Labor Standards

ARTICLE XIII
Social Justice and Human Rights
Labor
SECTION 3. The State shall afford full protection to labor,
local and overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy
and decision-making processes affecting their rights and
benefits as may be provided by law.
The State shall promote the principle of shared responsibility
between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and
shall enforce their mutual compliance therewith to foster
industrial peace.

The State shall regulate the relations between workers and

employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns on investments, and to expansion and growth.
Uy v Centro - October 19, 2011 (Illegal Dismissal)
Facts: Petitioner Jhorizaldy Uy was hired by respondent Centro
Ceramica Corporation as full-time sales executive on March 21,
1999 and became a regular employee on May 1, 2000.
On March 18, 2002, petitioner filed a complaint for illegal
dismissal against the company, its President Ramonita Sy (Sy)
and Vice-President Milagros Uy-Garcia (Garcia)
On Feb. 19, 2002, petitioner was informed by his supervisor
Richard Agcaoili, that he will be moved to a different position in
the marketing department. His friends warned him saying that
"mainit ka kay Ms. Garcia.", Later on, he was summoned by Sy
and Garcia for a closed-door meeting during which Sy informed
him of the termination of his services due to "insubordination"
and advised him to turn over his samples and files immediately.
On Feb. 21, he was summoned again by Sy, but prior to to this,
he was informed by Agcaoili that the Sy spouses will give him
all that is due to him plus goodwill money to settle everything.
However, during his mieeting with Sy, he asked for his
termination paper and thereupon Sy told him that it will be
given to him. She added that "pag-isipan mo ang gagawin mo
dahil kilala mo naman kami we are powerful."
On Feb. 22, 2002, Petitioner turned over the campany samples,
accounts and receivables to Agcaoili. Thereafter, he did not
report for work anymore.
On March 6, 2002, his co-worker presented to him at his
apartment that he has a Memo, noting that he failed to meet the
quota for sales executive, it was dated Feb. 21, 2002. asking him
to explain within 24hrs upon receipt on why the company
should not terminate his contract of employment. As to his
alleged low output, he was surprised considering that on
January, he was informed by his supervisor that he ranked 2nd
in sales, though all of the sales people did not meet the P1.5m
sales quota.
On Mar. 13, 2002, another memo was sent to him, it is a notice
of charge of absence without leave. It was stated that he failed to

report for work since Feb. 22, which will result to hold his
monetary entitlements such as salary, commission and others.
Few days after, he filed a complaint of his illegal dismissal
against his employer in NLRC.
As per the respondents' defense, they alleged that Uy has
voluntarily left his job after he known that not all his
commission will be given to him since some of them are not yet
delivered. The witnesses corroborated with all the statements of
the respondents.
The Labor Arbiter ruled in favor of the respondent, wherein they
appreciated that the petitioner who opted not to report for work
because he could not accept his possible transfer to another
department.
The NLRC reversed the Arbiter's ruling. Wherein they found
questionable circumstances which pertains to the P1.5m quota.
He was singled out even if all of them failed in meeting such
quota.
The CA reversed the NLRC's decision wherein the CA
appreciated that he asked for his dismissal from his superiors.
Issue: Whether petitioner was dismissed by the respondents or
voluntarily severed his employment by abandoning his job.
Held: The former was upheld. The court granted his petition
wherein the NLRC's finding of illegal dismissal is supported by
totality of evidence and more consistent with logic and ordinary
human experiance than the common finding of the CA and
Labor Arbiter that petitioner informally severed his employment
relations with the company.
Resignation is defined as"the voluntary act of employees who
are compelled by personal reasons to disassociate themselves
from their employment. It must be done with the intention of
relinquishing an office, accompanied by the act of
abandonment."[15] In this case, the evidence on record suggests
that petitioner did not resign; he was orally dismissed by Sy. It
is this lack of clear, valid and legal cause, not to mention due
process, that made his dismissal illegal, warranting
reinstatement and the award of backwages.
When there is no showing of a clear, valid and legal cause for
the termination of employment, the law considers it a case of
illegal dismissal. Furthermore, Article 4 of the Labor Code
expresses the basic principle that all doubts in the interpretation
and implementation of the Labor Code should be interpreted in
favor of the workingman.
DE CASTRO V. LIBERTY BROADCASTING NETWORK
(GR NO. 165153)
FACTS: Petitioner, Carlos de Castro, worked as a chief building
administrator at Liberty Broadcasting Network, Inc. (LBNI).
Thereafter, LBNI dismissed de Casto on the grounds of serious
misconduct, fraud and willful breach of trust. Aggrieve, de
Castro filed a complaint for illegal dismissal. The Labor Arbiter
rendered a decision holding the LBNI liable for illegal dismissal
of de Castro. However, the decision of Labor Arbiter was first
reversed by the NLRC but on de Castros motion for
reconsideration, the NLRC reinstated the LAs decision. Upon
appeal to the CA, the CA reversed the NLRCs decision and
held that de Castros dismissal was based on valid grounds.
However, the Court took notice that de Castros dismissal was
based on unsubstantiated charges. Hence, this appeal.
ISSUE: Whether or not the dismissal of de Castro was lawful

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Labor Standards
HELD: No. The Court ruled that the grounds that LBNI
invoked for de Castro's dismissal were, at best, doubtful, based
on the evidence presented. Aying, a contractor, earlier executed
an affidavit stating that de Castro asked him for commission, but
in his second affidavit, he recanted his statement and exonerated
de Castro.The other witnesses, Niguidula and Balais, were
LBNI employees who resented de Castro. We noted that de
Castro had not stayed long in the company and had not even
passed his probationary period when the acts charged allegedly
took place. We found this situation contrary to common
experience, since new employees have a natural motivation to
make a positive first impression on the employer, if only to
ensure that they are regularized. Hence, this doubts should be
interpreted in de Castros favor. Thus, under Article 4 of the
Labor Code, all doubts in the implementation and
interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of
labor. Hence, the Court held that between a laborer and his
employer, doubts reasonably arising from the evidence or
interpretation of agreements and writing should be resolved in
the former's favor. Therefore, the motion for reconsideration by
LBNI was denied.
PEAFLOR vs OUTDOOR ; G.R. No. 177114 ; January 21,
2010
FACTS: Manolo A. Peaflor was hired on September 2, 1999 as
probationary Human Resource Department (HRD) Manager of
respondent Outdoor Clothing Manufacturing Corporation. Two
staff members work with him to assist him in his functions.
He claimed his relationship with the company went well during
the first few months but his woes began when the VP for
Operations (Edgar Lee) left the company after a big fight with
Chief Corporate Officer Nathaniel Syfu. Because of his close
association with Lee, Peaflor claimed that he was among those
who bore Syfus ire.
Outdoor Clothing downsized and Peaflor alleged that his
department had been singled out, as his two staff members were
dismissed, making him a one-man department. When an
employee suffered injuries in an accident, he had to work
outside office premises to undertake this task. As he was acting
on company's orders, he was surprised when the company
deducted 6 days salary corresponding to the time he assisted the
employee. And on 10 March 2000, Syfu had appointed
Nathaniel Buenaobra as the new HRD Manager. He tried to
clarify the matter but was unable to do so. Peaflor claimed that
he had no option but to resign. He submitted a resignation letter
effective on March 15, 2000.
Peaflor then filed a complaint for illegal dismissal with the labor
arbiter, claiming that he had been constructively dismissed.
Outdoor Clothing denied the allegation. The labor arbiter found
that Peaflor had been illegally dismissed, however the NLRC
apparently found Outdoor Clothings submitted memoranda
sufficient to overturn the labor arbiters decision. CA affirmed
the NLRCs decision, stating that Peaflor failed to present
sufficient evidence supporting his claim that he had been
constructively dismissed.
PARTIES ARGUMENTS: Peaflor insists that, contrary to the
findings of the NLRC and the CA, he had been constructively
dismissed from his employment with Outdoor Clothing. He
alleges that the dismissal of his two staff members, the
demeaning liaison work he had to perform as HRD Manager, the
salary deduction for his alleged unauthorized absences, and the
appointment of Buenaobra as the new HRD manager even
before he tendered his resignation, were clear acts of

discrimination that made his continued employment with the

Outdoor Clothing unbearable. He was thus forced to resign.
Outdoor Clothing claims that Peaflor voluntarily resigned from
his work and his contrary allegations were all unsubstantiated.
The HRD was not singled out for retrenchment, but was simply
the first to lose its staff members because the company had to
downsize. Thus, all HRD work had to be performed by Peaflor.
Instead of being grateful that he was not among those
immediately dismissed due to the companys retrenchment
program, Peaflor unreasonably felt humiliated in performing
work that logically fell under his department; insisted on having
a full staff complement; absented himself from work without
official leave; and demanded payment for his unauthorized
absences.
ISSUE: Whether or not Peaflor's resignation was forced,
making it a constructive dismissal (which is equivalent to illegal
dismissal).
HELD: Yes. The Court held that Peaflor indeed learned of the
appointment of Buenaobra only on March 13, 2000 and reacted
to this development through his resignation letter after realizing
that he would only face hostility and frustration in his working
environment.
The first is the settled rule that in employee termination
disputes, the employer bears the burden of proving that the
employees dismissal was for just and valid cause. That Peaflor
did indeed file a letter of resignation does not help the
company's case as, other than the fact of resignation, the
company must still prove that the employee voluntarily
resigned. There can be no valid resignation where the act was
made under compulsion or under circumstances approximating
compulsion, such as when an employee's act of handing in his
resignation was a reaction to circumstances leaving him no
alternative but to resign. In sum, the evidence does not support
the existence of voluntariness in Peaflor's resignation.
Another basic principle is that expressed in Article 4 of the
Labor Code that all doubts in the interpretation and
implementation of the Labor Code should be interpreted in favor
of the workingman. This principle has been extended by
jurisprudence to cover doubts in the evidence presented by the
employer and the employee. As shown above, Peaflor has, at
very least, shown serious doubts about the merits of the
company's case, particularly in the appreciation of the clinching
evidence on which the NLRC and CA decisions were based. In
such contest of evidence, the cited Article 4 compels the Court
to rule in Peaflor's favor. Thus, Peaflor was constructively
dismissed given the hostile and discriminatory working
environment he found himself in, particularly evidenced by the
escalating acts of unfairness against him that culminated in the
appointment of another HRD manager without any prior notice
to him. Where no less than the company's chief corporate officer
was against him, Peaflor had no alternative but to resign from
his employment.
Last, the Court have repeatedly given significance in
abandonment and constructive dismissal cases to the employees
reaction to the termination of his employment and have asked
the question: is the complaint against the employer merely a
convenient afterthought subsequent to an abandonment or a
voluntary resignation? Peaflor sought almost immediate official
recourse to contest his separation from service through a
complaint for illegal dismissal. This is not the act of one who
voluntarily resigned; his immediate complaints characterize him
as one who deeply felt that he had been wronged.

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Labor Standards
NORKIS UNION v. NORKIS TRADING - G.R. No. 157098
- June 30, 2005
FACTS: Herein parties entered into a Collective Bargaining
Agreement (CBA) effective from August 1, 1994 to July 31,
1999.
Sec. 1. Salary Increase. The Company shall
grant a FIFTEEN (P15.00) PESOS per day
increase to all its regular or permanent
employees effective August 1, 1994.
Sec. 2. Minimum Wage Law Amendment. In
the event that a law is enacted increasing
minimum wage, an across-the-board increase
shall be granted by the company according to
the provisions of the law.
On January 27, 1998, a re-negotiation of the CBA was
terminated and pursuant to which a Memorandum of Agreement
was forged between the parties. Pursuant to said Memorandum
of Agreement, the employees received wage increases of P10.00
per day effective August 1, 1997 and P10.00 per day effective
August 1, 1998.
As a result, the agreed P10.00 re-negotiated salary increase
effectively raised the daily wage of the employees to P165.00
retroactive August 1, 1997; and another increase of P10.00,
effective August 1, 1998, raising the employees daily wage to
P175.00.
On March 10, 1998, the Regional Tripartite Wage Productivity
Board (RTWPB) of Region VII issued Wage Order ROVII-06
which established the minimum wage of P165.00.
In accordance with the Wage Order and Section 2, Article XII of
the CBA, petitioner demanded an across-the-board increase.
However, respondent refused and argued that long before the
passage of Wage Order ROVII-06 and by virtue of the
Memorandum of Agreement it entered with herein petitioner,
respondent was already paying its employees a daily wage of
P165.00 per day while the minimum wage at that time was still
P155.00 per day. Also, on August 1, 1998, respondent again
granted an increase from P165.00 per day to P175.00, so that at
the time of the effectivity of Wage Order No. 06 on October 1,
1998 prescribing the new minimum wage of P165.00 per day,
respondents employees were already receiving P175.00 per day.
A preventive mediation complaint was filed by herein petitioner
before the National Conciliation and Mediation Board. In his
decision, public respondent arbitrator found herein respondent
not to have complied with the wage order because the CBA
provision in question is worded and couched in a vague and
unclear manner.
Respondent elevated the case to the CA held that respondent had
sufficiently complied with Wage Order No. ROVII-06. The
Board had opined that since adjustments granted are only to
raise the minimum wage or the floor wage as a matter of policy,
wages granted over the above amount set by this Board is
deemed a compliance.

The employees are not entitled to the claimed salary increase,

simply because they are not within the coverage of the Wage
Order, as they were already receiving salaries greater than the
minimum wage fixed by the Order. Concededly, there is an
increase necessarily resulting from raising the minimum wage
level, but not across-the-board. Indeed, a double burden cannot
be imposed upon an employer except by clear provision of law.
It would be unjust, therefore, to interpret Wage Order No.
ROVII-06 to mean that respondent should grant an across-theboard increase. Such interpretation of the Order is not sustained
by its text.
In the resolution of labor cases, this Court has always been
guided by the State policy enshrined in the Constitution:
social justice and the protection of the working class. Social
justice does not, however, mandate that every dispute should
be automatically decided in favor of labor. In every case,
justice is to be granted to the deserving and dispensed in the
light of the established facts and the applicable law and
doctrine.
The petition is denied.

Sy vs Philippine Transmarine
Facts: Alfonso Sy was hired by Philippine Transmarine Carriers
as Able Seaman (AB) on board M/V Chekiang for the duration
of ten months, with a basic monthly salary of US$512.00.
While the vessel was at the Port of Jakarta, Indonesia, AB Sy
went on shore leave and left the vessel. Later, his cadaver was
found. A forensic pathologist certified that AB Sy's death was an
accident due to drowning, and that there was trace of alcohol in
his urine.
AB Sy's body was repatriated to the Philippines. Susana R. Sy,
widow of AB Sy, demanded from respondents payment of her
husband's death benefits and compensation. Respondents denied
such claim, since AB Sy's death occurred while he was on a
shore leave, hence, his death was not work-related and,
therefore, not compensable.

Petitioner argues that AB Sy's death happened in the course of

employment, because if not for his employment he could be
somewhere else and was not on shore leave; and that he would
not be in the riverside of Jakarta, Indonesia and had not
answered the call of nature and fell into the river and drowned.
LA- Petition granted as death occurred during the term of
contract
NLRC- affirmed
CA- NLRC reversed
Issue: whether petitioner is entitled to death compensation
benefits from respondents

ISSUE: WON respondent violated the CBA in its refusal to

grant its employees an across-the-board increase as a result of
the passage of Wage Order No. ROVII-06

Held: No. To be entitled for death compensation benefits from

the employer, the death of the seafarer (1) must be work-related;
and (2) must happen during the term of the employment
contract.

HELD: No. The Court ruled that the Wage Order was intended
to fix a new minimum wage only, not to grant across-the-board
wage increases to all employees in Region VII.

Under the 2000 POEA Amended Employment

Contract, work-related injury is defined as an injury(ies)

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Labor Standards
resulting in disability or death arising out of and in the course of
employment. Thus, there is a need to show that the injury
resulting to disability or death must arise (1) out of employment,
and (2) in the course of employment.
The words "arising out of" refer to the origin or cause
of the accident, and are descriptive of its character, while the
words "in the course of" refer to the time, place and
circumstances under which the accident takes place.
As a matter of general proposition, an injury or accident is said
to arise "in the course of employment" when it takes place
within the period of the employment, at a place where the
employee reasonably may be, and while he is fulfilling his
duties or is engaged in doing something incidental thereto.
It is not enough that death occurred during the term of the
employment contract, but must be work-related to be
compensable.
There is a need to show the connection of AB Sy's death with
the performance of his duty as a seaman. As we found, AB Sy
was not in the performance of his duty as a seaman, but was
doing an act for his own personal benefit at the time of the
accident. The cause of AB Sys death at the time he was on
shore leave which was drowning, was not brought about by a
risk which was only peculiar to his employment as a seaman.

Issue: Whether or not HPC is guilty of illegal dismissal

Held: Yes. The Court held that Farrales committed no serious or
willful misconduct or disobedience to warrant his dismissal. To
validly dismiss an employee, the law requires the employer to
prove the existence of any of the valid or authorized causes,
which, as enumerated in Article 282 of the Labor Code, are: (a)
serious misconduct or willful disobedience by the employee of
the lawful orders of his employer or the latters representative in
connection with his work; (b) gross and habitual neglect by the
employee of his duties; (c) fraud or willful breach by the
employee of the trust reposed in him by his employer or his duly
authorized representative; (d) commission of a crime or offense
by the employee against the person of his employer or any
immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.
Farrales lost no time in returning the helmet to Reymar the
moment he was apprised of his mistake by Eric, which proves
that he was not possessed of a depravity of conduct as would
justify HPCs claimed loss of trust in him. Farrales immediately
admitted his error to the company guard and sought help to find
the owner of the yellow helmet, and this only shows that
Farrales did indeed mistakenly think that the helmet he took
belonged to Eric.
If doubts exist between the evidence presented by the employer
and that of the employee, the scales of justice must be tilted in
favor of the latter. Because the HPC failed to provide a clear,
valid and legal cause for termination of employment of Farrales,
the Court considers the case a matter of illegal dismissal.
Serrano vs. Severino Santos, G.R. No. 187698; August 9,
2010 (Art. 82)

Hocheng vs Farrales GR No. 211497

Facts: Farrales is an employee of Hocheng Philippines
Corporation (HPC) and he was a consistent recipient of citations
for outstanding performance, as well as appraisal and year-end
bonuses. On December, 2009, a report reached HPC
management that a motorcycle helmet of an employee, Reymar
Solas, was stolen at the parking lot within its premises. The
footage of the CCTV showed Farrales taking the missing helmet
from a parked motorcycle. Later that day, HPC sent Farrales a
notice to explain his involvement in the alleged theft. Farrales
explained that he borrowed a helmet from his co-worker Eric
Libutan since they reside in the same barangay. They agreed
that Eric could get it at his house. Eric told him that his
motorcycle was black in color. However, he mistakenly took the
helmet of Solas.
HPC then issued a Notice of Termination to Farrales dismissing
him for violation of the HPC Code of Discipline, which
provides that "stealing from the company, its employees and
officials, or from its contractors, visitors or clients," is akin
to serious misconduct and fraud or willful breach by the
employee of the trust reposed in him by his employer or duly
authorized representative, which are just causes for termination
of employment under Article 282 of the Labor Code.
Farrales filed a complaint for illegal dismissal, non-payment of
appraisal and mid-year bonuses, service incentive leave pay and
13th month pay. He also prayed for reinstatement, or in lieu
thereof, separation pay with full backwages, plus moral and
exemplary damages and attorneys fees.

Facts: Petitioner Serrano was hired as bus conductor by

respondent Severino Transit on September 28, 1992. After 14
years of service, petitioner applied for optional retirement. from
the company whose representative advised him that he must first
sign the already prepared Quitclaim before his retirement pay
could be released. As petitioner's request to first go over the
computation of his retirement pay was denied, he signed the
Quitclaim on which he wrote "U.P." (under protest) after his
signature, indicating his protest to the amount of P75,277.45
which he received, computed by the company at 15 days per
year of service.
Petitioner soon after filed a complaint before the Labor Arbiter,
alleging that the company erred in its computation since under
Republic Act No. 7641, otherwise known as the Retirement Pay
Law, his retirement pay should have been computed at 22.5 days
per year of service to include the cash equivalent of the 5-day
service incentive leave (SIL) and 1/12 of the 13th month pay
which the company did not.
The company maintained, however, that the Quitclaim signed by
petitioner barred his claim and, in any event, its computation
was correct since petitioner was not entitled to the 5-day SIL
and pro-rated 13th month pay for, as a bus conductor, he was
paid on commission basis
Labor Arbiter Cresencio Ramos, Jr. ruled in favor of
petitioner, awarding him P116,135.45 as retirement pay
differential, and 10% of the total monetary award as attorney's
fees. This is because under Labor Advisory on Retirement Pay
Law, a covered employee who retires pursuant to RA 7641
shall be entitled to retirement pay equivalent to at least one-half
(1/12) month salary for every year of service (one-half month
salary means fifteen (15) days plus one-twelfth (1/12) of the

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Labor Standards
13th month pay and the cash equivalent of not more than five
(5) days service incentive leaves" unless the parties provide for
broader inclusions), a fraction of at least six (6) months being
considered as one whole year
The National Labor Relations Commission (NLRC) to which
respondents appealed reversed the Labor Arbiter's ruling and
dismissed petitioner's complaint. Citing R & E Transport, Inc. v.
Latag, the NLRC held that since petitioner was paid on purely
commission basis, he was excluded from the coverage of the
laws on 13th month pay and SIL pay, hence, the 1/12 of the 13th
month pay and the 5-day SIL should not be factored in the
computation of his retirement pay.
Petitioner's motion for reconsideration having been denied by
Resolution, he appealed to the Court of Appeals. The appellate
court affirmed the NLRC's ruling. Petitioner's motion for
reconsideration was again denied, hence, the present petition for
review on certiorari
Issue: WON the petitioner is excluded from the coverage of the
laws on 13th month pay and SIL pay, hence, the 1/12 of the 13th
month pay and the 5-day SIL should not be factored in the
computation of his retirement pay.
Held: No. It bears emphasis that under P.D. 851 or the SIL Law,
the exclusion from its coverage of workers who are paid on a
purely commission basis is only with respect to field personnel.
According to Article 82 of the Labor Code, "field personnel"
shall refer to non-agricultural employees who regularly perform
their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty.
This definition is further elaborated in the Bureau of Working
Conditions (BWC), Advisory Opinion to Philippine TechnicalClerical Commercial Employees Association which states that:
If required to be at specific places at specific times, employees
including drivers cannot be said to be field personnel despite
the fact that they are performing work away from the principal
office of the employee.

paid the amount of P75,551.50, representing thirty percent

(30%) of the cost of repair of the damaged buses and that
despite respondents pleas for reconsideration, the same was
ignored by management. After a month, management sent him a
letter of termination.
Because of his illegal dismissal made by the management, the
petitioner instituted a Complaint for Illegal Dismissal with
Money Claims for non-payment of 13th month pay and service
incentive leave pay against Autobus.
On 29 September 2000, based on the pleadings and supporting
evidence presented by the parties, Labor Arbiter Monroe C.
Tabingan promulgated a Decision, he ruled Bautista is entitled
to P78, 117.87 13th month pay payments and P13, 788.05 for
his unpaid service incentive leave pay.
The case was appealed before the National Labor Relations
Commission. NLRC modified the Labor Arbiters ruling. It
deleted the award for 13th Month pay. The court of Appeals
affirmed the NLRC.
The petitioner Auto Bus averred that Bautista is a commissioned
employee and if that is not reason enough that Bautista is also a
field personnel hence he is not entitled to a service incentive
leave. They invoke:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of
five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage.this rule shall apply to all employees
except:
...
(d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged
on task or contract basis, purely commission basis, or those who
are paid in a fixed amount for performing work irrespective of
the time consumed in the performance thereof.
Issue(s):

Autobus vs. Bautista G.R. No. 156367

1. Whether or not respondent is entitled to service incentive

leave;

Facts:
Respondent Antonio Bautista has been employed by the
petitioner Auto Bus Transport Systems Inc. as driver
conductor. He was paid on commission basis, seven percent
(7%) of the total gross income per travel, on a twice a month
basis.
On 03 January 2000, while respondent was driving Autobus No.
114 along Sta. Fe, Nueva Vizcaya, and the bus he was driving
accidentally bumped the rear portion of another bus that owned
also by the company, as the latter vehicle suddenly stopped at a
sharp curve without giving any warning. He claimed that he
bumped the he accidentally bumped the bus as he was so tired
and that he has not slept for more than 24 hours because Auto
Bus required him to return to Isabela immediately after arriving
at Manila. Sad to say as result of the accident, respondent
further alleged that he was not allowed to work until he fully

2. Whether or not the three (3)-year prescriptive period provided

under Article 291 of the Labor Code, as amended, is applicable
to respondents claim of service incentive leave pay.

Held:
1. Yes Bautista is entitled to Service Incentive Leave. The
Supreme Court emphasized that it does not mean that the
respondent was paid on purely commission basis, and that he
will not be entitled to Service Incentive Leave.

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Labor Standards
The first issue shall be resolved is that, in order to resolve the
issue of propriety of the grant of service incentive leave to
respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, field personnel
shall refer to non-agricultural employees who regularly perform
their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty.
Furthermore, as a general rule, [field personnel] are those whose
performance of their job/service is not supervised by the
employer or his representative, the workplace being away from
the principal office and whose hours and days of work cannot be
determined with reasonable certainty; hence, they are paid
specific amount for rendering specific service or performing
specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field
personnel despite the fact that they are performing work away
from the principal office of the employee. Auto Bus Transport
Systems.
Moreover, as observed by the Labor Arbiter and concurred in by
the Court of Appeals:
It is of judicial notice that along the routes that are
plied by these bus companies, there are its inspectors
assigned at strategic places who board the bus and
inspect the passengers, the punched tickets, and the
conductors reports. There is also the mandatory oncea-week car barn or shop day, where the bus is regularly
checked as to its mechanical, electrical, and hydraulic
aspects, whether or not there are problems thereon as
reported by the driver and/or conductor. They too, must
be at specific place as [sic] specified time, as they
generally observe prompt departure and arrival from
their point of origin to their point of destination. In
each and every depot, there is always the Dispatcher
whose function is precisely to see to it that the bus and
its crew leave the premises at specific times and arrive
at the estimated proper time.
In the case at bar, respondent Antonio Bautista is not a field
employee but a regular employee who performs tasks usually
necessary and desirable to the usual trade of petitioners
business. He has a specific route to traverse as a bus driver and
that is a specific place that he needs to be at work. Also through
the inspector, the respondent Antonio Bautista constantly
checking upon him.
Therefore, respondent is entitled to the grant of service incentive
leave.
2. Yes - Article 291 of the Labor Code states that all money
claims arising from employer-employee relationship shall be
filed within three (3) years from the time the cause of action
accrued; otherwise, they shall be forever barred.
In the application of this section of the Labor Code, the pivotal
question to be answered is when the cause of action for money
claims accrues in order to determine the reckoning date of the
three-year prescriptive period.
Correspondingly, it can be conscientiously deduced that the
cause of action of an entitled employee to claim his service
incentive leave pay accrues from the moment the employer
refuses to remunerate its monetary equivalent if the employee
did not make use of said leave credits but instead chose to avail
of its commutation. Accordingly, if the employee wishes to

accumulate his leave credits and opts for its commutation upon
his resignation or separation from employment, his cause of
action to claim the whole amount of his accumulated service
incentive leave shall arise when the employer fails to pay such
amount at the time of his resignation or separation from
employment.
Applying Article 291 of the Labor Code in light of this
peculiarity of the service incentive leave, we can conclude that
the three (3)-year prescriptive period commences, not at the end
of the year when the employee becomes entitled to the
commutation of his service incentive leave, but from the time
when the employer refuses to pay its monetary equivalent
after demand of commutation or upon termination of the
employees services, as the case may be.
David v Macasio G.R. No. 195466
Facts:
Respondent Macasio, employed as butcher in Yiels Hog Dealer
which owned and managed by the petitioner Ariel L. David,
filed before the Labor Arbiter a complaint against to the
petitioner for nonpayment of overtime pay, holiday pay, and 13th
month pay. He also claimed payment for moral and exemplary
damages and attorneys fees as well as the service incentive
leave (SIL).
Macasio also claimed that David exercised effective control and
supervision over his work, pointing out that David: (1) set the
work day, reporting time and hogs to be chopped, as well as the
manner by which he was to perform his work; (2) daily paid his
salary of P700.00, which was increased from P600.00 in 2007,
P500.00 in 2006 and P400.00 in 2005; and (3) approved and
disapproved his leaves.
On the other hand, David claimed that he started his hog dealer
business in 2005 and that he only has ten employees. He alleged
that he hired Macasio as a butcher or chopper on pakyaw or
task basis who is, therefore, not entitled to overtime pay, holiday
pay and 13th month pay pursuant to the provisions of the
Implementing Rules and Regulations (IRR) of the Labor Code.
David pointed out that Macasio: (1) usually starts his work at
10:00 p.m. and ends at 2:00 a.m. of the following day or earlier,
depending on the volume of the delivered hogs; (2) received the
fixed amount of P700.00 per engagement, regardless of the
actual number of hours that he spent chopping the delivered
hogs; and (3) was not engaged to report for work and,
accordingly, did not receive any fee when no hogs were
delivered.
Later on, the Labor Arbiter rendered decision which gave
credence the claim of the petitioner that he engaged Macasio on
pakyaw or task basis. He also concluded that since Macasio
was engaged on pakyaw or task basis, thus, Macasio is not
entitled to overtime, holiday, SIL, and 13th month pay.
Upon the decision of the Labor Arbiter, Macasio raised his
complaint to the NLRC.
Subsequently, NLRC rendered decision affirming the Labor
Arbiters decision. The NLRC observed that David did not
require Macasio to observe an eight-hour work schedule to earn
the fixed P700.00 wage; and that Macasio had been performing
a non-time work, pointing out that Macasio was paid a fixed
amount for the completion of the assigned task, irrespective of
the time consumed in its performance. Since Macasio was paid
by result and not in terms of the time that he spent in the
workplace, Macasio is not covered by the Labor Standards laws

Page 6 of 24

Labor Standards
on overtime, SIL and holiday pay, and 13th month pay under the
Rules and Regulations Implementing the 13th month pay law.
Macasio filed a motion for reconsideration, but sad to say it was
denied by the NLRC. As a result, Macasio elevated his case to
the CA through a petition on certiorari.

(4) David had the right and power to control and supervise.
Therefore, the totality of surrounding circumstances of the
present case sufficiently points to an employer-employee
relationship existing between David and Macasio.
Macasio is engaged on pakyaw or task basis:

Subsequently, CA reversed the NLRCs ruling for having been

rendered with grave abuse of discretion. However, CA agreed
with LA and NLRC that Macasio was a task basis employee. CA
emphasized that as a task basis employee, Macasio is excluded
from the coverage of holiday, and SIL, and 13th month pay only
if he is likewise a field personnel. In this case, the elements
that characterize as field personnel are evidently lacking.
Thus, CA awarded Macasios claim for holiday, SIL and 13th
month pay for three years, with 10% attorneys fees on the total
monetary award. The CA, however, denied Macasios claim for
moral and exemplary damages for lack of basis.
Upon the motion of reconsideration that was denied, petitioner
David filed a petition on certiorari to the Supreme Court. In his
petition, he maintains that Macasios engagement was on a
pakyaw or task basis. Hence, the latter is excluded from the
coverage of holiday, SIL and 13th month pay.

LA, the NLRC and the CA found that Macasio was engaged
or paid on pakyaw or task basis. This factual finding binds the
Court under the rule that factual findings of labor tribunals when
supported by the established facts and in accord with the laws,
especially when affirmed by the CA, is binding on this Court.
A distinguishing characteristic of pakyaw or task basis
engagement, as opposed to straight-hour wage payment, is the
non-consideration of the time spent in working. In a task-basis
work, the emphasis is on the task itself, in the sense that
payment is reckoned in terms of completion of the work, not in
terms of the number of time spent in the completion of work.
Once the work or task is completed, the worker receives a fixed
amount as wage, without regard to the standard measurements
of time generally used in pay computation.
On the issue of Macasios entitlement to holiday, SIL, and
13th month pay:

Issue:
Whether or not the CA correctly found the NLRC in grave abuse
of discretion in ruling that Macasio is entitled to these labor
standards benefits.

The LA dismissed Macasios claims pursuant to Article 94 of

the Labor Code in relation to Section 1, Rule IV of the IRR of
the Labor Code, and Article 95 of the Labor Code, as well as
Presidential Decree (PD) No. 851.

Held:
Yes CA correctly found that NLRC committed a grave abuse
of discretion in ruling that Macasio is not entitled to the labor
standards benefits. The following factors show that NLRC
erroneously did not consider in granting Macasio to the labor
standards benefits,
Macasio is Davids employee
Under the four-fold test of employment relationship, there are
four elements need to be considered the existence of the
employer employee relationship:

The NLRC, on the other hand, relied on Article 82 of the Labor

Code and the Rules and Regulations Implementing PD No. 851.
Uniformly, these provisions exempt workers paid on pakyaw
or task basis from the coverage of holiday, SIL and 13th month
pay.
In reversing the labor tribunals rulings, the CA similarly relied
on these provisions, as well as on Section 1, Rule V of the IRR
of the Labor Code and the Courts ruling in Serrano v. Severino
Santos Transit. These labor law provisions, when read together
with the Serrano ruling, exempt those engaged on pakyaw or
task basis only if they qualify as field personnel.
In the case of Macasio, clearly shows the existence of the
question of law regarding the correct interpretation of the
afore-mentioned labor provisions and implementing rules.

(1) The selection and engagement of the employee

(2) The payment of wages

Article 82 of the Labor Code provides the exclusions from the

coverage of Title I, Book III of the Labor Code provisions
governing working conditions and rest periods.

(3) The power of dismissal

(4) The power to control the employees conduct
In the case at bar, Macasios relationship with David satisfies the
four-fold test:
(1) First, David engaged the services of Macasio, thus
satisfying the first element in the said test. This was
confirmed in his Sinumpaang Salaysay where he stated
that nag apply po siya sa akin at kinuha ko siya na
chopper.
(2) Second, David paid Macasios wage.

Art.82.Coverage.The provisions of [Title I] shall

apply to employees in all establishments and
undertakings whether for profit or not, but not to
government employees, managerial employees, field
personnel, members of the family of the employer who
are dependent on him for support, domestic helpers,
persons in the personal service of another, and workers
who are paid by results as determined by the Secretary
of Labor in appropriate regulations.
xxxx

(3) Third, David had been setting the day and time when
Macasio should report for work. This power to determine
the work schedule obviously implies power of control.

Page 7 of 24

Field personnel shall refer to nonagricultural

employees who regularly perform their duties away
from the principal place of business or branch office of

Labor Standards
the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty.
The wordings of Article 82 of the Labor Code additionally
categorize workers paid by results and field personnel as
separate and distinct types of employees who are exempted from
the Title I provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and its
corresponding provision in the IRR reads:
Art.94.Right to holiday pay.(a) Every worker shall be paid
his regular daily wage during regular holidays, except in retail
and service establishments regularly employing less than (10)
workers.

unlike Article 82 of the Labor Code, the IRR on holiday and SIL
pay do not exclude employees engaged on task basis as a
separate and distinct category from employees classified as
field personnel. Rather, these employees are altogether
merged into one classification of exempted employees.
In short, the payment of an employee on task or pakyaw basis
alone is insufficient to exclude one from the coverage of SIL
and holiday pay. They are exempted from the coverage of Title I
(including the holiday and SIL pay) only if they qualify as field
personnel.
In the case at bar, Macasio does not fall under the definition of
field personnel which states the following circumstances:

xxxx

(1) Macasio regularly performed his duties at Davids

principal place of business.

SECTION1.Coverage.This Rule shall apply to all

employees except:

(2) His actual hours of work could be determined with

reasonable certainty.

xxxx

(3) David supervised his time and performance of duties.

(e)Field personnel and other employees whose time and

performance is unsupervised by the employer including those
who are engaged on task or contract basis, purely commission
basis, or those who are paid a fixed amount for performing work
irrespective of the time consumed in the performance thereof.
On the other hand, Article 95 of the Labor Code and its
corresponding provision in the IRR47 pertinently provides:

Since, Macasio cannot be considered as field personnel then

he is not exempt from holiday pay and SIL. Thus, he is entitled
to SIL and holiday pay.
In this instance, the NLRC clearly constitutes grave abuse of
discretion as when NLRC did not consider whether Macario was
a field personnel or not before dismissing his complain.
With regard to the entitlement of 13th month pay:

Art.95.Right to service incentive.(a) Every employee who

has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay.
(b)This provision shall not apply to those who are already
enjoying the benefit herein provided, those enjoying vacation
leave with pay of at least five days and those employed in
establishments regularly employing less than ten employees or
in establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the
viability or financial condition of such establishment. [emphases
ours]
xxxx
Section1.Coverage.This rule shall apply to all employees
except:
xxxx
(e) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged
on task or contract basis, purely commission basis, or those who
are paid a fixed amount for performing work irrespective of the
time consumed in the performance thereof.
Under these provisions, the general rule is that holiday and
SIL pay provisions cover all employees. To be excluded from
their coverage, an employee must be one of those that these
provisions expressly exempt, strictly in accordance with the
exemption.
Under the IRR, exemption from the coverage of holiday and SIL
pay refer to field personnel and other employees whose time
and performance is unsupervised by the employer including
those who are engaged on task or contract basis. Note that

The governing law on 13th month pay is PD No. 851.52 As with

holiday and SIL pay, 13th month pay benefits generally cover all
employees; an employee must be one of those expressly
enumerated to be exempted. Section 3 of the Rules and
Regulations Implementing P.D. No. 85153 enumerates the
exemptions from the coverage of 13th month pay benefits.
Under Section 3(e), employers of those who are paid on x x x
task basis, and those who are paid a fixed amount for
performing a specific work, irrespective of the time consumed
in the performance thereof are exempted.
In the case at bar, PD No. 851 exempts employees paid on task
basis in entitlement of 13th month pay. Macasio was employed
on a pakyaw or task basis. Therefore, Macasio cannot be
entitled in 13th month pay.
MAXICARE V. CONTRERAS (GR NO. 194352)
FACTS: Maxicare hired Dr. Contreras as a retainer doctor at the
Philippine National Bank. Under verbal agreement, the two
parties agreed into some terms including the payment of Dr.
Contreras, which will be 250 pesos per hour. Months later, Dr.
Asis, Maxicares medical specialist, informed Dr. Contreras that
she was going to be transferred to another account. Thereafter,
Dr. Contreras were transferred to Maybank, however, her
retainer fee was only 168 pesos per hour. Dr. Contreras reported
to Maybank for one day only. Subsequently, she filed a
complaint before the Labor Arbiter claiming that she was
constructively dismissed. This was denied by the Maxicare. On
the decision of the Labor Arbiter, the complaint of Dr. Contreras
was dismissed for lack of merit. However, it was reversed by the
NLRC and declared that Dr. Contreras was illegally dismissed.
The NLRC further recognized the contention of Dr. Contreras
when she wrote a notice to the Maxicare that she could not go
on serving under such a disadvantageous situation, which is the

Page 8 of 24

Labor Standards
low retainer fee. Maxicare filed a motion for reconsideration
but it was denied by the CA. Thereafter, Maxicare filed a
petition questioning the existence of employer-employee
relationship. It contended that there could have been no
employer-employee relationship arising from the oral medical
retainership agreement between the parties. On the other hand,
Dr. Contreras basically counters that Maxicare did not raise the
issue of the existence of an employer-employee relationship
before the lower courts making it irrelevant.
ISSUE: Whether or not the Court has the jurisdiction to solve
the employer-employee relationship problem despite of its
timely raise
HELD: No. The Court held that a party who deliberately adopts
a certain theory upon which the case is tried and decided by the
lower court, will not be permitted to change theory on appeal.
Points of law, theories, issues and arguments not brought to the
attention of the lower court need not be, and ordinarily will not
be, considered by a reviewing court, as these cannot be raised
for the first time at such late stage. Furthermore, the alleged
absence of employer-employee relationship cannot be raised for
the first time on appeal. Given that Maxicare exerted no effort to
question the employer-employee relationship on the lower
courts, it has no right to include such issue for the first time in
an appeal. As stated in the case, it is a fundamental rule of
procedure that higher courts are precluded from entertaining
matters neither alleged in the pleadings nor raised during the
proceedings below, but ventilated for the first time only in a
motion for reconsideration or on appeal. Petitioner is bound by
its submissions that respondent is its employee and it should not
be permitted to change its theory. Such change of theory cannot
be tolerated on appeal, not due to the strict application of
procedural rules, but as a matter of fairness.
SEMBLANTE vs. CA ; G.R. No. 196426 ; August 15, 2011
FACTS: Petitioners Marticio Semblante (Semblante) and
Dubrick Pilar (Pilar) assert that they were hired by respondentsspouses Vicente and Maria Luisa Loot owners of Gallera de
Mandaue (the cockpit).
As the masiador, Semblante calls and takes the bets from the
gamecock owners and other bettors and orders the start of the
cockfight. He also distributes the winnings. On the other hand,
as the sentenciador, Pilar oversees the proper gaffing of fighting
cocks, determines the fighting cocks physical condition and
capabilities to continue the cockfight, and eventually declares
the result of the cockfight.
They work every Tuesday, Wednesday, Saturday, and Sunday,
excluding monthly derbies and cockfights held on special
holidays. Their work starts at 1:00 p.m. and last until 12:00
midnight, or until the early hours of the morning depending on
the needs of the cockpit. Petitioners had both been issued
employees ID.

they were illegally dismissed, and so ordered respondents to pay

petitioners their backwages and separation pay.
Respondents counsel filed an appeal with the NLRC but without
posting a cash or surety bond equivalent to the monetary award
granted by the Labor Arbiter. Hence, NLRC denied the appeal.
Subsequently, NLRC reversed its resolution and held that there
was no employer-employee relationship between petitioners and
respondents, respondents having no part in the selection and
engagement of petitioners, and that no separate individual
contract with respondents was ever executed by petitioners.
Petitioners appealed and CA found for respondents, noting that
referees and bet-takers in a cockfight need to have the kind of
expertise that is characteristic of the game to interpret messages
conveyed by mere gestures. Hence, petitioners are akin to
independent contractors who possess unique skills, expertise,
and talent to distinguish them from ordinary employees.
The CA refused to reconsider its Decision. Hence, petitioners
came to Court, arguing that CA committed a reversible error in
entertaining an appeal, which was not perfected.
ISSUE: Whether or not there exists an employer-employee
relationship between the respondents and the petitioners.
HELD: No. The Court held that while respondents had failed to
post their bond within the period provided, it is evident, that
petitioners are NOT employees of respondents, since their
relationship fails to pass muster the four-fold test of
employment which are: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employees conduct, which is
the most important element.
Respondents had no part in petitioners' selection and
management; petitioners' compensation was paid out of the
arriba (which is a percentage deducted from the total bets), not
by petitioners; and petitioners performed their functions as
masiador and sentenciador free from the direction and control of
respondents. In the conduct of their work, petitioners relied
mainly on their expertise that is characteristic of the cockfight
gambling, and were never given by respondents any tool needed
for the performance of their work.
Respondents, not being petitioners' employers, could never have
dismissed, legally or illegally, petitioners, since respondents
were without power or prerogative to do so in the first place.
The rule on the posting of an appeal bond cannot defeat the
substantive rights of respondents to be free from an unwarranted
burden of answering for an illegal dismissal for which they were
never responsible.
PSI v. CA GR. 126297 February 2, 2010

One day, petitioners were denied entry into the cockpit upon the
instructions of respondents, and were informed of the
termination of their services. And so, they file a complaint for
illegal dismissal against respondents. Loot spouses denied that
petitioners were their employees. They claimed that petitioners
have no regular working time or day, and were free to report or
not. They also claimed that petitioners were only issued IDs to
indicate that they were free from the normal entrance fee.

FACTS: PSI, together with Dr. Miguel Ampil and Dr. Juan
Fuentes was impleaded by Enrique Agana and Natividad Agana
(later substituted by her heirs), in a complaint for damages filed
in the RTC for the injuries suffered by Natividad when Dr.
Ampil and Dr. Fuentes neglected to remove from her body two
gauzes which were used in the surgery they performed on her on
April 11, 1984 at the Medical City General Hospital. PSI was
impleaded as owner, operator and manager of the hospital.

Labor Arbiter found petitioners to be regular employees as they

performed work that was necessary and indispensable to the
usual trade or business of respondents. It was also ruled that

The RTC held PSI solidarily liable with Dr. Ampil and Dr.
Fuentes for damages. On appeal, the CA absolved Dr. Fuentes
but affirmed the liability of Dr. Ampil and PSI, subject to the
right of PSI to claim reimbursement from Dr. Ampil.

Page 9 of 24

Labor Standards
On petition for review, this Court affirmed the CA decision. PSI
filed a motion for reconsideration but the Court denied.
The Court premised the direct liability of PSI to the Aganas on
the ground that there existed between PSI and Dr. Ampil an
employer-employee relationship as contemplated in the
December 29, 1999 decision in Ramos v. Court of Appeals that
for purposes of allocating responsibility in medical negligence
cases, an employer-employee relationship exists between
hospitals and their consultants.
PSI is now asking this Court to reconsider the foregoing ruling
for the reason that the declaration in the 31 January 2007
Decision that the ruling in Ramos vs. Court of Appeals (G.R.
No. 134354, December 29, 1999) that an employer-employee
relations exists between hospital and their consultants stays
should be set aside for being inconsistent with or contrary to the
import of the resolution granting the hospital's motion for
reconsideration in Ramos vs. Court of Appeals (G.R. No.
134354, April 11, 2002), which is applicable to PSI since the
Aganas failed to prove an employer-employee relationship
between PSI and Dr. Ampil and PSI proved that it has no control
over Dr. Ampil. In fact, the trial court has found that there is no
employer-employee relationship in this case and that the doctor's
are independent contractors.
ISSUE: WON an employer-employee relation exists between
PSI and Dr. Ampil
HELD: NO. The Court ruled that the concurrent finding of the
RTC and the CA that PSI was not the employer of Dr. Ampil is
correct.
This Court still employs the control test to determine the
existence of an employer-employee relationship between
hospital and doctor. In Calamba Medical Center, Inc. v.
National Labor Relations Commission, et al. it held:
Under the "control test", an employment relationship exists
between a physician and a hospital if the hospital controls
both the means and the details of the process by which the
physician is to accomplish his task.
xx xx xx
As priorly stated, private respondents maintained specific workschedules, as determined by petitioner through its medical
director, which consisted of 24-hour shifts totaling forty-eight
hours each week and which were strictly to be observed under
pain of administrative sanctions.
That petitioner exercised control over respondents gains light
from the undisputed fact that in the emergency room, the
operating room, or any department or ward for that matter,
respondents' work is monitored through its nursing supervisors,
charge nurses and orderlies. Without the approval or consent of
petitioner or its medical director, no operations can be
undertaken in those areas. For control test to apply, it is not
essential for the employer to actually supervise the
performance of duties of the employee, it being enough that
it has the right to wield the power.
In fine, as there was no dispute over the RTC finding that PSI
and Dr. Ampil had no employer-employee relationship, such
finding became final and conclusive even to this Court. There
was no reason for PSI to have raised it as an issue in its petition.
Thus, whatever discussion on the matter that may have ensued
was purely academic.

Control as a determinative factor in testing the employeremployee relationship between doctor and hospital under
which the hospital could be held vicariously liable to a
patient in medical negligence cases is a requisite fact to be
established by preponderance of evidence.
Here, there was insufficient evidence that PSI exercised the
power of control or wielded such power over the means and the
details of the specific process by which Dr. Ampil applied his
skills in the treatment of Natividad. Consequently, PSI cannot be
held vicariously liable for the negligence of Dr. Ampil under the
principle of respondeat superior.
Calamba Medical vs. NLRC, G.R. No. 176484; November
25, 2008
Facts: The Calamba Medical Center (petitioner), a privatelyowned hospital, engaged the services of medical doctorsspouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha
Lanzanas (Dr. Merceditha) in March 1992 and August 1995,
respectively, as part of its team of resident physicians. The work
schedules of the members of the team of resident physicians
were fixed by petitioner's medical director Dr. Raul Desipeda
(Dr. Desipeda). On March 7, 1998, Dr. Meluz Trinidad (Dr.
Trinidad), also a resident physician at the hospital, inadvertently
overheard a telephone conversation of respondent Dr. Lanzanas
with a fellow employee, Diosdado Miscala, through an
extension telephone line. Apparently, Dr. Lanzanas and Miscala
were discussing the low "census" or admission of patients to the
hospital.
Dr. Desipeda whose attention was called to the above-said
telephone conversation issued to Dr. Lanzanas a Memorandum
of March 7, 1998, giving Dr. Lazanas 24 hours to explain why
no disciplinary action should be taken against him. Pending
investigation of the case, he was placed under 30-day preventive
suspension upon receipt thereof. Dr. Merceditha was also not
given any work schedule.
On March 20, 1998, Dr. Lanzanas filed a complaint for illegal
suspension before the National Labor Relations Commission
(NLRC)-Regional Arbitration Board (RAB) IV. Dr. Merceditha
subsequently filed a complaint for illegal dismissal.
By Decision of March 23, 1999, Labor Arbiter Antonio R.
Macam dismissed the spouses' complaints for want of
jurisdiction upon a finding that there was no employer-employee
relationship between the parties, the fourth requisite or the
"control test" in the determination of an employment bond being
absent. On appeal, the NLRC, by Decision of May 3, 2002,
reversed the Labor Arbiter's findings. Petitioner's motion for
reconsideration having been denied, it brought the case to the
Court of Appeals on certiorari. The appellate court, by June 30,
2004 Decision,[22] initially granted petitioner's petition and set
aside the NLRC ruling. However, upon a subsequent motion for
reconsideration filed by respondents, it reinstated the NLRC
decision in an Amended Decision.
Issue: WON there exists an employer-employee relationship
between petitioner and the spouses-respondents.
Held: Yes. Under the "control test," an employment relationship
exists between a physician and a hospital if the hospital controls
both the means and the details of the process by which the
physician is to accomplish his task. In the case at bar, first,
private respondents maintained specific work-schedules, as
determined by petitioner through its medical director, which
consisted of 24-hour shifts totaling forty-eight hours each week
and which were strictly to be observed under pain of

Page 10 of 24

Labor Standards
administrative sanctions. Second, Without the approval or
consent of petitioner or its medical director, no operations can
be undertaken in those areas. For control test to apply, it is not
essential for the employer to actually supervise the performance
of duties of the employee, it being enough that it has the right to
wield the power. Third, petitioner itself provided
incontrovertible proof of the employment status of respondents,
namely, the identification cards it issued them, the payslips and
BIR W-2 (now 2316) Forms which reflect their status as
employees, and the classification as "salary" of their
remuneration. Moreover, it enrolled respondents in the SSS and
Medicare (Philhealth) program. Lastly, under Section 15, Rule
X of Book III of the Implementing Rules of the Labor Code, an
employer-employee relationship exists between the resident
physicians and the training hospitals, unless there is a training
agreement between them, and the training program is duly
accredited or approved by the appropriate government agency.
In respondents' case, they were not undergoing any
specialization training.

Therefore, Manulife had the power of control over Tongko that

would make him its employee

Tongko vs Manufacturers Life GR No. 167622 Nov. 7, 2008

Facts: A Motion for Reconsideration was filed by respondent

Manulife to set aside Court's Decision of November 7, 2008. In
the assailed decision, the Court found that an employeremployee relationship existed between Manulife and petitioner
Gregorio Tongko and ordered Manulife to pay Tongko
backwages and separation pay for illegal dismissal.

Facts: Manufacturers Life Insurance Co. (Phils.), Inc.

(Manulife) is a domestic corporation engaged in life insurance
business. Gregorio V. Tongko started his professional
relationship with Manulife by virtue of Career Agent's
Agreement which stipulates that the Agent is an independent
contractor and nothing in it shall be construed or
interpreted as creating an employer-employee relationship.
It was further written that the Company may terminate the
Agreement for any breach or violation of any of the provisions
by the Agent by giving written notice within fifteen (15) days
from the time of the discovery of the breach. After years of
employment, he was promoted as a Branch Manager.
Thereafter, Manulife instituted manpower development
programs in the regional sales management level which pointed
the low performance of the Region managed by Tongko and
instructed him to make adjustments through a letter. After
several months, because the performance of Tongkos Region
did not improve and he did not institute the necessary changes
instructed to him, the Company decided to terminate Tongkos
employment. Petitioner filed for illegal dismissal.
Issue: (1) Whether or not there is an employer-employee
relationship between Manulife and Tongko
(2) Whether or not Manulife is guilty of illegal
dismissal
Held: (1) Yes. In the determination of whether an employeremployee relationship exists between two parties, the Court
applied the four-fold test to determine the existence of the
elements of such relationship which are: a) the selection and
engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer's power to control the
employee's conduct. It is the so-called "control test" which
constitutes the most important index of the existence of the
employer-employee relationship that is, whether the employer
controls or has reserved the right to control the employee not
only as to the result of the work to be done but also as to the
means and methods by which the same is to be accomplished.
In the case at bar, the different codes of conduct that were
applicable to Tongko served as the foundations of the power of
control wielded by Manulife over Tongko that is further
manifested in the different administrative and other tasks that he
was required to perform. The petitioner was also integrated into
a management structure over which Manulife exercised control,
including the actions of its officers. Such integration added to
the fact that Tongko did not have his own agency belied
Manulife's claim that Tongko was an independent contractor.

(2) Yes. When there is no showing of a clear, valid and legal

cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the
burden is on the employer to prove that the termination
was for a valid or authorized cause. In the case at bar,
Manulife failed to overcome such burden of proof. It
must be reiterated that Manulife even failed to identify
the specific acts by which Tongko's employment was
terminated much less support the same with substantial
evidence. To repeat, mere conjectures cannot work to
deprive employees of their means of livelihood. Thus,
it must be concluded that Tongko was illegally
dismissed.
Tongko vs. Manufacturers Life, G.R. No. 167622; June 29,
2010

Manulife claimed that "the November 7[, 2008] Decision

ignores the findings of the CA on the three elements of the fourfold test other than the "control" test, reverses well-settled
doctrines of law on employer-employee relationships, and
grossly misapplies the "control test," by selecting, without basis,
a few items of evidence to the exclusion of more material
evidence to support its conclusion that there is "control."
Issue: WON an employer-employee relationship exists between
petitioner and respondent?
Held: No. By the Agreement's express terms, Tongko served as
an "insurance agent" for Manulife, not as an employee. To be
sure, the Agreement's legal characterization of the nature of the
relationship cannot be conclusive and binding on the courts; as
the dissent clearly stated, the characterization of the juridical
relationship the Agreement embodied is a matter of law that is
for the courts to determine. At the same time, though, the
characterization the parties gave to their relationship in the
Agreement cannot simply be brushed aside because it embodies
their intent at the time they entered the Agreement, and they
were governed by this understanding throughout their
relationship. At the very least, the provision on the absence of
employer-employee relationship between the parties can be an
aid in considering the Agreement and its implementation, and in
appreciating the other evidence on record.
Also, the provisions of the Insurance Code cannot be
disregarded as this Code expressly envisions a principal-agent
relationship between the insurance company and the insurance
agent in the sale of insurance to the public. For this reason, we
can take judicial notice that as a matter of Insurance Code-based
business practice, an agency relationship prevails in the
insurance industry for the purpose of selling insurance.
Significantly, evidence shows that Tongko's role as an insurance
agent never changed during his relationship with Manulife.
Evidence indicates that Tongko consistently clung to the view
that he was an independent agent selling Manulife insurance
products since he invariably declared himself a business or selfemployed person in his income tax returns. This consistency
with, and action made pursuant to the Agreement were pieces of

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Labor Standards
evidence that were never mentioned nor considered in our
Decision of November 7, 2008.

On April 30, 1998, the Labor Arbiter a quo issued the assailed
decision dismissing the complaint for lack of merit.

Also, the mere presentation of codes or of rules and regulations,

however, is not per se indicative of labor law control as the law
and jurisprudence teach us.

On June 26, 1998, complainants not satisfied with the aforecited

ruling interposed the instant appeal before the NLRC. The
NLRC held that respondents attained the status of regular
seasonal workers of Hda. Maasin II having worked therein from
1964-1985. It found that petitioner failed to discharge the
burden of proving that the termination of respondents was for a
just or authorized cause. Hence, respondents were illegally
dismissed and should be awarded their money claims.

Given this anemic state of the evidence, particularly on the

requisite confluence of the factors determinative of the existence
of employer-employee relationship, the Court cannot
conclusively find that the relationship exists in the present case,
even if such relationship only refers to Tongko's additional
functions. While a rough deduction can be made, the answer
will not be fully supported by the substantial evidence needed.
Benares vs. Pancho G.R. No. 151827
Facts:
The complainants alleged to have working as sugar farm
workers in Hacienda Maasin II, a sugar cane plantation located
in Murcia, Negros Occidental with an area of 12-24 has planted,
owned and managed by the respondent Josefina Benares.
On July 24, 1991, complainants thru counsel wrote the Regional
Director of the Department of Labor and Employment, Bacolod
City for intercession particularly in the matter of wages and
other benefits mandated by law.
On September 24, 1991, the Bacolod District Office of the
Department of Labor and Employment conducted a routine
inspection. Accordingly, a report and recommendation was
made, hence, they endorsed the instant case to the Regional
Arbitration Branch, NLRC, Bacolod City for proper hearing and
disposition.
On October 15, 1991, complainants alleged to have been
terminated without being paid termination benefits by
respondent.
On July 14, 1992, notification and summons were served to the
parties wherein complainants were directed to file a formal
complaint.
On July 28, 1992, a formal complaint was filed for illegal
dismissal with money claims.
From the records, summons and notices of hearing were served
to the parties and apparently no amicable settlement was
arrived, hence, the parties were directed to file their respective
position papers.
On January 22, 1993, complainant submitted their position
paper, while respondent filed its position paper on June 21,
1993.

The Court of Appeals affirmed the NLRCs ruling, with the

modification that the backwages and other monetary benefits
shall be computed from the time compensation was withheld in
accordance with Article 279 of the Labor Code, as amended by
Republic Act No. 6715.
In this case, petitioner argues that respondents were not her
regular employees as they were merely pakiao workers who
did not work continuously in the sugar plantation. They
performed such tasks as weeding, cutting and loading canes,
planting cane points, fertilizing, cleaning the drainage, etc.
These functions allegedly do not require respondents daily
presence in the sugarcane field as it is not everyday that one
weeds, cuts canes or applies fertilizer. In support of her
allegations, petitioner submitted cultivo and milling payrolls.
Issue:
Whether or not respondents are regular employees of Hacienda
Maasin and thus entitled to their monetary claims.
Held:
Yes Under Art. 280. REGULAR AND CASUAL
EMPLOYMENT.The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular where
the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the
employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the
season. An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether
such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is
employed and his employment shall continue while such
activity exists.
Meaning to say that the above-mentioned article provides three
kinds of employees,

On March 17, 1994, complainants filed their reply position

paper and affidavit. Correspondingly, a rejoinder was filed by
respondent on May 16, 1994.

(1) Regular employees or those who have been engaged to

perform activities which are usually necessary or desirable
in the usual business or trade of the employer;

On August 17, 1994, from the Minutes of the scheduled hearing,

respondent failed to appear, and that the Office will evaluate the
records of the case whether to conduct a formal trial on the
merits or not, and that the corresponding order will be issued.

(2) Project employees or those whose employment has

been fixed for a specific project or undertaking, the
completion or termination of which has been determined at
the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and
the employment is for the duration of the season; and

On January 16, 1996, the Labor Arbiter issued an order to the

effect that the case is now deemed submitted for resolution.

Page 12 of 24

Labor Standards
(3) Casual employees or those who are neither regular nor
project employees.
In addition, In Hacienda Fatima vs. National Federation of
Sugarcane Workers-Food and General Trade, the Supreme
Court condensed the rule that the primary standard for
determining regular employment is the reasonable connection
between the particular activity performed by the employee vis-vis the usual trade or business of the employer. This
connection can be determined by considering the nature of
the work performed and its relation to the scheme of the
particular business or trade in its entirety. If the employee has
been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law
deems repeated and continuing need for its performance as
sufficient evidence of the necessity if not indispensability of that
activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such
activity exists.
In this case, the issue, therefore, of whether respondents were
regular employees of petitioner has been adequately dealt with.
The labor arbiter, the NLRC and the Court of Appeals have
similarly held that respondents were regular employees of
petitioner. Since it is a settled rule that the factual findings of
quasi-judicial agencies which have acquired expertise in the
matters entrusted to their jurisdiction are accorded by this Court
not only respect but even finality, we shall no longer disturb this
finding.
Also, we also find no reason to disturb the finding that
respondents were illegally terminated. When there is no
showing of clear, valid and legal cause for the termination of
employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the
termination was for a just or authorized cause. In this case, as
found both by the NLRC and the Court of Appeals, petitioner
failed to prove any such cause for the dismissal of respondents.
Therefore, the instant petition is denied, and the respondents are
to be considered as regular employees, thus, they are entitled to
monetary claims.
Francisco v NLRC (Employer-employee relationship)
Aug 31, 2006
Facts: In 1995, Petitioner Angelina Francisco was hired by
Kasei Corp. during its incorporation stage. She was designated
as Accountant and Corporate Secretary. She was also designated
as Liason Officer to the City of Makati to secure business
permits, construction permits and other licenses for the initial
operation of the company.
In 1996, petitioner was designated as Acting Manager, she was
assigned to handle recruitment of all employees and perform
management administration functions; represent the company in
all dealings with government agencies, such as, BIR, SSS, etc.
For five years, she performed duties of Acting Manager, as of
December 31, 2000, her salary was P27,500.00 plus P3,000.00
housing allowance and a 10% share in the profit of Kasei Corp.
In January 2001, she was replaced by Liza Fuentes as Manager
and she was designated as Technical Assistant to Seiji Kimura in
charge of all BIR matters. Her Salary went down to P2,500.00 a
month, her mid year bonus was also not paid. On Oct. 2001, she
did not receive her salary from the company, even after repeated

follow-ups, she was advised that the company was not earning
well.
On Oct. 15, 2001, she asked for her salary from Acedo, she was
informed that she is no longer connected with the company, she
did not reported for work and filed for constructive dismissal
before the labor arbiter.
Respondents averred that the petitioner is not an employee of
Kasei Corp. They alleged that petitioner was hired as technical
consultants on accounting matters and act as Corporate
Secretary. As technical consultant, she will work at her own
discretion without control and supervision, no daily time record
and she came to the office any time she wanted. The company
never interfered with her work except that from time to time, the
management would ask her opinion on matters relating to her
profession.
Respondents claimed that employer-employee relationship does
not exist.
Issue: WON employer-employee relationship exists between
Angelica Francisco and Kasei Corp.
Held: Yes. The better approach would therefore be to adopt a
two-tiered test involving: (1) the putative employer's power to
control the employee with respect to the means and methods by
which the work is to be accomplished; and (2) the underlying
economic realities of the activity or relationship.
By applying the control test, there is no doubt that petitioner is
an employee of Kasei Corporation because she was under the
direct control and supervision of Seiji Kamura, the corporation's
Technical Consultant. She reported for work regularly and
served in various capacities as Accountant, Liaison Officer,
Technical Consultant, Acting Manager and Corporate Secretary,
with substantially the same job functions, that is, rendering
accounting and tax services to the company and performing
functions necessary and desirable for the proper operation of the
corporation such as securing business permits and other licenses
over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can
likewise be said to be an employee of respondent corporation
because she had served the company for six years before her
dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security
contributions from August 1, 1999 to December 18, 2000. When
petitioner was designated General Manager, respondent
corporation made a report to the SSS signed by Irene
Ballesteros. Petitioner's membership in the SSS as manifested
by a copy of the SSS specimen signature card which was signed
by the President of Kasei Corporation and the inclusion of her
name in the on-line inquiry system of the SSS evinces the
existence of an employer-employee relationship between
petitioner and respondent corporation.
Reyes v Glaucoma - June 17, 2015 (employer-employee
relationship)
Facts: Petitioner Jesus Reyes filed a complaint for illegal
dismissal against the respondents.
Petitioner alleged that on Aug. 1, 2003, he was hired by
respondent as administrator of the latter's Eye Referral Center.
He performed his duties as administrator and continously
reeived his monthly salary of P 20,000.00 until the end of
January 2005.

Page 13 of 24

Labor Standards
Beginning Feb. 2005, respondent withheld petitioner's salary
without notice but he still continued to report for work. He
wrote a letter to respondent Manuel Agulto, who is the
Executive Director of respondent corporation regarding his
salaries since Feb. as well as his 14th month pay for 2004. He
did not received any response from Agulto. Afterwards, he was
informed by the asst. Executive Director that he is no longer the
Administrator of ERC, his office was padlocked and closed, and
he was not allowed by the security guard to enter the premise of
the ERC

totality of circumstances surrounding the true nature of the

relationship between the parties. This is especially appropriate
when, as in this case, there is no written agreement or contract
on which to base the relationship. In our jurisdiction, the
benchmark of economic reality in analyzing possible
employment relationships for purposes of applying the Labor
Code ought to be the economic dependence of the worker on his
employer.

The respondents claimed that there is no employer-employee

relationship between them because respondents had no control
over the petitioner in terms of working hours as he reports for
work at anytime of the day and leaves as he pleases.
Respondents also had no control as to the manner in which he
performs his alleged duties as consultant. With this, petitioner
was not illegally dismissed by the respondent.

FACTS: Metromedia Time Corporation entered into an

agreement with petitioner, Efren Paguio, appointing him as an
account executive of the firm, wherein the latters task was to
solicit advertisements for the Manila Times. Months later,
Paguio received a notice wherein he is being terminated for
vague allegation of misconduct. On the defense of Metromedia
Times Corporation, they asserted that they have the right to
terminate the contract and it is written on the contract that both
parties have agreed upon. However, the Labor Arbiter declared
that the dismissal of the petitioner was illegal. It was, then,
reversed by the NLRC which declared the contractual
relationship between the parties a being a fixed-term
employment, and that it is lawful given that both parties have
voluntarily agreed on it. However, petitioner contended that he
is a regular employee of Metromedia, which, then, rejected by
the NLRC. Hence, this appeal.

Issue: WON employer-employee relationship exists between the

petitioner and the respondents.
Held: No, Before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established.Thus,
in filing a complaint before the LA for illegal dismissal, based
on the premise that he was an employee of respondents.
Etched in an unending stream of cases are four standards in
determining the existence of an employer-employee
relationship, namely: (a) the manner of selection and
engagement of the putative employee; (b) the mode of payment
of wages; (c) the presence or absence of power of dismissal;
and, (d) the presence or absence of control of the putative
employee's conduct. Most determinative among these factors is
the so-called "control test."
Indeed, the power of the employer to control the work of the
employee is considered the most significant determinant of the
existence of an employer-employee relationship. This test is
premised on whether the person for whom the services are
performed reserves the right to control both the end achieved
and the manner and means used to achieve that end.
Well settled is the rule that where a person who works for
another performs his job more or less at his own pleasure, in the
manner he sees fit, not subject to definite hours or conditions of
work, and is compensated according to the result of his efforts
and not the amount thereof, no employer-employee relationship
exists.
What was glaring in the present case is the undisputed fact that
petitioner was never subject to definite working hours. He never
denied that he goes to work and leaves therefrom as he pleases.
In fact, on December 1-31, 2004, he went on leave without
seeking approval from the officers of respondent company. On
the contrary, his letter simply informed respondents that he will
be away for a month and even advised them that they have the
option of appointing his replacement during his absence. This
Court has held that there is no employer-employee relationship
where the supposed employee is not subject to a set of rules and
regulations governing the performance of his duties under the
agreement with the company and is not required to report for
work at any time, nor to devote his time exclusively to working
for the company.
Aside from the control test, the Supreme Court has also used the
economic reality test in determining whether an employeremployee relationship exists between the parties. Under this
test, the economic realities prevailing within the activity or
between the parties are examined, taking into consideration the

PAGUIO V. NLRC

ISSUE: Whether or not the nature of contractual relationship

between petitioner and respondent company is of regular
employment
HELD: Yes, the Court held that Paguio is a regular employee of
Metromedia. The Court was able to uphold that it is a regular
employment through control test. Under control test, an
employment relation obtains where work is performed or
services are rendered under the control and supervision of the
party contracting for the service, not only as to the result of the
work but also as to the manner and details of the performance
desired. There are factors that were taken into consideration to
determine if it is a regular employment, namely, a) the manner
of selection and engagement of the putative employee, b) the
mode of payment of wages, c) the presence or absence of the
power of dismissal; and d) the presence or absence of the power
to control the conduct of the putative employee or the power to
control the employee with respect to the means or methods by
which his work is to be accomplished. In the case at bar, it is
evident that Metromedia has control over Paguio considering
the manner and means of his job. It is well-noted that
Metromedia were requiring petitioner to report its daily activity
as well as to submit monthly sales report and other papers that
the company would require of him. Furthermore, petitioner, for
more than a year, performed activities which were necessary and
desirable to the business of the employer, this constitutes regular
employment. Hence, the Court did not consider the defense of
the Metromedia that it is lawful given that it is written in the
agreement that both parties have signed. Thus, the Court stated
that a stipulation in the agreement can be ignored as and when it
is utilized to deprive the employee of his security tenure.
Therefore, the petition of Paguio was granted.
CORPORAL vs. NLRC ; G.R. No. 129315 ; October 2, 2000
FACTS: Petitioners Osias I. Corporal, Sr., Pedro Tolentino,
Manuel Caparas, Elpidio Lacap, and Simplicio Pedelos worked
as barbers, while Teresita Flores and Patricia Nas worked as
manicurists in New Look Barber Shop owned by private
respondent Lao Enteng Co. Inc.

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Labor Standards
Petitioners claim that at the start of their employment, it was a
single proprietorship owned and managed by Mr. Vicente Lao,
but was later turned into a corporation (Lao Enteng Co. Inc.)
with Trinidad Ong as President. Upon its incorporation,
petitioners were allowed to continue working with the new
company until respondent Ong informed them that the building
wherein the barber shop was located had been sold and that their
services were no longer needed.
Petitioners filed a complaint for illegal dismissal, illegal
deduction, separation pay, non-payment of 13th month pay, and
salary differentials. Private respondent averred that there was no
employer-employee relationship between them and petitioners.
And assuming that there was, still petitioners are not entitled to
separation pay because the cessation of operations of the barber
shop was due to serious business losses.
Respondent Trinidad Lao Ong stated that Lao Enteng Company,
Inc. did not take over the management of the New Look Barber
Shop, and that petitioners were verbally informed that the
partnership may fold up anytime; that New Look Barber Shop
had always been a joint venture partnership and the operation
and management of the barber shop was left entirely to
petitioners. Trinidad explained that some of the petitioners were
allowed to register with the SSS as employees only as an act of
accommodation. All the SSS contributions were made by
petitioners. Moreover, Corporal, Lacap and Flores were not
among those registered with the Social Security System (SSS).
In a Decision by the Labor Arbiter, dismissal of the complaint
was ordered on the basis that the complainants and the
respondents were engaged in a joint venture and that there
existed no employer-employee relation between them. On
appeal, NLRC affirmed the Labor Arbiter's findings.
Petitioners principally argue that NLRC erred in declaring that
they were independent contractors and that it disregarded
substantial evidence showing they were registered with the SSS
as regular employees.
ISSUE: (1) Whether or NLRC erred in declaring that petitioners
were independent contractors.
(2) Whether or not an employer-employee relationship
existed between petitioners and private respondent Lao Enteng
Company, Inc.
HELD: Yes. The Court held that petitioners are not independent
contractors. An independent contractor is one who undertakes
"job contracting", i.e., a person who (a) carries on an
independent business and undertakes the contract work on his
own account under his own responsibility according to his own
manner and method, free from the control and direction of his
employer or principal in all matters connected with the
performance of the work except as to the results thereof, and (b)
has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials
which are necessary in the conduct of the business.
Petitioners did not carry on an independent business. Neither did
they undertake cutting hair and manicuring nails, on their own
as their responsibility, and in their own manner and method.
More importantly, the petitioners, individually or collectively,
did not have a substantial capital or investment in the form of
tools, equipment, work premises and other materials which are
necessary in the conduct of the business of the respondent
company. Also, petitioners were required to observe rules and
regulations of the respondent company pertaining, among other
things, observance of daily attendance, job performance, and

regularity of job output. The nature of work performed by were

clearly directly related to private respondent's business of
operating barber shops. Respondent company did not dispute
that it owned and operated three barber shops. Hence,
petitioners were not independent contractors.
(2) Did an employee-employer relationship exist between
petitioners and private respondent? Yes. The following
elements must be present: (a) the selection and engagement of
the workers; (b) power of dismissal; (c) the payment of wages
by whatever means; and (d) the power to control the worker's
conduct, with the latter assuming primacy in the overall
consideration.
Records of the case show that the late Vicente Lao engaged the
services of the petitioners as barbers and manicurists in the New
Look Barber Shop, then a single proprietorship owned by him;
his children organized a corporation which they registered with
the Securities and Exchange Commission as Lao Enteng
Company, Inc.; that upon its incorporation, respondent company
retained the services of all the petitioners and continuously paid
their wages. Clearly, all three elements exist in petitioners' and
private respondent's working arrangements.
The fourth element, the power to control refers to the existence
of the power and not necessarily to the actual exercise thereof,
nor is it essential for the employer to actually supervise the
performance of duties of the employee. It is enough that the
employer has the right to wield that power. The following facts
reveal that respondent company wielded control over the work
performance of petitioners: (1) they worked in the barber shop
owned and operated by the respondents; (2) they were required
to report daily and observe definite hours of work; (3) they were
not free to accept other employment elsewhere for all the fifteen
years they have worked; (4) that some have worked with
respondents as early as in the 1960's; (5) that petitioner Patricia
Nas was instructed by the respondents to watch the other six
petitioners in their daily task. Certainly, respondent company
was clothed with the power to dismiss any or all of them for just
and valid cause. Petitioners were unarguably performing work
necessary and desirable in the business of the respondent
company.
Villamaria v. CA GR. No. 165881 April 19, 2006
FACTS: Petitioner Oscar Villamaria, Jr., owner of Villamaria
Motors which is a sole proprietorship engaged in assembling
passenger jeepneys with a public utility franchise. One of the
drivers was respondent Bustamante who drove the jeepney with
Plate No. PVU-660.
In August 1997, Villamaria verbally agreed to sell the jeepney to
Bustamante under the boundary-hulog scheme, where
Bustamante would remit to Villamaria P550.00 a day for a
period of four years. It was also agreed that Bustamante would
make a downpayment of P10,000.00. Villamaria executed a
contract entitled Kasunduan ng Bilihan ng Sasakyan sa
Pamamagitan ng Boundary-Hulog over the passenger jeepney
with Plate No. PVU-660.
In 1999, Bustamante failed to pay his respective boundaryhulog. This prompted Villamaria to serve a Paalala, reminding
him that under the Kasunduan, failure to pay the daily
boundary-hulog for one week, would mean their respective
jeepneys would be returned to him without any complaints.
On July 24, 2000, Villamaria took back the jeepney driven by
Bustamante and barred the latter from driving the vehicle.

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Labor Standards
On August 15, 2000, Bustamante filed a Complaint for Illegal
Dismissal against Villamaria and his wife Teresita. Bustamante
prayed that judgment be rendered in his favor.
On the other hand, in their Position Paper, the spouses
Villamaria admitted the existence of the Kasunduan, but alleged
that Bustamante failed to pay the P10,000.00 downpayment and
the vehicles annual registration fees. They further alleged that
Bustamante eventually failed to remit the requisite boundaryhulog of P550.00 a day, which prompted them to issue the
Paalaala.
Citing the cases of Cathedral School of Technology v. NLRC
and Canlubang Security Agency Corporation v. NLRC, the
spouses Villamaria argued that Bustamante was not illegally
dismissed since the Kasunduan executed on August 7, 1997
transformed the employer-employee relationship into that of
vendor-vendee. Hence, the spouses concluded, there was no
legal basis to hold them liable for illegal dismissal.
In his Reply, Bustamante claimed that Villamaria exercised
control and supervision over the conduct of his employment. He
maintained that the rulings of the Court in National Labor Union
v. Dinglasan, are germane to the issue as they define the nature
of the owner/operator-driver relationship under the boundary
system.
On March 15, 2002, the Labor Arbiter rendered judgment in
favor of the spouses Villamaria and ordered the complaint
dismissed.
Bustamante appealed the decision to the NLRC but was
dismissed because the NLRC ruled that under the Kasunduan,
the juridical relationship between Bustamante and Villamaria
was that of vendor and vendee, hence, the Labor Arbiter had no
jurisdiction over the complaint.
Bustamante elevated the matter to the CA. He insisted that
despite the Kasunduan, the relationship between him and
Villamaria continued to be that of employer-employee and as
such, the Labor Arbiter had jurisdiction over his complaint.
For his part, Villamaria averred that Bustamante failed to adduce
proof of their employer-employee relationship. He argued that
upon the execution of the Kasunduan, the juridical tie between
him and Bustamante was transformed into a vendor-vendee
relationship.
The CA entered judgment in favor of petitioner and ruled that
the Labor Arbiter had jurisdiction over Bustamantes complaint.
Under the Kasunduan, the relationship between him and
Villamaria was dual: that of vendor-vendee and employeremployee.
Villamaria, now petitioner, seeks relief from this Court alleging
that the CA erred in ruling that the juridical relationship between
him and respondent under the Kasunduan was a combination of
employer-employee and vendor-vendee relationships.
ISSUES: WON the existence of a boundary-hulog agreement
negates the employer-employee relationship between the vendor
and vendee
HELD: NO. The Court affirmed the ruling of the CA that, under
the boundary-hulog scheme incorporated in the Kasunduan, a
dual juridical relationship was created between petitioner and
respondent: that of employer-employee and vendor-vendee. The
Kasunduan did not extinguish the employer-employee

relationship of the parties extant before the execution of said

deed.
Under the boundary system, the owner/operator exercises
control and supervision over the driver. The management of the
business is still in the hands of the owner/operator, who, being
the holder of the certificate of public convenience, must see to it
that the driver follows the route prescribed by the franchising
and regulatory authority, and the rules promulgated with regard
to the business operations.
The juridical relationship of employer-employee between
petitioner and respondent was not negated by the foregoing
stipulation in the Kasunduan, considering that petitioner
retained control of respondents conduct as driver of the vehicle.
As correctly ruled by the CA:
The exercise of control by private respondent over petitioners
conduct in operating the jeepney he was driving is inconsistent
with private respondents claim that he is, or was, not engaged in
the transportation business; that the existence of an employment
relation is not dependent on how the worker is paid but on the
presence or absence of control over the means and method of
the work; that the amount earned in excess of the boundary
hulog is equivalent to wages.
Moreover, requiring petitioner to drive the unit for commercial
use, or to wear an identification card, or to don a decent attire,
or to park the vehicle in Villamaria Motors garage, or to inform
Villamaria Motors about the fact that the unit would be going
out to the province for two days of more, or to drive the unit
carefully, etc. necessarily related to control over the means by
which the petitioner was to go about his work; that the ruling
applicable here is National Labor Union since the latter case
involved jeepney owners/operators and jeepney drivers, and that
the fact that the boundary here represented installment payment
of the purchase price on the jeepney did not withdraw the
relationship from that of employer-employee, in view of the
overt presence of supervision and control by the employer.
The petition is DENIED. The decision of the Court of Appeals
in CA is AFFIRMED.
Jardin, et. al., vs. NLRC
Facts: 7 petitioners were drivers of Philjama International Inc., a
domestic corporation engaged in the operation of "Goodman
Taxi." Petitioners used to drive private respondent's taxicabs
every other day on a 24-hour work schedule under the boundary
system. Under this arrangement, the petitioners earned an
average of P400.00 daily. Philjama regularly deducts from
petitioners daily earnings the amount of P30.00 for the washing
of the taxi units. Believing that the deduction is illegal,
petitioners decided to form a labor union to protect their rights
and interests.
Upon learning about the plan of petitioners, private respondent
refused to let petitioners drive their taxicabs. Petitioners
suspected that they were singled out because they were the
leaders and active members of the proposed union. Aggrieved,
petitioners filed with the labor arbiter a complaint against
private respondent for unfair labor practice, illegal dismissal and
illegal deduction of washing fees.
LA- Petition dismissed for lack of merit
NLRC- reversed LA, petitioners were illegally dismissed. First
MR : denied. On second MR*, however, NLRC ruled that it
lacks jurisdiction over the case as petitioners and private
respondent have no employer-employee relationship. It held that

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Labor Standards
the relationship of the parties is leasehold which is covered by
the Civil Code rather than the Labor Code
(* SC: the second motion for reconsideration filed by private
respondent is indubitably a prohibited pleading16 which should
have not been entertained at all.)
Issue: WON ER-EE relationship exists between the taxi drivers
and respondent corp. on the "boundary system"
Held: YES. In a number of cases decided by this Court,19 we
ruled that the relationship between jeepney owners/operators on
one hand and jeepney drivers on the other under the boundary
system is that of employer-employee and not of lessor-lessee.
We explained that in the lease of chattels, the lessor loses
complete control over the chattel leased although the lessee
cannot be reckless in the use thereof, otherwise he would be
responsible for the damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former exercise
supervision and control over the latter. The management of the
business is in the owner's hands. The owner as holder of the
certificate of public convenience must see to it that the driver
follows the route prescribed by the franchising authority and the
rules promulgated as regards its operation. Now, the fact that the
drivers do not receive fixed wages but get only that in excess of
the so-called "boundary" they pay to the owner/operator is not
sufficient to withdraw the relationship between them from that
of employer and employee. We have applied by analogy the
abovestated doctrine to the relationships between bus
owner/operator and bus conductor,20 auto-calesa owner/operator
and driver,21 and recently between taxi owners/operators and
taxi drivers.22 Hence, petitioners are undoubtedly employees of
private respondent because as taxi drivers they perform
activities which are usually necessary or desirable in the usual
business or trade of their employer.
Martinez vs NLRC GR. No. 117495
Facts: Raul Martinez was operator of two (2) taxicab units and
private respondents worked for him as drivers. When Raul
Martinez died, he left behind his mother, petitioner Nelly Acta
Martinez, as his sole heir. Months after the death of Raul,
private respondents lodged a complaint against him and the
petitioner before the Labor Arbiter for violation of P. D. 851 and
illegal dismissal. They alleged that for the duration of
employment, not once did they receive a 13th month pay. After
the death of Raul, petitioner took over the management and
operation of the business. Then she informed the respondents
that because of difficulty in maintaining the business, she was
selling the units together with the corresponding
franchises. However, petitioner did not proceed with her plan;
instead, she assigned the units to other drivers.
Issue: (1) Whether or not the respondents are entitled for a
13th month pay
(2) Whether or not there was an employer-employee
relation between the respondents and deceased
Martinez
Held: (1) NO. The claim for 13th month pay pertains to the
personal obligation of Raul Martinez which did not survive his
death. The rule is settled that unless expressly assumed, labor
contracts are not enforceable against the transferee of an
enterprise. In the present case, petitioner does not only disavow
that she continued the operation of the business of her son but
also disputes the existence of labor contracts between her son
and private respondents. The reason for the rule is that labor
contracts are in personam, and that claims for backwages earned
from the former employer cannot be filed against the new

owners of an enterprise. Nor is the new operator of a business

liable for claims for retirement pay of employees. Thus the
claim of private respondents should have been filed instead in
the intestate proceedings involving the estate of Raul Martinez.
(2) YES. The fact that the drivers do not receive fixed
wages but get only that in excess of the so-called "boundary"
they pay to the owner/operator is not sufficient to withdraw the
relationship between them from that of employer and employee.
Private respondents were employees of Raul Martinez because
they had been engaged to perform activities which were usually
necessary or desirable in the usual business or trade of the
employer
Calamba Medical Center vs. NLRC (2008)
Facts: Calamba Medical Center (petitioner), a privately-owned
hospital, engaged the services of medical doctors-spouses Dr.
Lanzanas and Dr. Merceditha as resident physicians. They report
for work twice-a-week on twenty-four-hour shifts. In addition to
their fixed monthly retainer, they share in profits in some
hospital fees.
The work schedules of the members of the team of resident
physicians were fixed by petitioners medical director Dr.
Desipeda. They were issued identification cards by petitioner
and were enrolled in SSS. Income taxes were withheld from
them.
Dr. Lazanas was suspended pending investigation for alleged
acts inimical to the interest of the hospital but later on
terminated for not reporting back to work despite the DOLE
order and his supposed role in the recent striking of the union.
While Dr. Merceditha since then was not given any work
schedule. The spouses filed complaint for illegal dismissal.
Labor Arbiter(LA) no EE-ER relationship; power of
control is absent
NLRC- Reversed LA; EE-ER rel. exists
CA- sustained NLRC
CMC contends the fact that their resident physicians are frree to
practice their profession elsewhere for the rest of the week and
are entitled to shares in certain hospital fees are indicative that
there is no power of control. Thus, no EE-ER rel.
Issue: WON an employer-employee relationship exists bet.
CMC and the resident physicians
Held: YES. Under the control test, an employment relationship
exists between a physician and a hospital if the hospital controls
both the means and the details of the process by which the
physician is to accomplish his task.

Private respondents maintained specific work-schedules, as

determined by petitioner through its medical director, strictly to
be observed under pain of administrative sanctions.
Respondents work is monitored. Without the approval or
consent of petitioner or its medical director, no operations can
be undertaken.
The scheme of sharing in some hospital fees does not severe the
employment tie between them and petitioner as this merely
mirrors additional form or another form of compensation or
incentive similar to what commission-based employees receive
as contemplated in Article 97 (f) of the Labor Code,
Respondents were made subject to petitioner-hospitals Code of
Ethics which has administrative sancitions for any violation.

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Labor Standards
Identification cards issued, the payslips1 and BIR W-2 (now
2316) Forms which reflect their status as employees, and the
classification as salary of their remuneration, are
incontrovertible proof of the employment status of respondents
Mandatory coverage under the SSS Law2 is premised on the
existence of an employer-employee relationship, except in cases
of compulsory coverage of the self-employed.
Memorandum explicitly stating that respondent is employed in
it and of the subsequent termination letter indicating respondent
Lanzanas employment status.
Finally, under Section 15, Rule X of Book III of the
Implementing Rules of the Labor Code, an employer-employee
relationship exists between the resident physicians and the
training hospitals, unless there is a training agreement between
them, and the training program is duly accredited or approved
by the appropriate government agency. In respondents case, they
were not undergoing any specialization training. They were
considered non-training general practitioners,3assigned at the
emergency rooms and ward sections.

SIP Food House vs. Batolina G.R. No. 192473

respondents were considered as SIPs employees, their dismissal

would still not be illegal because the termination of its contract
to operate the canteen came as a surprise and against its will,
rendering the canteens closure involuntary. He ruled also that
SIP is not liable for unpaid salaries of the respondent because it
had complied with the minimum statutory requirement.
The respondents brought their case, on appeal, to the National
Labor Relations Commission (NLRC).
The NLRC rendered decision as they found out that SIP was the
respondents employer, but it sustained the labor arbiters ruling
that the employees were not illegally dismissed as the
termination of SIPs concession to operate the canteen
constituted an authorized cause for the severance of employeremployee relations. Also, NLRC awarded the respondents a
total of P952, 865.53 in salary and 13th month pay differentials
and service incentive leave pay.
SIP elevated the case to the CA through petition for certiorari.
They argued that the NLRC erred in declaring that it was the
respondents employer who is liable for their money claims
despite its being a labor-only contractor of GMPC.
The CA rendered decision affirming the decision of the NLRC,
but as per the awards, remanded the case for a re-computation.

Facts:
GSIS Multi-Purpose Cooperative (GMPC) wanted to operate a
canteen in a new GSIS Building, but had no capability and
expertise in that area. Thus, it engaged the services of the
petitioner S.I.P. Food House (SIP), owned by the spouses
Alejandro and Esther Pablo, as concessionaire. The respondents
Restituto Batolina and nine (9) others (the respondents) worked
as waiters and waitresses in the canteen.
Unfortunately, GMPC terminated SIPs contract as GMPC
concessionaire, because of GMPCs decision to take direct
investment in and management of the GMPC canteen; SIPs
continued refusal to heed GMPCs directives for service
improvement; and the alleged interference of the Pablos two
sons with the operation of the canteen. The termination of the
concession contract caused the termination of the respondents
employment, prompting them to file a complaint for illegal
dismissal, with money claims, against SIP and the spouses
Pablo.
The respondents alleged before the labor arbiter that they were
SIP employees, who were illegally dismissed sometime in
February and March 2004. S.I.P. SIP did not implement Wage
Order Nos. 5 to 11 for the years 1997 to 2004. They did not
receive overtime pay although they worked from 6:30 in the
morning until 5:30 in the afternoon, or other employee benefits
such as service incentive leave, and maternity benefit (for their
co-employee Flordeliza Matias). Their employee contributions
were also not remitted to the Social Security System.
The Labor Arbiter Francisco Robles rendered a decision as he
found out that the respondents were GMPCs employees, and
not SIPs, as there existed only a labor-only contracting
relationship between the two parties. He emphasized that even if

SIP elevated the case to the Supreme Court seeking for a

reversal decision of the appellate courts ruling that it was the
employer of the respondents, claiming that it was merely a labor
only contractor of the GMPC.
Issue:
WON an employer-employee relationship exists bet. SIP and to
the respondents.
Held:
Yes The Supreme Court affirmed the decision of the NLRC
and CA. Clearly, no less than respondents, thru their counsel,
admitted that respondents herein were their employees, as stated
in their protest letter to GMPC, xxx Last March 12, 2004,
without any court writ or order, and with the aid of your armed
agents, you physically barred our clients & their
employees/helpers from entering the said premises and from
performing their usual duties of serving the food requirements
of GSIS personnel and others.
Furthermore, The CA ruled out SIPs claim that it was a laboronly contractor or a mere agent of GMPC. We agree with the
CA; SIP and its proprietors could not be considered as mere
agents of GMPC because they exercised the essential elements
of an employment relationship with the respondents such as
hiring, payment of wages and the power of control, not to
mention that SIP operated the canteen on its own account as it
paid a fee for the use of the building and for the privilege of
running the canteen. The fact that the respondents applied with
GMPC in February 2004 when it terminated its contract with
SIP, is another clear indication that the two entities were
separate and distinct from each other. We thus see no reason to
disturb the CAs findings.

1
2
3

For the monetary claims, we affirm the CAs ruling with regard
to the monetary claims of the respondents. However, on the
collateral issue of the proper computation of the monetary
award, we also find the CA ruling to be in order. Indeed, in the

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Labor Standards
absence of evidence that the employees worked for 26 days a
month, no need exists to re-compute the award for the
respondents who were explicitly claiming for their salaries and
benefits for the services rendered from Monday to Friday or 5
days a week or a total of 20 days a month
LETRAN CALAMBA FACULTY V. NLRC (GR NO.
156225)
FACTS: The Letran Calamba Faculty and Employees
Association (Letran Faculty, for brevity) filed a complaint
against Colegio de San Juan de Letran, Calamba, Inc. for
collection of various monetary claims due its members. The
petitioner contended that the latter failed to pay them the
necessary payment given that they worked overtime.
Furthermore, their 13th month fee, as well as the holiday fees,
were not given to them or included in their salary. However, the
Labor Arbiter dismissed the petition of the Letran Faculty.
Hence, they appealed to the NLRC, which then, promulgated a
decision dismissing their appeals. The petitioner, once again,
elevated the issue to the CA but of no avail. Hence, this instant
petition.
ISSUE: Whether or not the Letran Faculty is entitled to receive
additional salary to their regular wage
HELD: No. The Court held that the Letran Faculty failed to
substantiate their contentions regarding the salary differentials.
The rule used by the petitioners as a ground to demand
additional salary, namely, the Rules and Regulations
Implementing Presidential Decree 851 which defines basic
salary to include all remunerations or earnings paid by an
employer to an employee, was not appreciated by the Court
given that is supplementary to the Labor Code if there are
doubts or injustice in implementing the said code. Rather, the
Court uphold that the all-embracing phrase earnings and other
remunerations which are deemed not part of the basic salary
includes within its meaning payments for sick, vacation, or
maternity leaves, premium for works performed on rest days
and special holidays, pay for regular holidays and night
differentials. As such they are deemed not part of the basic
salary and shall not be considered in the computation of the 13thmonth pay. If they were not so excluded, it is hard to find any
earnings and other remunerations expressly excluded in the
computation of the 13th-month pay. This was supported by Art.
87 and 93 of the Labor Code of the Philippine stating that
overtime pay and special holiday fee is an additional
compensation rather than an addition to the regular wage.
Hence, any pay given as compensation for such additional work
should be considered as extra and not deemed as part of the
regular or basic salary.
Therefore, the Letran Facultys contention that it must be added
to their regular salary were denied and dismissed by the Court.

refused to do so. The following day, respondent reported for

work but petitioner Anna Reyes Escobia told him not to work
and return later in the afternoon for a hearing. When he returned
a copy of an Office Memorandum was served on him regarding
his warning for dismissal due to his tardiness, discourtesy,
failure to work overtime, and insubordination.
On Feb. 24, 1999, respondent was terminated from employment.
The employer, through petitiner Escobia, gave him his two-day
salary and a termination letter.
Respondent subsequently filed a complaint for illegal dismissal
and money claims before the NLRC.
Issues: (1) WON Nicasio Galit was illegally dismissed
(2) WON his employer may require him to perform overtime
work
Held: No, the court ruled in favor of the employer due to the
following offenses of Nicasio Galit: (1) tardiness constituting
neglect of duty; (2) serious misconduct; and (3) insubordination
or willful disobedience.
Habitual tardiness is a form of neglect of duty. Lack of
initiative, diligence, and discipline to come to work on time
everyday exhibit the employees deportment towards work.
While the CA is correct that the charge of serious misconduct
was not substantiated, the charge of insubordination however is
meritorious.
For willful disobedience to be a valid cause for dismissal, these
two elements must concur: (1) the employees assailed conduct
must have been willful, that is, characterized by a wrongful and
perverse attitude; and (2) the order violated must have been
reasonable, lawful, made known to the employee, and must
pertain to the duties which he had been engaged to discharge.
(2) Yes, In the present case, there is no question that petitioners
order for respondent to render overtime service to meet a
production deadline complies with the second requisite. Art. 89
of the Labor Code empowers the employer to legally compel his
employees to perform overtime work against their will to
prevent serious loss or damage:
Art. 89. EMERGENCY OVERTIME WORK
Any employee may be required by the employer to perform
overtime work in any of the following cases:
xxxx

R.B. Michael Press v Galit (Art 89 Emergency Overtime)

(c) When there is urgent work to be performed on machines,

installations, or equipment, in order to avoid serious loss or
damage to the employer or some other cause of similar nature;

Feb. 13, 2008

xxxx

Facts: On May 1, 1997, Nicasio Galit was employed by

petitioner R.B. Michael Press as an offset machine operator,
whose work schedule was from 8:00 a.m. to 5:00 p.m., Mondays
to Saturdays, and he was paid PhP 230 a day. During his
employment, Galit was tardy for a total of 190 times, totaling to
6,117 minutes, and was absent without leave for a total of nine
and a half days.

In the present case, petitioners business is a printing press

whose production schedule is sometimes flexible and varying. It
is only reasonable that workers are sometimes asked to render
overtime work in order to meet production deadlines.

On Feb. 22, 1999, respondent was ordered to render overtime

service in order to comply with a job order deadline, but he

FACTS: Petitioner Rowena De Leon Cruz was hired by the Far

East Bank and Trust Company (FEBTC), which later on merged

CRUZ V. BPI (GR NO. 173357)

Page 19 of 24

Labor Standards
with the Bank of the Philippine Islands. Upon the merging of the
two banks, Cruz automatically became an employee of BPI and
held the position of Assistant Branch Manager of BPI Ayala
Avenue Branch and was charge of the Trading Section.
However, after 13 years of continuous service, Cruz were
terminated on grounds of gross negligence and breach of trust. It
was found out that Cruz approved pre-termination accounts that
turned out to be fraud. The accounts belonged to Uymatiao,
Caluag and Avila, the three complained that their signatures
were forged. On defense of Cruz, she contended that at the time
the alleged fraudulent transactions took place, she was not yet
an Assistant Manager, but only a Cash II Officer of the branch,
still operating under the FEBTC set-up wherein her
responsibility doesnt include approving the accounts but only to
bring out signature card files in the bank. Despite of the
contention of Cruz, she was still terminated, thus, she appealed.
The Labor Arbiter held that the dismissal of petitioner was
illegal, however, the NLRC reversed it and stated that the
complaint of Cruz lacks merit. This was affirmed by the CA
stating that the petitioners task was highly confidential, thus,
she must have exerted extraordinary diligence in performing it.
Hence, this appeal.
ISSUE: Whether or not the evidence submitted by respondent
bank is substantial in character to warrant the dismissal of the
petitioner.
HELD: Yes. The Court affirmed the ruling of NLRC and CA
that petitioners dismissal was for a valid cause. In this case,
respondent avers that petitioner held the position of Assistant
Manager in its Ayala Avenue Branch. However, petitioner
contends that her position was only Cash II Officer. Hence, it is
important to know whether the status of Cruz employment were
managerial or supervisory. Given the responsibility that the
petitioner performs, one of which is to maintain the integrity of
the signature of the card files, the Court believes that the
petitioner holds as managerial status. The Court stated that
petitioner holds a managerial status since she is tasked to act in
the interest of her employer as she exercises independent
judgment when she approves pre-termination of USD CDs or
the withdrawal of deposits. Given that petitioner admitted that
she did not call the depositors to assure their identity but rather
she only performed other procedures gave way to the Court to
rule that the petitioner did not perform extraordinary diligence
in performing her job which resulted to breach of trust of the
depositors to the bank itself. In that regard, petitioner was
remiss in the performance of her duty to approve the pretermination of certificates of deposits by legitimate depositors or
their duly-authorized representatives, resulting in prejudice to
the bank, which reimbursed the monetary loss suffered by the
affected clients. Hence, respondent was justified in dismissing
petitioner on the ground of breach of trust. Therefore, the
petition of Cruz was denied and the decision of CA and NLRC
that the dismissal was valid were affirmed.
SME BANK vs. DE GUZMAN ; G.R. No. 184517 ; October
8, 2013
FACTS: Respondent employees Elicerio Gaspar (Elicerio),
Ricardo Gaspar, Jr.(Ricardo), Eufemia Rosete (Eufemia), Fidel
Espiritu (Fidel), Simeon Espiritu, Jr. (Simeon, Jr.), and Liberato
Mangoba (Liberato) were employees of Small and Medium
Enterprise Bank, Incorporated (SME Bank). Originally, the
principal shareholders and corporate directors of the bank were
Eduardo M. Agustin, Jr. (Agustin) and Peregrin de Guzman, Jr.
(De Guzman).
SME Bank experienced financial difficulties and so, Agustin
and De Guzman sell it to Abelardo Samson (Samson) with the
condition that there be a peaceful turn over of all assets, as well

as peaceful transition of management and shall terminate/retire

the employees that both parties agreed upon. Also, all retirement
benefits, if any of the above officers/stockholders/board of
directors are hereby waived upon consummation of the above
sale. The retirement benefits of the rank and file employees
including the managers shall be honored by the new
management.
The general manager of SME Bank held a meeting with all the
employees and persuaded them to tender their resignations, with
the promise that they would be rehired upon reapplication.
Relying on this, respondents tendered their resignations and
subsequently submitted application letters. They were not
rehired, except for Simeon, Jr. But after a month in service,
Simeon, Jr. again resigned.
Respondent-employees demanded the payment of separation
pays but requests were denied. They filed Complaint against
SME Bank, spouses Abelardo and Olga Samson and Aurelio
Villaflor (the Samson Group), and Agustin and De Guzman,
before the NLRC for unfair labor practice, illegal dismissal;
illegal deductions; underpayment; and nonpayment of
allowances, separation pay and 13th month pay.
The labor arbiter ruled that the buyer of an enterprise is not
bound to absorb its employees, unless there is an express
stipulation to the contrary. He also found that respondent
employees were illegally dismissed. Accordingly, the labor
arbiter decided the case against Agustin and De Guzman, but
dismissed the Complaint against the Samson Group.
Respondent employees, and Agustin and De Guzman brought
separate appeals to the NLRC. Respondent employees
questioned the labor arbiters failure to award backwages, while
Agustin and De Guzman contended that they should not be held
liable for the payment of the employees claims.
NLRC found that there was only a mere transfer of shares and
therefore, a mere change of management (from Agustin and De
Guzman to the Samson Group). As the change of management
was not a valid ground to terminate respondent bank employees,
the NLRC ruled that they had indeed been illegally dismissed. It
further ruled that Agustin, De Guzman and the Samson Group
should be held jointly and severally liable for the employees
separation pay and backwages. CA also affirmed the decision of
the NLRC.
ISSUE: Whether or not respondents were illegally dismissed.
HELD: Yes. The Court held that while resignation letters
containing words of gratitude may indicate that the employees
were not coerced into resignation, this fact alone is not
conclusive proof that they intelligently, freely and voluntarily
resigned. Resignations must be made voluntarily and with the
intention of relinquishing the office, coupled with an act of
relinquishment. Therefore, in order to determine whether the
employees truly intended to resign from their respective posts,
we cannot merely rely on the tenor of the resignation letters, but
must take into consideration the totality of circumstances in
each particular case. Same goes with retirement.
Elicerio, Ricardo, Fidel, and Liberato only tendered resignation
letters because they were led to believe that, upon reapplication,
they would be reemployed by the new management. Their
reliance on the representation that they would be reemployed
gives credence to their argument that they merely submitted
courtesy resignation letters because it was demanded of them,
and that they had no real intention of leaving their posts.

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Labor Standards
Therefore , they did not voluntarily resign from their work;
rather, they were terminated from their employment.
In San Miguel Corporation v. NLRC, 354 Phil. 815 (1998), it
was explained that involuntary retirement is tantamount to
dismissal, as employees can only choose the means and methods
of terminating their employment, but are powerless as to the
status of their employment and have no choice but to leave the
company.
This rule squarely applies to Eufemia's case. Indeed, she could
only choose between resignation and retirement, but was made
to understand that she had no choice but to leave SME Bank.
Thus, we conclude that, similar to her other co-employees, she
was illegally dismissed from employment.
The Samson Group contends that, assuming the employees were
dismissed, the dismissal is legal because cessation of operations
due to serious business losses is one of the authorized causes of
termination under Labor Code. However, as per the Court, the
law permits an employer to dismiss its employees in the event of
closure of the business establishment. However, the employer is
required to serve written notices on the worker and the
Department of Labor at least one month before the intended date
of closure. Moreover, the dismissed employees are entitled to
separation pay, except if the closure was due to serious business
losses or financial reverses. However, to be exempt from
making such payment, the employer must justify the closure by
presenting convincing evidence that it actually suffered serious
financial reverses. In this case, the records do not support the
contention of SME Bank that it intended to close the business
establishment. On the contrary, the intention of the parties to
keep it in operation is evident, and employees and Department
of Labor were given written notices at least one month before
the dismissal took place.

settled rule is that an employer who terminates the employment

of its employees without lawful cause or due process of law is
liable for illegal dismissal.
Respondent employees are entitled to separation pay, full
backwages, moral damages, exemplary damages and attorneys
fees. As the rule is that illegally dismissed employees are
entitled to (1) either reinstatement, if viable, or separation pay if
reinstatement is no longer viable; and (2) backwages.
LRTA v. Pili June 8, 2016
FACTS: LRTA is a government-owned and controlled
corporation created under Executive Order (EO) No. 6035.It
entered into a ten-year operations and management agreement
with Meralco Transit Organization, Inc. (MTOI) from 8 June
1984 to 8 June 1994. MTOI, a corporation organized under the
Corporation Code, hired its own employees and thereafter
entered into collective bargaining agreements (CBAs) with the
unions of its employees.
However, the Commission on Audit declared the Agreement
between LRTA and MTOI void. As a result, LRTA purchased all
the shares of stock of MTOI and renamed MTOI to Metro
Transit Organization, Inc. (Metro) and formally declared Metro
as its wholly-owned subsidiary.
The Agreement between LRTA and Metro expired on 8 June
1994, and was thereafter extended on a month-to-month basis.
Respondents, who were employees of Metro who have been
terminated upon the expiration of the Agreement, filed cases
involving purely monetary claims in the form of separation
pays, balances of separation pays, and other unpaid claims.

Petitioner bank also argues that following the court's ruling in

Manlimos v. NLRC, even in cases of stock sales, the new
owners are under no legal duty to absorb the sellers employees,
and that the most that the new owners may do is to give
preference to the qualified separated employees. Thus, petitioner
bank argues that the dismissal was lawful.

The Board of Directors of LRTA issued Resolution No. 00-44

where LRTA officially assumed the obligation to ensure that the
Metro Inc. Employees Retirement Fund is updated and that it
fully covers all retirement benefits payable to the employees of
Metro. Based on the foregoing, the respondents argue that the
LRTA is liable for their monetary claims.

The court held that the right to security of tenure guarantees the
right of employees to continue in their employment absent a just
or authorized cause for termination. This guarantee proscribes a
situation in which the corporation procures the severance of the
employment of its employees who patently still desire to work
for the corporation only because new majority stockholders
and a new management have come into the picture. This
situation is a clear circumvention of the employees
constitutionally guaranteed right to security of tenure, an act that
cannot be countenanced by this Court.

LRTA, on the other hand, argues that NLRC cannot exercise

jurisdiction over it as it is a government-owned and controlled
corporation, and that only the Civil Service Commission (CSC)
can take cognizance of the matter. Further, LRTA maintains that
it has a separate legal personality from Metro, and thus, there
can be no basis for the monetary claims of the employees of
Metro.

It is thus erroneous on the part of the corporation to consider the

employees as terminated from their employment when the sole
reason for so doing is a change of management by reason of the
stock sale. The conformity of the employees to the corporations
act of considering them as terminated and their subsequent
acceptance of separation pay does not remove the taint of illegal
dismissal. Acceptance of separation pay does not bar the
employees from subsequently contesting the legality of their
dismissal, nor does it estop them from challenging the legality
of their separation from the service.

LRTA appealed to the NLRC and it found that there was no

illegal dismissal as Pili's dismissal was valid on account of the
termination of the Agreement between Metro and LRTA.

Also, it was held that SME Bank, Eduardo M. Agustin, Jr. and
Peregrin de Guzman, Jr. are liable for illegal dismissal. The

Labor Arbiter Catalino R. Laderas rendered his Decision in

favor of the rest of the respondents. The Labor Arbiter found
that LRTA was solidarity liable with Metro for the monetary
claims.

LRTA appealed to the CA and it set aside the Resolution of the

NLRC and reinstated the Decision of the Labor Arbiter in toto.
Hence, this petition.
ISSUE: (1) WON an employer-employee relationship exists
between the respondents and LRTA

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Labor Standards
(2) WON the NLRC has jurisdiction over LRTA on the issue of
the monetary obligations.
HELD: NO. The Court ruled that the LRTA is a governmentowned and controlled corporation with an original charter. All
of the respondents allege that they were employed by Metro.
Thus, there is no real issue as far as the employer-employee
relationship is concerned - the respondents themselves do not
claim to be employed by LRTA. The employees were employed
solely by Metro as Metro and LRTA each maintained their
separate juridical personalities.
LRTA, even after it purchased all the shares of stock of Metro,
maintained and continued to have its separate and juridical
personality.
(2) Yes. The Court ruled that the argument of LRTA that only
the CSC may exercise jurisdiction over it - even for monetary
claims, must necessarily fail.
The NLRC acquired jurisdiction over LRTA not because of the
employer-employee relationship of the respondents and LRTA
(because there is none) but rather because LRTA expressly
assumed the monetary obligations of Metro to its employees. In
the Agreement, LRTA was obligated to reimburse Metro for the
latter's Operating Expenses which included the salaries, wages
and fringe benefits of certain employees of Metro. Moreover,
the Board of Directors of LRTA issued Resolution No. 00-44
where again, LRTA assumed the monetary obligations of Metro
more particularly to update the Metro Inc. Employees
Retirement Fund and to ensure that it fully covers all the
retirement benefits payable to the employees of Metro.
It is clear from the foregoing, and it is also not denied by LRTA,
that it has assumed the monetary obligations of Metro to its
employees. As such, the NLRC may exercise jurisdiction over
LRTA on the issue of the monetary obligations.
South Cotobato Comms. vs. Sto. Tomas

Facts: DOLE conducted a Complaint Inspection at the premises

of DXCP Radio Station( owned by petitioner) w/c yielded a
finding of violation of labor standards provisions of the Labor
Code involving the nine (9) private respondents, such as:
Underpayment of Wages; Underpayment of 13th Month Pay;
Non-payment of the five (5) days Service Incentive Leave Pay;
Non-payment of Rest Day Premium Pay; Non-payment of the
Holiday Premium Pay; Non-remittance of SSS Contributions;
Some employees are paid on commission basis aside from their
allowance[s]
DOLE issued an Order for petitioners to pay private respondents
the total amount of P759,752, representing private respondents'
claim.
Petitioner asserted that the Order did not state employeremployee relationship exists between petitioners and private
respondents, which is necessary to confer jurisdiction to the
DOLE over the alleged violations.
Issue:
1. What is the quantum of proof in labor cases, i.e.,
finding of ER-EE rel.
2. WON ER-EE exists
Held: 1.In labor cases, the quantum of proof necessary is
substantial evidence, or such amount of relevant evidence

which a reasonable mind might accept as adequate to justify a

conclusion.

Like the NLRC, the DOLE has the authority to rule on the
existence of an employer-employee relationship between the
parties, considering that the existence of an employer-employee
relationship is a condition sine qua non for the exercise of its
visitorial power. Nevertheless, it must be emphasized that
without an employer-employee relationship, or if one has
already been terminated, the Secretary of Labor is without
jurisdiction to determine if violations of labor standards
provision had in fact been committed,24 and to direct employers
to comply with their alleged violations of labor standards.
Substantial evidence, such as proofs of employment, clear
exercise of control, and the power to dismiss that prove such
relationship and that petitioners committed the labor laws
violations they were adjudged to have committed, are grossly
absent in this case.
Mere allegation, without more, is not evidence and is not
equivalent to proof.29Hence, private respondents' allegations,
essentially self-serving statements as they are and devoid under
the premises of any evidentiary weight, can hardly be taken as
the substantial evidence contemplated for the DOLE'S
conclusion that they are employees of petitioners.
it was incumbent upon private respondents to prove their
allegation that they were, indeed, under petitioners' employ and
that the latter violated their labor rights. A person who alleges a
fact has the onus of proving it and the proof should be clear,
positive and convincing.32 Regrettably, private respondents
failed to discharge this burden. The pronouncement in Bombyo
Radyo that the determination by the DOLE of the existence of
an employer-employee relationship must be respected should
not be construed so as to dispense with the evidentiary
requirement when called for.
The Orders of the Regional Director and the Secretary of
Labor do not contain clear and distinct factual basis
necessary to establish the jurisdiction of the DOLE and to
justify the monetary awards to private respondents
As can be gleaned from the above-quoted Order, the Regional
Director merely noted the discovery of violations of labor
standards provisions in the course of inspection of the DXCP
premises. No such categorical determination was made on the
existence of an employer-employee relationship utilizing any of
the guidelines set forth. In a word, the Regional Director had
presumed, not demonstrated, the existence of the relationship.
Of particular note is the DOLE'S failure to show that petitioners,
thus, exercised control over private respondents' conduct in the
workplace. The power of the employee to control the work of
the employee, or the control test, is considered the most
significant determinant of the existence of an employeremployee relationship.
Valeroso vs Skycable

GR No. 202015

Facts: Petitioners Valeroso and Legatona alleged that they

started working in 1998 as account executives tasked to solicit
cable subscriptions for Respondent Skycable. As shown in their
payslips, for the years 2001 to 2006, they received commissions
upon reaching a specific quota every month and an additional
allowance of per month. From being direct hires of respondent,
they were transferred to Skill Plus Manpower Services sans any
agreement for their transfer. In February 2009, they were
informed that their commissions would be reduced due to the
introduction of prepaid cards sold to cable subscribers resulting
in lower monthly cable subscriptions. Dismayed, they notified

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Labor Standards
their manager, Marlon Pasta, of their intention to file a labor
case with the NLRC. Pasta then informed them that they will be
dropped from the roster of its account executives, which act,
petitioners claimed, constitutes unfair labor practice.
Respondent, on the other hand, claimed that it did not terminate
the services of petitioners for there was never an employeremployee relationship to begin with. They engaged petitioners
as independent contractors under a Sales Agency Agreement and
insisted that it engaged in legitimate job contracting where no
employer-employee relation exists between them.
Issue: Whether or not there was an employer-employee
relationship that would constitute illegal dismissal
Held: NO. The Court ruled that there is an absence of an
employer-employee relationship in this case. To prove the claim
of an employer-employee relationship, the following should be
established by competent evidence: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the employer's power to control the
employee with respect to the means and methods by which the
work is to be accomplished. Among the four, the most
determinative factor in ascertaining the existence of employeremployee relationship is the "right of control test." Under this
control test, the person for whom the services are performed
reserves the right to control not only the end to be achieved, but
also the means by which such end is reached.
The documents presented are not competent evidence of
employer-employee relation as these merely certified that
respondent had engaged the services of petitioners without
specifying the true nature of such engagement. Furthermore, the
respondent's act of regularly updating petitioners of new
promos, price listings, meetings and trainings of new account
executives as well as imposing quotas and penalties do not
pertain to the means and methods of how petitioners were to
perform and accomplish their task of soliciting cable
subscriptions. At most, these indicate that respondent regularly
monitors the result of petitioners' work but in no way dictate
upon them the manner in which they should perform their
duties. Absent any intrusion by respondent into the means and
manner of conducting petitioners' tasks, bare assertion that
petitioners' work was supervised and monitored does not suffice
to establish employer-employee relationship.
Century Properties vs. Babiano, G.R. No. 220978; July 5,
2016
Facts: On October 2, 2002, Edwin J. Babiano was hired by
Century Properties, Inc. (CPI) as Director of Sales, and was
eventually appointed as Vice President for Sales effective
September 1, 2007. During the same period, Emma B.
Concepcion was initially hired as Sales Agent by CPI and was
eventually promoted as Project Director on September 1,
2007As such, she signed an employment agreement,
denominated as "Contract of Agency for Project Director
which provided, among others, that she would directly report to
Babiano. On March 31, 2008, Concepcion executed a similar
contract anew with CPI in which she would receive a monthly
subsidy of P50,000.00, 0.5% commission, and cash incentives
as per company policy. Notably, it was stipulated in both
contracts that no employer-employee relationship exists between
Concepcion and CPI.
After receiving reports that Babiano provided a competitor with
information regarding CPFs marketing strategies, spread false
information regarding CPI and its projects, recruited CPI's
personnel to join the competitor, and for being absent without
official leave (AWOL) for five (5) days, CPI sent Babiano a

Notice to Explain on February 23, 2009 directing him to explain

why he should not be charged with disloyalty, conflict of
interest, and breach of trust and confidence for his actuations.
On February 25, 2009, Babiano tendered his resignation and
revealed that he had been accepted as Vice President of First
Global BYO Development Corporation (First Global), a
competitor of CPI. On the other hand, Concepcion resigned as
CPFs Project Director through a letter dated February 23, 2009,
effective immediately.
On the other hand, Concepcion resigned as CPFs Project
Director through a letter[22] dated February 23, 2009, effective
immediately. For its part, CPI maintained[25] that Babiano is
merely its agent tasked with selling its projects. On
Concepcion's money claims, CPI asserted that the NLRC had no
jurisdiction to hear the same because there was no employeremployee relations between them, and thus, she should have
litigated the same in an ordinary civil action. The Labor Arbiter
(LA) ruled in CPI's favor. NLRC reversed and set aside the LA
ruling. CA affirmed the NLRC ruling with modification
increasing the award of unpaid commissions to Babiano and
Concepcion. The CA echoed the NLRC's finding that there
exists an employer-employee relationship between Concepcion
and CPI, because the latter exercised control over the
performance of her duties as Project Director which is indicative
of an employer-employee relationship.
Issue: WON CPI has employer-employee relationship with
Concepcion.
Held: Yes. Anent the nature of Concepcion's engagement, based
on case law, the presence of the following elements evince the
existence of an employer-employee relationship: (a) the power
to hire, i.e., the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee's conduct, or the so
called "control test." Under this test, an employer-employee
relationship exists where the person for whom the services are
performed reserves the right to control not only the end
achieved, but also the manner and means to be used in reaching
that end.
Guided by these parameters, the Court finds that Concepcion
was an employee of CPI considering that: (a) CPI continuously
hired and promoted Concepcion from October 2002 until her
resignation on February 23, 2009, thus, showing that CPI
exercised the power of selection and engagement over her
person and that she performed functions that were necessary and
desirable to the business of CPI; (b) the monthly "subsidy" and
cash incentives that Concepcion was receiving from CPI are
actually remuneration in the concept of wages as it was
regularly given to her on a monthly basis without any
qualification, save for the "complete submission of documents
on what is a sale policy"; (c) CPI had the power to discipline or
even dismiss Concepcion as her engagement contract with CPI
expressly conferred upon the latter "the right to discontinue
[her] service anytime during the period of engagement should
[she] fail to meet the performance standards," among others, and
that CPI actually exercised such power to dismiss when it
accepted and approved Concepcion's resignation letter; and most
importantly, (d) as aptly pointed out by the CA, CPI possessed
the power of control over Concepcion because in the
performance of her duties as Project Director - particularly in
the conduct of recruitment activities, training sessions, and skills
development of Sales Directors - she did not exercise
independent discretion thereon, but was still subject to the direct
supervision of CPI, acting through Babiano.
Besides, while the employment agreement of Concepcion was
denominated as a "Contract of Agency for Project Director," it

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Labor Standards
should be stressed that the existence of employer-employee
relations could not be negated by the mere expedient of
repudiating it in a contract. In the case of Insular Life Assurance
Co., Ltd. v. NLRC, it was ruled that one's employment status is

defined and prescribed by law, and not by what the parties say it
should be.

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