by paying them a so-called "back
marketing scheme known as the "Complementary adjustment commission" to make up for the
Distribution System" whereby its beer products commissions they might lose as a result of the CDS
were offered for sale directly to wholesalers proves the company's good faith and lack of
through San Miguel's sales offices. intention to bust their union.
The labor union filed a complaint for unfair

labor practice in the Ministry of Labor, with a
notice of strike on the ground that the CDS was
contrary to the existing marketing scheme whereby
the Route Salesmen were assigned specific
territories within which to sell their stocks of beer,
and wholesalers had to buy beer products from
them, not from the company.
Issue: Whether the CDS is a valid exercise of

management prerogative?
Held: Yes, public respondent was correct in holding

that the CDS is a valid exercise of management
prerogatives. Every business enterprise endeavors
to increase its profits. In the process, it may adopt
or devise means designed towards that goal.
Labor Relations 53
WILTSHIRE FILE CO., INC., v. THE NATIONAL Held: Yes, the employer has no legal obligation to
LABOR RELATIONS keep in its payroll more employees than are
G.R. No. 82249 necessarily for the operation of its business.
February 7, 1991
Feliciano, J. It is of no legal moment that the financial
troubles of the company were not of Ong’s making.
Facts: Upon Ong’s return from a business and Ong cannot insist on the retention of his position
pleasure trip abroad, he was informed by the upon the ground that he had not contributed to
President of Wiltshire that his services were being the financial problems of Wiltshire. The
terminated. Ong tried to get an explanation from characterization of Ong’s services as no longer
management of his dismissal but to no avail and necessary or sustainable, and therefore properly
subsequently received from the company's security terminable, was an exercise of business judgment
guard a letter which formally informed him that his on the part of petitioner company. The wisdom or
services were being terminated upon the ground of soundness of such characterization or decision was
redundancy. not subject to discretionary review on the part of
the Labor Arbiter nor of the NLRC so long, of
Ong filed a complaint before the Labor course, as violation of law or merely arbitrary and
Arbiter for illegal dismissal alleging that his position malicious action is not shown. It should also be
could not possibly be redundant because nobody in noted that the position held by private respondent,
the company was then performing the same duties Sales Manager, was clearly managerial in character.
and that his remarkable performance as Sales In D.M. Consunji, Inc. v. National Labor Relations
Manager was the reason why the Company had an Commission,5 the Court held:
unprecedented increase in domestic market share
the preceding year. Wiltshire alleged that the An employer has a much wider discretion in
termination of respondent's services was a cost- terminating the employment relationship of
cutting measure. managerial personnel as compared to rank and file
employees. This is not to say that the employee
Issue: Whether the termination of Ong on the may not contest the reality or good faith character
exercise of Wiltshire’s management prerogative is of the retrenchment or redundancy asserted as
legal? grounds for termination of services. The
appropriate forum for such controversion would,
however, be the Department of Labor and
Employment.
Labor Relations 54

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Labor Relations 1

Case Digests: Prelims Coverage

In a Memorandum, respondent was

BEST WEAR GARMENTS v. Held: No, the respondents are not

LEGEND HOTEL v. HERNANI S. REALUYO employee. He was undeniably employed as a

HACIENDA LEDDY v. PAQUITA VILLEGAS

Held: Yes, in Integrated Contractor and Plumbing

Smart Communications v. Astorga, Held: Yes, redundancy in an employer’s personnel

Thereafter, Margallo averred that De Leon

Issue: Whether Margallo is entitled to the

Held: Yes, the principle against unjust enrichment

On the other hand, private respondents

Issue: Whether the Labor Arbiter has the

Held: Yes, the jurisdiction of Labor Arbiters is

Issue: Whether the amount of backwages and

Held: Yes because contrary to the bank’s

October 20, 2010 intra-corporate controversy which arises between

Brion, J. a stockholder and a corporation. In the context of

Locsin filed a complaint for illegal dismissal

Issue: Whether Locsin’s position as Executive Vice-

Held: Yes, even as Executive Vice-President and

Given Locsin’s status as a corporate officer,

Sangu Philippine claims that Real

Issue: Whether the petitioner’s complaint for

Held: No. The present case is not an intra-

In Speed Distribution Inc. v. Court of

Issues: Whether the case instituted by Cosare was

Held: No, an intra-corporate controversy, which

Issue: Whether the regular courts have jurisdiction

Respondent court erred in holding that the

Issue: Whether the regular courts have jurisdiction

Held: Yes, the regular courts have jurisdiction over

EDUARDO G. EVIOTA v. Court of Appeals Not every controversy or money claim by

Issue: Whether court has the jurisdiction of the

Held: Yes, case law has it that the nature of an

Issue: Whether retrenchment is within the ambit

Held: Yes, the right of management to dismiss

Out of its concern for those with less

MANILA ELECTRIC COMPANY v. The employer has the ultimate

Meralco filed this petition arguing that an

Issue: Whether contracting out of services is an

Held: Yes, an employer is allowed to contract out

Aliviado v. Procter and Gamble Where labor-only contracting exists, the

Issue: Whether P and G is the employer of

Held: Clearly, the law and its implementing rules

Considering that SAPS has no substantial

GOYA, INC., v. GOYA, INC. recall of work, presupposing the existence of

Issue: Whether the hiring of contractual employees

Held: Yes, the company’s engagement of Peso was

Issue: Whether Zytron and A.C. Sicatare labor-only

Held: Yes, in labor-only contracting, the law creates

Alilin v. Petron Generally the contractor is presumed to be

Petron, on the other hand, maintained that

Issue: Whether Petron is the real Employer of the

Held: Yes, in distinguishing between Labor-only

Issue: Whether Petitioner is the real Employer of

Corporation v. NLRC substantial capital, investment or assets to perform

Issue: Whether Universal is a labor-only contractor,

Held: Yes, the presumption is that a contractor is a

Since neither petitioner nor Universal was

The day after Arlene signed the non-

Issue: Whether Arlene was a regular employee not

Held: Yes, Arlene is not an independent contractor.