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Cyrus Vincent Tronco

LABOR STANDARDS

Cyrus Vincent Tronco LABOR STANDARDS University of San Carlos School of Law and Governance LABOR STANDARDS

University of San Carlos School of Law and Governance

LABOR STANDARDS CASE DIGESTS

(School Year 2017-2018)

SUBMITTED BY:

TRONCO, CYRUS VINCENT L.

EH-405

SUBMITTED TO:

ATTY. JEFFERSON M. MARQUEZ

Cyrus Vincent Tronco

LABOR STANDARDS

Table of Contents

185449

BASIC PRINCIPLES

5

Sonza vs. ABS-CBN (GR No. 138051 June 10, 2004)

5

Lazaro vs. Social Security Commission (G.R. No. 138254 July 30, 2004)

6

Philippine Global Commission, Inc. vs. De Vera (G.R. No. 157214 June 7, 2005)

7

ABS-CBN vs. Nazareno (G.R. 164156 September 26, 2006)

9

Francisco vs. NLRC (GR No. 170087 August 31, 2006)

11

Nogales et. al. vs. Capitol Medical Center (G.R. No. 142625 December 19, 2006)

13

Coca-Cola Bottlers vs. Dr. Climaco (GR No. 146881 February 5, 2007)

15

Calamba Medical center VS. NLRC, et. Al. (GR No. 176484 November 28, 2008)

17

Escasiñas, et. al. vs. Shangri-La Mactan Island Resort, et. al (G.R. No. 178827 March 4, 2009)

18

Tongko vs. The Manufacturers Life Insurance Co., Inc. (G.R. No. 167622 November 7, 2008)

19

Semblante et al., vs. Court of Appeals, et al. (G.R. No. 196426 August 15, 2011)

21

Bernarte vs. Phil. Basketball Association et al. (G.R. No. 192084 September 14, 2011)

23

Lirio vs Genovia (G.R. No. 169757 November 23, 2011)

25

Charlie Jao vs BCC Products Sales, Inc. (GR No. 163700 April 18, 2012)

28

Legend Hotel vs Realuyo (GR 153511 July 18, 2012)

30

The New Philippine Skylanders, Inc., vs. Dakila (G.R. No. 199547 Sept. 24, 2012)

32

Tesoro et al., vs. Metro Manila Retreaders Inc., et al. (GR No. 171482 March 12, 2014)

34

Royale Homes Marketing Corp. vs. Alcantara (G.R. No. 195190 July 28, 2014)

36

Fuji Television Network, Inc., vs. Arlene S. Espiritu (G.R. No. 204944-45 December 3, 2014)

38

Cabaobas et. al. vs. Pepsi Cola (G.R. No. 176908 March 25, 2015)

41

Begino et.al. v. ABS-CBN Corp. (G.R. No. 199166 April 20, 2015)

43

Social Security System vs Ubana (G.R. No 200144 August 25, 2015)

45

Century Properties, Inc., v. Edwin Babiano and Emma Concepcion (G.R. No. 220978 July 5, 2016)

47

Lu vs. Enopia (G.R. No. 197899 March 6, 2017)

49

185450 HIRING OF EMPLOYEE

51

PT &T vs. NLRC (G.R. No. 118978 May 23, 1997)

51

Duncan Asso. Of Detailman-PTGWO vs. GlaxoSmithKlein Phils. (G.R. No. 162994 Sept. 17, 2004)

53

Star Paper Corp., vs Simbol (G.R. 164774 April 12, 2006)

55

Del Monte Phils. V. Velasco (G.R. No. 153477 March 6, 2007)

56

Yrasuegui vs. Philippine Airline (G.R No. 168081 Oct. 17, 2008)

57

185451 WAGE & THE WAGE RATIONALIZATION ACT

58

SIP Food House et al vs. Batolina (G.R. No. 192473 October 11, 2010)

58

SLL International Cables Specialist vs. NLRC (G.R. No. 172161 March 2, 2011)

60

Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. (G.R. No. 176985 April 1, 2013)

62

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LABOR STANDARDS

Royal Plant Workers Union vs. Coca-Cola Bottlers Philippines Inc. (GR No. 198783 April 15, 2013)

64

The National Wages and Productivity Commission et. al. vs. The Alliance of Progressive Labor et. al. (G.R. No. 150326 March 12, 2014)

66

David/Yield Hog Dealer v. Macasio (G.R. No. 195466 July 2, 2014)

69

Our Haus Realty Corporation vs. Parian (G.R. No. 204651 August 6, 2014)

71

Milan, et al vs. NLRC and Solid Mills (G.R. No. 202961 February 4, 2015)

73

185452 WAGE ENFORCEMENT AND RECOVERY

76

Tiger Construction and Development Corp. vs. Abay et al. (G.R. No. 164141 February 26, 2010)

76

People’s Broadcasting (Bombo Radyo Phils) vs. Sec of DOLE et al. (G.R. No. 179652 May 8, 2009)

78

Superior Package Corp. v. Balagsay (G.R. No. 178909 October 10, 2012)

80

SHS Perforated Materials, Inc. et al., vs. Diaz (GR No. 185814 Oct. 13, 2010)

82

Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo (G.R. No. 188169 November 28, 2011)

84

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

86

TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union (G.R. No. 191714 February 26, 2014)

88

Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso. (G.R. No. 181806 March 12, 2014)

90

Bluer Than Blue Joint Ventures Co., vs. Esteban (G.R. No. 192582 April 7, 2014)

92

Netlink Computer Inc. v. Delmo (G.R. No. 160827 June 18, 2014)

93

PLDT vs Estrañero (G.R. No. 192518 October 15, 2014)

95

Milan et al vs. NLRC (G.R. No. 202961 February 4, 2015)

97

185453 PAYMENT OF WAGES

102

Congson vs. NLRC (G.R. No. 114250 April 5, 1995)

102

North Davao Mining vs. NLRC (G.R. No. 112546 March 13, 1996)

103

Heirs of Sara Lee vs. Rey (G.R. No. 149013 August 31, 2006)

104

185454 CONDITIONS OF

EMPLOYMENT

106

San Juan De Dios Hospital vs. NLRC (G.R. No. 126383 November 28, 1997)

106

Sime Darby Pilipinas, Inc. vs. NLRC (G.R. No. 119205 April 15, 1998)

107

Phil. Airlines vs. NLRC (G.R. No. 132805 February 2, 1999)

108

Linton Commercial Co., Inc., vs. Hellera et al. (G.R. No. 163147 October 10, 2007)

110

Bisig Manggagawa sa Tryco vs. NLRC (G.R. No. 151309 October 15, 2008)

111

HSY Marketing Ltd., Co., vs. Virgilio O. Villastique (G.R. No. 219569 August 17, 2016)

115

A. Nate Casket Maker vs. Elias V. Arango (G.R. No. 192282 October 5, 2016)

117

185455 MINIMUM LABOR STANDARD BENEFITS

119

San Miguel Corp., vs. CA (G.R. No. 146775 January 30, 2002)

119

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

122

Lambo vs. NLRC (G.R. No. 111042 October 26, 1999)

124

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LABOR STANDARDS

R&E Transport vs. Latag (G.R. No. 155214 February 13, 2004)

126

Asian Transmission vs. CA (G.R. No. 144664 March 15, 2004)

127

Autobus Transport System vs. Bautista (G.R. No. 156364 May 16, 2005)

128

San Miguel Corp., vs. Del Rosario (G.R. No. 168194 Dec. 13, 2005)

130

Penaranda vs. Baganga Plywood Corp. (G.R. No. 159577 May 3, 2006)

133

Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, (G.R. No. 1577745 October

19, 2007)

135

Bahia Shipping Services vs. Chua (G.R. No. 162195 April 8, 2008)

137

PNCC Skyway Traffic Management and Security Division Workers Organization (G.R. No. 171231

February 17, 2010)

138

Radio Mindanao Network, Inc. vs. Ybarola (G.R. No. 198662 September 12, 2012)

139

Robina Farms Cebu vs. Villa (GR No. 175869 April 18, 2016)

141

De La Salle Araneta University v. Juanito Bernardo (G.R. No. 190809 February 13, 2017)

143

185456 OTHER SPECIAL BENEFITS

147

185457 Reyes vs. NLRC et al. (GR No. 160233 August 8, 2007)

147

185458 Acro Metal Products Co., Inc., et. Al., vs Samahan ng mga Manggagawa sa Acro . 149

149

185459 Metal-NAFLU (G.R. No. 170734 May 14, 2008)

185460 Universal Robina Sugar Milling Corp. vs Caballeda (GR No. 156644 July 28, 2008)150

152

185461 Cercado vs. Uniprom, Inc. (GR No. 199338 January 21, 2013)

185462 Radio Mindanao Network Inc., et al., vs Ybarola, Jr. Et al. (GR No. 198662

September 12, 2012)

153

185463 Padillo vs Rural Bank of Nabunturan Inc. (G.R. No. 199338 January 21, 2013)

154

185464 Grace Christian High School vs Lavandera (G.R. No. 177845 August 20, 2014)

156

185465 Goodyear Philippines Inc., and Remegio M. Ramos vs. Marina L. Angus (G.R. No.

185466, November 12, 2014)

157

185466

Banco De Oro Unibank vs Sagaysay (G.R. No. 214961 September 16, 2015)

159

185467

Maureen P. Perez vs. Comparts Industries, Inc. (G.R. No. 197557 October 5, 2016) 161

185468

Editha M. Catotocan vs. Lourdes School of Quezon City, Inc. (G.R. No. 213486 April

26, 2017)

162

185469

Philippine Airlines, Inc. vs. Arjan T. Hassaram (G.R. No. 217730 June 5, 2017)

165

Cyrus Vincent Tronco

LABOR STANDARDS

185449 BASIC PRINCIPLES

Sonza vs. ABS-CBN (GR No. 138051 June 10, 2004)

FACTS:

In May 1994, ABS-CBN signed an agreement with Mel and Joey Management and Developments Corporation (MJMDC), a television program. Referred to in the Agreement as “Agent”, MJMDC agreed to provide Sonza’s services exclusively to ABS-CBN as talent for radio and television. ABS-CBN agreed to pay Sonza’s services a monthly talent fee of P310, 000 for the first year and P317,000 for the second and third year of the agreement.

On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President Lopez stating that he will irrevocably resign in view of the recent events concerning his program and career, that he is waiving and renouncing recovery of the remaining amount stipulated in the Agreement, but reserves the right to seek recovery of the other benefits under said agreement.

On April 30, 1996, Sonza filed a complaint against ABS-CBN before the Department of Labor and

Employment, NCR alleging that ABS-CBN did not pay his salary, separation pay, service incentive leave, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP). ABS-CBN moved for the dismissal of the complaint on the ground that there was no employer-employee relationship between them. ABS-CBN insists that Sonza was an independent contractor.

ISSUE: Whether an employer-employee relationship exists.

RULING:

The Court sustained ABS-CBN’s contention and hence, dismissed the petition.

The Supreme Court ratiocinated that Independent contractors often present themselves to possess unique skills, expertise, talent, to distinguish them from ordinary employees. The specific selection and hiring of Sonza, because of his unique skills, talent, and celebrity status not possessed by an ordinary employee, is a circumstance indicative of an independent contractual relationship. Whatever benefits Sonza enjoyed arose from a contract and not because of an employer-employee relationship. Sonza’s talent fees are so huge and out of the ordinary that they indicate more an independent contractual relationship.

Applying the control test in the case at bar, the Court found that Sonza is not an employee but an independent contractor. First, ABS-CBN engaged Sonza’s services specifically to co-host the “Mel and Jay” program. ABS-CBN did not assign any other work to Sonza. To perform his work, Sonza only needed his skills and talent. Sonza delivered his lines appeared on the television and sounded on radio, all outside the control of ABS-CBN. Sonza did not have to work eight hours a day. The Agreement required Sonza to attend only rehearsals and tapings. ABS-CBN could not dictate the contents of Sonza’s script. Sonza had a free hand on what to say or discuss in his shows. Clearly, ABS-CBN did not exercise control over the means and methods of performance of Sonza’s work.

Cyrus Vincent Tronco

LABOR STANDARDS

Lazaro vs. Social Security Commission (G.R. No. 138254 July 30, 2004)

FACTS:

Private respondent Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against her three employers. Among the respondents was herein petitioner Angelito L. Lazaro (“Lazaro”), proprietor of Royal Star Marketing (“Royal Star”), which is engaged in the business of selling home appliances. Petitioner states that 1) Laudato was not a sales supervisor of Royal Star, but was a mere sales agent whom he paid purely on commission basis.2) Laudato was not subjected to definite hours and conditions of work. As such, Laudato could not be deemed an employee of Royal Star while respondents contended that despite her employment as sales supervisor of the sales agents for Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory coverage or remit Laudato’s social security contributions.

ISSUE: Whether or not respondent is an employee, bringing her under the coverage of the Social Security Act.

RULING:

Ladato is an employee of Royal Star. It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship warrants the application of the “control test,” that is, whether the employer controls or has reserved the right to control the employee, not only as to the result the of work done, but also as to the means and methods by which the same is accomplished. The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship.

The relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. A supervisor is exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes.” Laudato oversaw and supervised the sales agents of the company, and thus was subject to the control of management as to how she implements its policies and its end results. Royal Star exercised control over its sales supervisors or agents such as Laudato as to the means and methods through which these personnel performed their work.

Cyrus Vincent Tronco

LABOR STANDARDS

Philippine Global Commission, Inc. vs. De Vera (G.R. No. 157214 June 7, 2005)

FACTS:

Philippine Global Communications Inc. is a corporation engaged in the business of communication services and allied activities while Ricardo de Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. The controversy arose when petitioner terminated his engagement.

In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized the respondent’s proposal in a document denominated as retainership contract which will be for a period of one year, subject to renewal and clearly stated that respondent will cover the retainership the company previously with Dr. Eulau. The agreement went until 1994, in the years 1995-1996, it was renewed verbally. The turning point of the parties’ relationship was when petitioner, thru a letter bearing the subject TERMINATION RETAINERSHIP CONTRACT, informed Dr. de Vera of its decision to discontinue the latter’s retainer contract because the management has decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises.

On January 1997, de Vera filled a complaint for illegal dismissal before the NLRC, alleging that he had been actually employed by the company as its company physician since 1991. The commission rendered decision in favor of Philcom and dismissed the complaint saying that de Vera was an independent contractor. On appeal to NLRC, it reversed the decision of the Labor Arbiter stating that de Vera is a regular employee and directed the company to reinstate him. Philcom appealed to the CA where it rendered decision deleting the award but reinstating de Vera. Philcom filed this petition involving the difference of a job contracting agreements from employee-employer relationship.

ISSUE: Whether or not there exists an employee-employer relationship between the parties.

RULING:

SC ruled that there was no such relationship existing between Dr. de Vera and Phil. Com.

Upon reading the contract dated September 6, 1982, signed by the complainant himself, it clearly states that is a retainership contract. The retainer fee is indicated thereon and the duration of the contract for one year is also clearly indicated in paragraph 5 of the Retainership Contract. The complainant cannot claim that he was unaware that the ‘contract’ was good only for one year, as he signed the same without any objections. The complainant also accepted its renewal every year thereafter until 1994. As a literate person and educated person, the complainant cannot claim that he does not know what contract he signed and that it was renewed on a year to year basis. The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with petitioner, he never was included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an employer employee relationship. The elements of an employer-employee relationship are wanting in this case. The record is replete with evidence showing that respondent had to bill petitioner for his monthly professional fees. It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary.

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LABOR STANDARDS

The power to terminate the parties’ relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause. Remarkably absent is the element of control whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished.

Petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. In fine, the parties themselves practically agreed on every terms and conditions of the engagement, which thereby negates the element of control in their relationship.

Cyrus Vincent Tronco

LABOR STANDARDS

ABS-CBN vs. Nazareno (G.R. 164156 September 26, 2006)

FACTS:

ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees’ identification cards and were required to work for a minimum of eight hours a day, including Sundays and holidays. They were made to: a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN; b) Coordinate, arrange personalities for air interviews; c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints; e) Assist, anchor program interview, etc.; and f) Record, log clerical reports, man based control radio.

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.

Due to a memorandum assigning PA’s to non-drama programs, and that the DYAB studio operations would be handled by the studio technician. There was a revision of the schedule and assignments and that respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa.

On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC.

ISSUE: WON the respondents are regular employees?

RULING:

Respondents are considered regular employees of ABS-CBN and are entitled to the benefits granted to all regular employees.

Where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity exists. The reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular status. Article 280 of the Labor Code provides:

REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

Any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity performed and while such activity actually exists. The fact that respondents received pre-agreed “talent fees” instead of salaries, that they did not observe the required office hours, and that they were permitted to join other productions during their free time are

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not conclusive of the nature of their employment. They are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors.

There are two kinds of regular employees under the law: (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed.

What determines whether a certain employment is regular or otherwise is the character of the activities performed in relation to the particular trade or business taking into account all the circumstances, and in some cases the length of time of its performance and its continued existence.

The employer-employee relationship between petitioner and respondents has been proven by the following:

First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required from them because they were merely hired through petitioner’s personnel department just like any ordinary employee.

Second. The so-called “talent fees” of respondents correspond to wages given as a result of an employer employee relationship. Respondents did not have the power to bargain for huge talent fees, a circumstance negating independent contractual relationship.

Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents are highly dependent on the petitioner for continued work.

Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates the allegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish an independent business or professional service, such work is a regular employment of such employee and not an independent contractor.

Cyrus Vincent Tronco

LABOR STANDARDS

Francisco vs. NLRC (GR No. 170087 August 31, 2006)

FACTS:

In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company. In 1996, she was designated Acting Manager, and was able to perform the duties of such for 5 years. As of December 31, 2000, her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. In January 2001, Liza R. Fuentes as Manager replaced her. She alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, she did not receive her salary from the company. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well. On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was informed that she is no longer connected with the company. Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter. The Labor Arbiter ruled in favor of the petitioner.

The NLRC affirmed with modification the Decision of the Labor Arbiter. On appeal, the Court of Appeals reversed the NLRC decision. The appellate court denied petitioner’s motion for reconsideration, hence, the present recourse.

ISSUE: Whether there was an employer-employee relationship between petitioner and private respondent Kasei Corporation.

RULING:

The determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as: (1) the extent to which the services performed are an integral part of the employer’s business; (2) the extent of the worker’s investment in equipment and facilities; (3) the nature and degree of control exercised by the employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker upon the employer for his continued employment in that line of business. The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. In the United States, the touchstone of economic reality in analyzing possible employment relationships for purposes of the Federal Labor Standards Act is dependency. By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his employer. 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, 13 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

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LABOR STANDARDS

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. It is therefore apparent that petitioner is economically dependent on Respondent Corporation for her continued employment in the latter’s line of business. The petition is GRANTED.

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LABOR STANDARDS

Nogales et. al. vs. Capitol Medical Center (G.R. No. 142625 December 19, 2006)

FACTS:

Pregnant Corazon Nogales ("Corazon") was under the exclusive prenatal care of Dr. Oscar Estrada ("Dr. Estrada"). Corazon was admitted at the CMC. Dr. Estrada ordered the injection of ten grams of magnesium sulfate. However, Dr. Ely Villaflor ("Dr. Villaflor"), who was assisting Dr. Estrada, administered only 2.5 grams of magnesium sulfate. Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby. In the process, piece of cervical tissue was allegedly torn. The baby came out in an panic, cyanotic, weak, and injured condition. Corazon began to manifest moderate vaginal bleeding which rapidly became profuse. Dr. Noe Espinola ("Dr. Espinola"), head of the Obstetrics Gynecology Department of the CMC, was apprised of Corazon's condition by telephone. Upon being informed that Corazon was bleeding profusely, Dr. Espinola ordered immediate hysterectomy. Despite Dr. Espinola's efforts, Corazon died.

Petitioners filed a complaint for damages with the Regional Trial Court. Petitioners mainly contended that defendant physicians and CMC personnel were negligent in the treatment and management of Corazon's condition. Petitioners charged CMC with negligence in the selection and supervision of defendant physicians and hospital staff.

Trial court rendered judgment finding Dr. Estrada solely liable for damages. The Court of Appeals upheld the trial court's ruling, finding Dr. Estrada as an independent contractor-physician. The Court of Appeals applied the "borrowed servant" doctrine considering that Dr. Estrada was an independent contractor who was merely exercising hospital privileges. This doctrine provides that once the surgeon enters the operating room and takes charge of the proceedings, the acts or omissions of operating room personnel, and any negligence associated with such acts or omissions, are imputable to the surgeon.

ISSUE: WON there is employer-employee relationship between Dr. Estrada and CMC.

RULING:

Dr. Estrada is not an employee of CMC, but an independent contractor. However, CMC is still vicariously liable.

The Court finds no single evidence pointing to CMC's exercise of control over Dr. Estrada's treatment and management of Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she was under the exclusive prenatal care of Dr. Estrada. Dr. Estrada is not an employee of CMC, but an independent contractor.

In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an exception to this principle. The hospital may be liable if the physician is the "ostensible" agent of the hospital. This exception is also known as the "doctrine of apparent authority." The doctrine of apparent authority essentially involves two factors to determine the liability of an independent- contractor physician. The first factor focuses on the hospital's manifestations and is sometimes described as an inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital. In this regard, the hospital need not make express representations to the patient that the treating physician is an employee of the hospital; rather a representation may be general and implied. The doctrine of apparent authority is A specie of the doctrine of estoppel. Article 1431 of the Civil Code provides that "through estoppel, an admission or representation is rendered conclusive upon the person making it,

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LABOR STANDARDS

and cannot be denied or disproved as against the person relying thereon." CMC impliedly held out Dr. Estrada as a member of its medical staff.

Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such authority. First, CMC granted staff privileges to Dr. Estrada. Second, CMC made Rogelio sign consent forms printed on CMC letterhead. Third, Dr. Estrada's referral of Corazon's profuse vaginal bleeding to Dr. Espinola, who was then the Head of the Obstetrics and Gynecology Department of CMC, gave the impression that Dr. Estrada as a member of CMC's medical staff was collaborating with other CMC employed specialists in treating Corazon. WHEREFORE, the Court PARTLY GRANTS the petition. The Court finds respondent Capitol Medical Center vicariously liable for the negligence of Dr. Oscar Estrada.

Cyrus Vincent Tronco

LABOR STANDARDS

Coca-Cola Bottlers vs. Dr. Climaco (GR No. 146881 February 5, 2007)

FACTS:

Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-Cola Bottlers Phil.(petitioner) by virtue of a Retainer Agreement. Among the terms and conditions under their retainer agreement are:

That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31, 1988. Either party may terminate the contract upon giving a 30-day written notice to the other;

That petitioner shall compensate respondent a retainer fee of P3,800/month. The DOCTOR may charge professional fee for hospital services rendered in line with his specialization;

That in consideration of the retainer’s fee, the DOCTOR agrees to perform the duties and obligations in the COMPREHENSIVE MEDICAL PLAN, made an integral part of this retainer agreement;

That the DOCTOR shall observe clinic hours at the company’s premises from Monday to Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each day or treatment from 7:30 a.m. to 8:30 a.m. and 3:00pm to 4:00pm. It is further understood that the DOCTOR shall be on call at all times during the other work shifts to attend to emergency case(s);

That no employee-employer relationship shall exist between the company and the DOCTOR.

The retainer agreement expired after 1 year. However, despite the non-renewal of the agreement, respondent continued to perform his functions as company doctor to petitioner until he received a letter dated March 9, 1995 from the company ending their retainership agreement.

Respondent thereafter filed a complaint before the NLRC seeking recognition as a regular employee of petitioner and thus prayed from payment of all the benefits of a regular employee including 13th month pay, COLA, holiday pay, service incentive leave, and Christmas bonus. Also, respondent filed another complaint for illegal dismissal against petitioner.

In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint was dismissed by the Labor Arbiters and subsequently affirmed by the NLRC on the ground that no employer-employee relationship existed between petitioner company and respondent.

However, when it was elevated to CA for review, the latter ruled that employer-employee relationship existed between the parties after applying the four-fold test: (1) power to hire employee (2) payment of wages (3) power to dismissal (4) and power to control over the employee with respect to the means and methods by which the work is to be accomplished.

The CA held it in this wise:

First, the agreement provides “the company desires to engage on a retainer basis the services of a physician and the said DOCTOR is accepting such engagement”. This clearly shows that Coca-Cola company exercised its power to hire.

Secondly, the agreement showed that petitioner would compensate the doctor for P3,800/month. This would represent the element of payment of wages.

Cyrus Vincent Tronco

LABOR STANDARDS

Thirdly, it was provided in the agreement that the same shall be valid only for 1 year. “the said term notwithstanding, either party may terminate the contract upon giving 30-day written notice”. This would show that petitioner had the power to dismissal.

Lastly, the agreement reveals that Coca-Cola control over the conduct of respondent in the latter’s performance of his duties as a doctor for the company.

Hence, this petition filed by Coca-Cola company

ISSUE: Whether or not there exist an employer-employee relationship between the parties.

RULING:

The Court agrees with the finding of the Labor Arbiter and the NLRC.

The Court held that the Labor Arbiter and the NLRC correctly found that petitioner company lacked the power of control over the performance by respondent of his duties.

The Court citing the case of Neri vs. NLRC said, petitioner company, through the Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved. In other words, what was sought to be controlled by the petitioner company was actually the end result of the task. The guidelines or the Comprehensive Medical Plan were laid down merely to ensure that the desired end result was achieved but did not control the means and methods by which respondent performed his assigned tasks.

The Supreme Court further held that, an employee is required to stay in the employer’s workplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose. Such is not the prevailing situation here. The respondent does not dispute that fact that outside of the two (2) hours that he is required to be at petitioner company’s premises, he is not at all further required to just sit around in the premises and wait for an emergency to occur so as to enable him from using such hours for his own benefit and advantage. In fact, respondent maintains his own private clinic attending his private practice in the city, where he services his patients and bills them accordingly.

The Court finds that the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement.

The Supreme Court also notes that the Agreement granted to both parties the power to terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or termination.

Therefore, the petition was GRANTED.

Cyrus Vincent Tronco

LABOR STANDARDS

Calamba Medical center VS. NLRC, et. Al. (GR No. 176484 November 28, 2008)

FACTS:

Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians. Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00 each. Also, resident physicians were also given a percentage share out of fees charged for out-patient treatments, operating room assistance and discharge billings, in addition to their fixed monthly retainer.

The work schedules of the members of the team of resident physicians were fixed by petitioner's medical director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax from them.

After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and a fellow employee Diosdado Miscala, the former was given a preventive suspension and his wife Dr. Merceditha was not given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed a complaint for illegal suspension and Dr. Merceditha for illegal dismissal.

ISSUE: Whether or not there exists an employer-employee relationship between petitioner and the spouses-respondents?

RULING: Drs. Lanzanas are declared employee by the petitioner hospital. 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.

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.

With respect to respondents' sharing in some hospital fees, this scheme does not sever 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.

Moreover, respondents were made subject to petitioner-hospital's Code of Ethics, the provisions of which cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and offenses against persons, property, and the hospital's interest.

More importantly, petitioner itself provided incontrovertible proof of the employment status of respondents, namely, the identification cards it issued them, the pay slips 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. It bears noting at this juncture that mandatory coverage under the SSS Law is premised on the existence of an employer- employee relationship, except in cases of compulsory coverage of the self-employed.

Cyrus Vincent Tronco

LABOR STANDARDS

Escasiñas, et. al. vs. Shangri-La Mactan Island Resort, et. al (G.R. No. 178827 March 4,

2009)

FACTS:

Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-La's Mactan Island Resort (Shangri-La) in Cebu of which she was a retained physician.

In late 2002, petitioners filed with the National Labor Relations Commission (NLRC) a complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular employees of Shangri-La. Shangri-La claimed, however, that petitioners were not its employees but of respondent doctor, that Article 157 of the Labor Code, as amended, does not make it mandatory for a covered establishment to employ health personnel, that the services of nurses is not germane nor indispensable to its operations, and that respondent doctor is a legitimate individual contractor who has the power to hire, fire and supervise the work of nurses under her.

ISSUE: Whether

between

RULING:

or

Shangri-La

not

there

and petitioners.

exists

an

employer-employee

relationship

The Court holds that respondent doctor is a legitimate independent contractor. That Shangri-La provides the clinic premises and medical supplies for use of its employees and guests do not necessarily prove that respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its employees is required under Art. 157, which are not directly related to Shangri-La's principal business operation of hotels and restaurants.

As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contributions and other benefits of the staff; group life, group personal accident insurance and life/death insurance for the staff with minimum benefit payable at 12 times the employee’s last drawn salary, as well as value added taxes and withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-La's guests who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as workers, pay their SSS premium as well as their wages if they were not indeed her employees.

With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document, “Clinic Policies and Employee Manual” claimed to have been prepared by respondent doctor exists, to which petitioners gave their conformity and in which they acknowledged their co-terminus employment status. It is thus presumed that said document, and not the employee manual being followed by Shangri-La's regular workers, governs how they perform their respective tasks and responsibilities.

In fine, as Shangri-La does not control how the work should be performed by petitioners, it is not petitioners’ employer.

Cyrus Vincent Tronco

LABOR STANDARDS

Tongko vs. The Manufacturers Life Insurance Co., Inc. (G.R. No. 167622 November 7,

2008)

FACTS: Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance business. Renato A. Vergel De Dios was, during the period material, its President, and Chief Executive Officer. Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by virtue of a Career Agent's Agreement (Agreement) he executed with Manulife.

In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or interpreted as creating an employer-employee relationship between the Company and the Agent.

The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal, or cancellation of the right to terminate this Agreement by the Company shall be construed for any previous failure to exercise its right under any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party fifteen (15) days' notice in writing.

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting of commissions, persistency income, and management overrides. The problem started sometime in 2001, when Manulife instituted manpower development programs in the regional sales management level. Relative thereto, De Dios addressed a letter dated November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting. Stating that Tongko’s Region was the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in this area. Other issues were: "Some Managers are unhappy with their earnings and would want to revert to the position of agents." And "Sales Managers are doing what the company asks them to do but, in the process, they earn less." Tongko was then terminated.

Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for illegal dismissal In the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the complaint for lack of an employer-employee relationship.

The NLRC's First Division, while finding an employer-employee relationship between Manulife and Tongko applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an appeal with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the absence of an employer-employee relationship between the parties, and deeming the NLRC with no jurisdiction over the case. Hence, Tongko filed this petition.

ISSUE: Whether or not Tongko was an employee of Manulife and that he was illegally dismissed.

RULING:

Cyrus Vincent Tronco

LABOR STANDARDS

Yes. In the instant case, Manulife had the power of control over Tongko that would make him its employee. Several factors contribute to this conclusion.

In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that:

The Agent hereby agrees to comply with all regulations and requirements of the Company as herein provided as well as maintain a standard of knowledge and competency in the sale of the Company's products which satisfies those set by the Company and sufficiently meets the volume of new business required of Production Club membership. Under this provision, an agent of Manulife must comply with three (3) requirements: (1) compliance with the regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses.

Among the company regulations of Manulife are the different codes of. The fact that Tongko was obliged to obey and comply with the codes of conduct was not disowned by respondents.

Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of Manulife may already be established. Certainly, these requirements controlled the means and methods by which Tongko was to achieve the company's goals.

More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform administrative duties that establishes his employment with Manulife.

Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of agents, in addition to his other administrative functions, leads to no other conclusion that he was an employee of Manulife.

Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of proving the validity of the termination of employment rests on the employer. Failure to discharge this evidential burden would necessarily mean that the dismissal was not justified, and, therefore, illegal.

The Labor Code provides that an employer may terminate the services of an employee for just cause and this must be supported by substantial evidence. The settled rule in administrative and quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the legality of an employer's dismissal of an employee, and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient. Substantial evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.

Here, 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.

Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its employee is not entitled to such notices. Since we have ruled that Tongko is its employee, however, Manulife clearly failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.

Cyrus Vincent Tronco

LABOR STANDARDS

Semblante et al., vs. Court of Appeals, et al. (G.R. No. 196426 August 15, 2011)

FACTS:

Petitioners Marticio Semblante and Dubrick Pilar assert that they were hired by respondents-spouses Vicente and Maria Luisa Loot, the owners of Galleria de Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of the cockpit sometime in 1993.

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 after deducting the arriba, or the commission for the cockpit. Meanwhile, 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.

For their services as masiado rand sentenciador, Semblante receives Php 2,000 per week or a total of Php

8,000 per month, while Pilar gets Php 3,500 a week or Php 14,000 per month. They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the morning depending on the needs of the cockpit. Petitioners had both been issued employees’ identification cards that they wear every time they report for duty. They alleged never having incurred any infraction and/or violation of the cockpit rules and regulations.

On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of respondents, and were informed of the termination of their services effective that date. This prompted petitioners to file a complaint for illegal dismissal against respondents.

Respondents denied that petitioners were their employees and alleged that they were associates of respondents’ independent contractor, Tomas Vega. Respondents claimed that petitioners have no regular working time or day and they are free to decide for themselves whether to report for work or not on any cockfighting day. In times when there are few cockfights in Galleria de Mandaue, petitioners go to other cockpits in the vicinity. Lastly, petitioners, so respondents assert, were only issued identification cards to indicate that they were free from the normal entrance fee and to differentiate them from the general public.

In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to be regular employees of respondents as they performed work that was necessary and indispensable to the usual trade or business of respondents for a number of years. The Labor Arbiter also ruled that petitioners were illegally dismissed, and so ordered respondents to pay petitioners their back wages and separation pay.

Respondents’ counsel received the Labor Arbiter’s Decision on September 14, 2004. And within the 10- day appeal period, he filed the respondents’ appeal with the NLRC on September 24, 2004, but without posting a cash or surety bond equivalent to the monetary award granted by the Labor Arbiter.

The NLRC held in its Resolution of October 18, 2006 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.

The CA upheld the NLRC decision.

Cyrus Vincent Tronco

LABOR STANDARDS

ISSUE: Whether or not there exists an employer/employee relationship between Semblante, et al. and the spouses LOOT.

RULING:

The petitioners are NOT employees of respondents, since their relationship fails to pass muster the fourfold test of employment We have repeatedly mentioned in countless decisions: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct, which is the most important element.

As found by both the NLRC and the CA, respondents had no part in petitioners’ selection and management; petitioners’ compensation was paid out of the arriba (which is a percentage deducted from the total bets), not by petitioners; and petitioners performed their functions as masiador and sentenciador free from the direction and control of respondents. In the conduct of their work, petitioners relied mainly on their “expertise that is characteristic of the cockfight gambling,” and were never given by respondents any tool needed for the performance of their work.

Respondents, not being petitioners’ employers, could never have dismissed, legally or illegally, petitioners, since respondents were without power or prerogative to do so in the first place.

Cyrus Vincent Tronco

LABOR STANDARDS

Bernarte vs. Phil. Basketball Association et al. (G.R. No. 192084 September 14, 2011)

FACTS:

Complainants, Jose Mel Bernarte and Renato Guevarra, aver that they were invited to join the PBA as referees. During the leadership of Commissioner Emilio Bernardino, they were made to sign contracts on a year-to-year basis. During the term of Commissioner Eala, however, changes were made on the terms of their employment.

Bernarte, was not made to sign a contract during the first conference of the All-Filipino Cup which was from February 23, 2003 to June 2003. It was only during the second conference when he was made to sign a one-and-a-half-month contract for the period July 1 to August 5, 2003.

January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him that his contract would not be renewed citing his unsatisfactory performance on and off the court. It was a total shock for Bernarte who was awarded Referee of the year in 2003. He felt that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon.

Guevarra alleges that he was invited to join the PBA pool of referees in February 2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003, respondent Martinez issued a memorandum to Guevarra expressing dissatisfaction over his questioning on the assignment of referees officiating out-of-town games. Beginning February 2004, he was no longer made to sign a contract.

The Court of Appeals denied the motion for reconsideration.

Complainants entered into two contracts of retainer with the PBA in the year 2003. The first contract was for the period January 1, 2003 to July 15, 2003; and the second was for September 1 to December 2003. After the lapse of the latter period, PBA decided not to renew their contracts.

Complainants were not illegally dismissed because they were not employees of the PBA. Their respective contracts of retainer were simply not renewed. PBA had the prerogative of whether or not to renew their contracts, which they knew were fixed.

Labor Arbiter’s decision, on 31 March 2005, declared petitioner an employee whose dismissal by respondents was illegal. Accordingly, the Labor Arbiter ordered the reinstatement of petitioner and the payment of back wages, moral and exemplary damages, and attorney’s fees.

In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiter’s judgment. The dispositive portion of the NLRC’s decision reads:

WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor Arbiter Teresita D. Castillon- Lora dated March 31, 2005 is AFFIRMED.

The Court of Appeals found petitioner an independent contractor since respondents did not exercise any form of control over the means and methods by which petitioner performed his work as a basketball referee. The Court of Appeals held:

While the NLRC agreed that the PBA has no control over the referees’ acts of blowing the whistle and making calls during basketball games, it, nevertheless, theorized that the said acts refer to the means and methods employed by the referees in officiating basketball games for the illogical reason that said

Cyrus Vincent Tronco

LABOR STANDARDS

acts refer only to the referees’ skills. How could a skilled referee perform his job without blowing a whistle and making calls? Worse, how can the PBA control the performance of work of a referee without controlling his acts of blowing the whistle and making calls?

ISSUE: Whether petitioner is an employee of respondents, which in turn determines whether petitioner was illegally dismissed

RULING:

At any rate, the NLRC declared the issue on the finality of the Labor Arbiter’s decision moot as respondents’ appeal was considered in the interest of substantial justice. We agree with the NLRC. The ends of justice will be better served if we resolve the instant case on the merits rather than allowing the substantial issue of whether petitioner is an independent contractor or an employee linger and remain unsettled due to procedural technicalities.

The existence of an employer-employee relationship is ultimately a question of fact. As a general rule, factual issues are beyond the province of this Court. However, this rule admits of exceptions, one of which is where there are conflicting findings of fact between the Court of Appeals, on one hand, and the NLRC and Labor Arbiter, on the other, such as in the present case.

To determine the existence of an employer-employee relationship, case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee on the means and methods by which the work is accomplished. The so-called “control test” is the most important indicator of the presence or absence of an employer-employee relationship.

We agree with respondents that once in the playing court, the referees exercise their own independent judgment, based on the rules of the game, as to when and how a call or decision is to be made. The referees decide whether an infraction was committed, and the PBA cannot overrule them once the decision is made on the playing court. The referees are the only, absolute, and final authority on the playing court. Respondents or any of the PBA officers cannot and do not determine which calls to make or not to make and cannot control the referee when he blows the whistle because such authority exclusively belongs to the referees. The very nature of petitioner’s job of officiating a professional basketball game undoubtedly calls for freedom of control by respondents.

Moreover, the following circumstances indicate that petitioner is an independent contractor: (1) the referees are required to report for work only when PBA games are scheduled, which is three times a week spread over an average of only 105 playing days a year, and they officiate games at an average of two hours per game; and (2) the only deductions from the fees received by the referees are withholding taxes. In other words, unlike regular employees who ordinarily report for work eight hours per day for five days a week, petitioner is required to report for work only when PBA games are scheduled or three times a week at two hours per game. In addition, there are no deductions for contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual deductions from employees’ salaries. These undisputed circumstances buttress the fact that petitioner is an independent contractor, and not an employee of respondents.

Cyrus Vincent Tronco

LABOR STANDARDS

Lirio vs Genovia (G.R. No. 169757 November 23, 2011)

FACTS:

On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner Cesar Lirio and/or Celkor Ad Sonic Mix Recording Studio for illegal dismissal, non-payment of commission and award of moral and exemplary damages.

In his Position Paper, respondent Genovia alleged, among others, that on August 15, 2001, he was hired as studio manager by petitioner Lirio, owner of Celkor Ad Sonic Mix Recording Studio (Celkor). He was employed to manage and operate Celkor and to promote and sell the recording studio's services to music enthusiasts and other prospective clients. He received a monthly salary of P7,000.00. They also agreed that he was entitled to an additional commission of P100.00 per hour as recording technician whenever a client uses the studio for recording, editing or any related work. He was made to report for work from Monday to Friday from 9:00 a.m. to 6 p.m. On Saturdays, he was required to work half-day only, but most of the time, he still rendered eight hours of work or more. All the employees of petitioner, including respondent, rendered overtime work almost every day, but petitioner never kept a daily time record to avoid paying the employees overtime pay.

Respondent stated that a few days after he started working as a studio manager, petitioner approached him and told him about his project to produce an album for his 15-year-old daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange songs for Celine and promised that he (Lirio) would draft a contract to assure respondent of his compensation for such services. As agreed upon, the additional services that respondent would render included composing and arranging musical scores only, while the technical aspect in producing the album, such as digital editing, mixing and sound engineering would be performed by respondent in his capacity as studio manager for which he was paid on a monthly basis. Petitioner instructed respondent that his work on the album as composer and arranger would only be done during his spare time, since his other work as studio manager was the priority. Respondent then started working on the album.

Respondent alleged that before the end of September 2001, he reminded petitioner about his compensation as composer and arranger of the album. Petitioner verbally assured him that he would be duly compensated. By mid-November 2001, respondent finally finished the compositions and musical arrangements of the songs to be included in the album. Before the month ended, the lead and back-up vocals in the ten (10) songs were finally recorded and completed. From December 2001 to January 2002, respondent, in his capacity as studio manager, worked on digital editing, mixing and sound engineering of the vocal and instrumental audio files.

Thereafter, petitioner tasked respondent to prepare official correspondence, establish contacts and negotiate with various radio stations, malls, publishers, record companies and manufacturers, record bars and other outlets in preparation for the promotion of the said album. By early February 2002, the album was in its manufacturing stage. ELECTROMAT, manufacturer of CDs and cassette tapes, was tapped to do the job. The carrier single of the album, which respondent composed and arranged, was finally aired over the radio on February 22, 2002.

On February 26, 2002, respondent again reminded petitioner about the contract on his compensation as composer and arranger of the album. Petitioner told respondent that since he was practically a nobody and had proven nothing yet in the music industry, respondent did not deserve a high compensation, and he should be thankful that he was given a job to feed his family. Petitioner informed respondent that he was entitled only to 20% of the net profit, and not of the gross sales of the album, and that the

Cyrus Vincent Tronco

LABOR STANDARDS

salaries he received and would continue to receive as studio manager of Celkor would be deducted from the said 20% net profit share. Respondent objected and insisted that he be properly compensated. On March 14, 2002, petitioner verbally terminated respondent’s services, and he was instructed not to report for work.

Respondent asserts that he was illegally dismissed as he was terminated without any valid grounds,

and no hearing was conducted before he was terminated, in violation of his constitutional right to due

process. Having worked for more than six months, he was already a regular employee. Although he was a so called “studio manager,” he had no managerial powers, but was merely an ordinary employee.

Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative, that he be paid separation pay, back wages and overtime pay; and that he be awarded unpaid commission in the amount of P2,000.00 for services rendered as a studio technician as well as moral and exemplary damages.

Respondent’s evidence consisted of the Payroll dated July 31, 2001 to March 15, 2002, which was certified correct by petitioner,[2] and Petty Cash Vouchers[3] evidencing receipt of payroll payments by respondent from Celkor.

In defense, petitioner stated in his Position Paper[4] that respondent was not hired as studio manager, composer, technician or as an employee in any other capacity of Celkor. Respondent could not have been hired as a studio manager, since the recording studio has no personnel except petitioner. Petitioner further claimed that his daughter Celine Mei Lirio, a former contract artist of ABS-CBN Star Records, failed to come up with an album as the latter aborted its project to produce one. Thus, he decided to produce an album for his daughter and established a recording studio, which he named Celkor Ad Sonic

Mix Recording Studio. He looked for a composer/arranger who would compose the songs for the said

album. In July 2001, Bob Santiago, his son-in-law, introduced him to respondent, who claimed to be an amateur composer, an arranger with limited experience and musician without any formal musical training. According to petitioner, respondent had no track record as a composer, and he was not known in the field of music. Nevertheless, after some discussion, respondent verbally agreed with petitioner to co-produce the album based on the following terms and conditions: (1) petitioner shall provide all the

financing, equipment and recording studio; (2) Celine Mei Lirio shall sing all the songs; (3) respondent shall act as composer and arranger of all the lyrics and the music of the five songs he already composed

and the revival songs; (4) petitioner shall have exclusive right to market the album; (5) petitioner was

entitled to 60% of the net profit, while respondent and Celine Mei Lirio were each entitled to 20% of the

net profit; and (6) respondent shall be entitled to draw advances of P7,000.00 a month, which shall be deductible from his share of the net profits and only until such time that the album has been produced.

According to petitioner, they arrived at the foregoing sharing of profits based on the mutual understanding that respondent was just an amateur composer with no track record whatsoever in the music industry, had no definite source of income, had limited experience as an arranger, had no knowledge of the use of sound mixers or digital arranger and that petitioner would help and teach him how to use the studio equipment; that petitioner would shoulder all the expenses of production and provide the studio and equipment as well as his knowledge in the use thereof; and Celine Mei Lirio would sing the songs. They embarked on the production of the album on or about the third week of August 2002.

Petitioner asserted that from the aforesaid terms and conditions, his relationship with respondent is one of an informal partnership under Article 1767of the New Civil Code, since they agreed to contribute money, property, or industry to a common fund with the intention of dividing the profits among

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themselves. Petitioner had no control over the time and manner by which respondent composed or arranged the songs, except on the result thereof. Respondent reported to the recording studio between 10:00 a.m. and 12:00 noon. Hence, petitioner contended that no employer-employee relationship existed between him and the respondent, and there was no illegal dismissal to speak of.

ISSUE: Whether or not employer-employee relationship exists?

RULING: Yes. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee’s conduct. The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.

It is settled that no particular form of evidence is required to prove the existence of an employer employee relationship. Any competent and relevant evidence to prove the relationship may be admitted.

In this case, the documentary evidence presented by respondent to prove that he was an employee of petitioner are as follows: (a) a document denominated as "payroll" (dated July 31, 2001 to March 15, 2002) certified correct by petitioner,[31] which showed that respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th of the month and another P3,500.00 every 30th of the month) with the corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash vouchers,[32] showing the amounts he received and signed for in the payrolls.

The said documents showed that petitioner hired respondent as an employee and he was paid monthly wages of P7, 000.00. Petitioner wielded the power to dismiss as respondent stated that he was verbally dismissed by petitioner, and respondent, thereafter, filed an action for illegal dismissal against petitioner. The power of control refers merely to the existence of the power. It is not essential for the employer to actually supervise the performance of duties of the employee, as it is sufficient that the former has a right to wield the power. Nevertheless, petitioner stated in his Position Paper that it was agreed that he would help and teach respondent how to use the studio equipment. In such case, petitioner certainly had the power to check on the progress and work of respondent.

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Charlie Jao vs BCC Products Sales, Inc. (GR No. 163700 April 18, 2012)

FACTS:

Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President, respondent Terrance Ty (Ty), employed him as comptroller starting from September 1995 with a monthly salary of P20,000.00 to handle the financial aspect of BCC's business; that on October 19, 1995, the security guards of BCC, acting upon the instruction of Ty, barred him from entering the premises of BCC where he then worked; that his attempts to report to work in November and December 12, 1995 were frustrated because he continued to be barred from entering the premises of BCC; and that he filed a complaint dated December 28, 1995 for illegal dismissal, reinstatement with full back wages, non-payment of wages, damages and attorney's fees.

Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as its comptroller in BCC to oversee BCC's finances and business operations and to look after SFC's interests or investments in BCC.; that their issuance of the ID to petitioner was only for the purpose of facilitating his entry into the BCC premises in relation to his work of overseeing the financial operations of BCC for SFC; that the ID should not be considered as evidence of petitioner's employment in BCC; that petitioner executed an affidavit in March 1996, 20 stating, among others, as follows:

I am a CPA (Certified Public Accountant) by profession but presently associated with, or employed by, Sobien Food Corporation with the same business address as above stated;

In the course of my association with, or employment by, Sobien Food Corporation (SFC, for short), I have been entrusted by my employer to oversee and supervise collections on account of receivables due SFC from its customers or clients; for instance, certain checks due and turned over by one of SFC's customers is BCC Product Sales, Inc., operated or run by one Terrance L. Ty, (President and General manager).

Petitioner counters, however, that the affidavit did not establish the absence of an employer-employee relationship between him and respondents because it had been executed in March 1996, or after his employment with respondents had been terminated on December 12, 1995; and that the affidavit referred to his subsequent employment by SFC following the termination of his employment by BCC.

ISSUE: The sole issue is whether or not an employer-employee relationship existed between petitioner and BCC.

RULING: In determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the following incidents, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee on the means and methods by which the work is accomplished. The last element, the so-called control test, is the most important element.

Petitioner presented no document setting forth the terms of his employment by BCC. The failure to present such agreement on terms of employment may be understandable and expected if he was a common or ordinary laborer who would not jeopardize his employment by demanding such document from the employer, but may not square well with his actual status as a highly educated professional.

Petitioner's admission that he did not receive his salary for the three months of his employment by BCC, as his complaint for illegal dismissal and non-payment of wages and the criminal case for estafa he later

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filed against the respondents for non-payment of wages indicated, further raised grave doubts about his assertion of employment by BCC. If the assertion was true, we are puzzled how he could have remained in BCC's employ in that period of time despite not being paid the first salary of P20,000.00/month. Moreover, his name did not appear in the payroll of BCC despite him having approved the payroll as comptroller.

Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the insincerity of petitioner's assertion of employment by BCC. In the petition for review on certiorari, he averred that he had been barred from entering the premises of BCC on October 19, 1995, 27 and thus was illegally dismissed. Yet, his complaint for illegal dismissal stated that he had been illegally dismissed on December 12, 1995 when respondents' security guards barred him from entering the premises of BCC, 28 causing him to bring his complaint only on December 29, 1995, and after BCC had already filed the criminal complaint against him. The wide gap between October 19, 1995 and December 12, 1995 cannot be dismissed as a trivial inconsistency considering that the several incidents affecting the veracity of his assertion of employment by BCC earlier noted herein transpired in that interval.

With all the grave doubts thus raised against petitioner's claim, we need not dwell at length on the other proofs he presented, like the affidavits of some of the employees of BCC, the ID, and the signed checks, bills, and receipts. Suffice it to be stated that such other proofs were easily explainable by respondents and by the aforestated circumstances showing him to be the employee of SFC, not of BCC.

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Legend Hotel vs Realuyo (GR 153511 July 18, 2012)

FACTS:

This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays, separation pay, service incentive leave pay, and 13 th month pay.

Respondent averred that he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from September 1992 with an initial rate of P400.00/night that was given to him after each night’s performance; that his rate had increased to P750.00/night; and that during his employment, he could not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that the Legend Hotel’s restaurant manager had required him to conform with the venue’s motif; that he had been subjected to the rules on employees’ representation checks and chits, a privilege granted to other employees; that on July 9, 1999, the management had notified him that as a cost-cutting measure his services as a pianist would no longer be required effective July 30, 1999; that he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and that the loss of his employment made him bring his complaint.2 ISSUE: Whether there exists an employer-employee relationship

RULING:

Employer-employee relationship existed between the parties. The issue of whether or not an employer employee relationship existed between petitioner and respondent is essentially a question of fact. The factors that determine the issue include who has the power to select the employee, who pays the employee’s wages, who has the power to dismiss the employee, and who exercises control of the methods and results by which the work of the employee is accomplished.10 Although no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted, a finding that the relationship exists must nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion.

A review of the circumstances reveals that respondent was, indeed, petitioner’s employee. He was

undeniably employed as a pianist in petitioner’s Madison Coffee Shop/Tanglaw Restaurant from

September 1992 until his services were terminated on July 9, 1999.

First of all, petitioner actually wielded the power of selection at the time it entered into the service contract dated September 1, 1992 with respondent. This is true, notwithstanding petitioner’s insistence that respondent had only offered his services to provide live music at petitioner’s Tanglaw Restaurant, and despite petitioner’s position that what had really transpired was a negotiation of his rate and time of availability. The power of selection was firmly evidenced by, among others, the express written recommendation dated January 12, 1998 by Christine Velazco, petitioner’s restaurant manager, for the increase of his remuneration.

Secondly, petitioner argues that whatever remuneration was given to respondent were only his talent fees that were not included in the definition of wage under the Labor Code. Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights a week. Such rate

of remuneration was later increased to P750.00 upon restaurant manager Velazco’s recommendation.

There is no denying that the remuneration denominated as talent fees was fixed on the basis of his talent

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and skill and the quality of the music he played during the hours of performance each night, taking into account the prevailing rate for similar talents in the entertainment industry

Respondent’s remuneration, albeit denominated as talent fees, was still considered as included in the term wage in the sense and context of the Labor Code, regardless of how petitioner chose to designate the remuneration.

Thirdly, 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 is the so-called control test, and 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.

A review of the records shows, however, shows that respondent performed his work as a Pianist under petitioner’s supervision and control. Specifically, petitioner’s control of both the end achieved and the manner and means used to achieve that end was demonstrated by the following, to wit:

He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to

10:00 pm, three to six times a week;

He could not choose the place of his performance;

The restaurant’s manager required him at certain times to perform only Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana motif; and

He was subjected to the rules on employees’ representation check and chits, a privilege granted to other employees.

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The New Philippine Skylanders, Inc., vs. Dakila (G.R. No. 199547 Sept. 24, 2012)

FACTS:

November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the certification election conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders Employees Association-WATU (PSEA-WATU) immediately protested the result of the election before the Secretary of Labor.

In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLU’s supposed deliberate and habitual dereliction of duty toward its members. Attached to the notice was a copy of the resolution adopted and signed by the officers and members of PSEA authorizing their local union to disaffiliate from its mother federation.

PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philippine Skylanders Employees Association -National Congress of Workers (PSEA-NCW), and to maintain continuity within the organization, allowed the former officers of PSEA-PAFLU to continue occupying their positions as elected officers in the newly-forged PSEA-NCW.

On 17, March 1994, PSEA-NCW entered into a collective bargaining agreement with PSI which was immediately registered with the Department of Labor and Employment.

PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied the request.

PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSI’s refusal to bargain collectively with its workers, the company through its president and personnel manager, was also liable for interfering with its employees’ union activities

Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEA’s organizational meeting thereby confirming his illicit participation in union activities. Ayroso added that the members of the local union had unwittingly fallen into the manipulative machinations of PSI and were lured into endorsing a collective bargaining agreement which was detrimental to their interests.

PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since they brazenly allowed themselves to be manipulated and influenced by petitioner Francisco Dakila.

Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. PSEA was no longer affiliated with PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant complaint.

Labor Arbiter declared PSEA’s disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their respective officers guilty of unfair labor practice.

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As PSEA-NCW’s personality was not accorded recognition, its collective bargaining agreement with PSI was struck down for being invalid.

PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But the NLRC upheld the Decision of the Labor Arbiter.

RULING: Local unions have a right to separate from their mother federation on the ground that as separate and voluntary associations, local unions do not owe their creation and existence to the national federation to which they are affiliated but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the common bargaining power of local unions for the effective enhancement and protection of their interests. Admittedly, there are times when without succor and support local unions may find it hard, unaided by other support groups, to secure justice for them. Yet the local unions remain the basic units of association, free to serve their own interests subject to the restraints imposed by the constitution and by-laws of the national federation, and free also to renounce the affiliation upon the terms laid down in the agreement which brought such affiliation into existence.

There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway. As such, the pendency of an election protest involving both the mother federation and the local union did not constitute a bar to a valid disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local union, or an equivalent of 92.5% of the total union membership supported the claim of disaffiliation and had in fact deauthorized PAFLU from instituting any complaint in their behalf.

It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As PSEA had validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from subsequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members.

The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license to act independently of the local union.

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Tesoro et al., vs. Metro Manila Retreaders Inc., et al. (GR No. 171482 March 12, 2014)

This case concerns the effect on the status of employment of employees who entered into a Service Franchise Agreement with their employer.

FACTS:

On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang, and Gregorio Sharp used to work as salesmen for respondents Metro Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or Power Tire and Rubber Corporation. These are sister companies collectively called “Bandag”. Bandag offered repair and retread services for used tires. In 1998, however, Bandag developed a franchising scheme that would enable others to operate tire and retreading businesses using its trade name and service system. Petitioners quit their jobs as salesmen and entered into separate Service Franchise Agreements (SFAs) with Bandag for the operation of their respective franchises. Under this SFA, Bandag would provide funding with the petitioner’s subject to regular liquidation of revolving funds. The expenses of these funds will be deducted from their sale in order to determine their income. After some time, petitioners began to default on their obligations to submit periodic liquidations of their operational expenses in relation to the revolving funds Bandag provided them. Bandag terminated their SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, nonpayment of wages, incentive pay, 13th month pay and damages against Bandag with the National Labor Relations Commission (NLRC). Petitioners contend that despite the SFA, they remained employees of Bandag. For its part, Bandag pointed out that petitioners freely resigned from their employment and decided to avail themselves of the opportunity to be independent entrepreneurs under the franchise scheme that Bandag had. Thus, no employeremployee relationship existed between petitioners and Bandag.

ISSUE: Whether or not petitioners remained to be Bandag’s salesmen under the franchise scheme it entered into with them.

RULING:

No, petitioners were no longer employees of Bandag the moment they entered into the SFA. Franchising is a business method of expansion that allows an individual or group of individuals to market a product or a service and to use of the patent, trademark, trade name and the systems prescribed by the owner.

The tests for determining employeremployee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished. The last is called the “control test,” the most important element.

When petitioners agreed to operate Bandag’s franchise branches in different parts of the country, they knew that this substantially changed their former relationships. They were to cease working as Bandag’s salesmen, the positions they occupied before they ventured into running separate Bandag branches. They were to cease receiving salaries or commissions. Their incomes were to depend on the profits they made. Yet, petitioners did not then complain of constructive dismissal. They took their chances, ran their branches, Gregorio Sharp in La Union for several months and Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan for over a year. Clearly, their belated claim of constructive dismissal is quite hollow.

It is pointed out that Bandag continued, like an employer, to exercise control over petitioners’ work. It points out that Bandag: (a) retained the right to adjust the price rates of products and services; (b)

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imposed minimum processed tire requirement (MPR); (c) reviewed and regulated credit applications; and (d) retained the power to suspend petitioners’ services for failure to meet service standards. But uniformity in prices, quality of services, and good business practices are the essence of all franchises. A franchisee will damage the franchisor’s business if he sells at different prices, renders different or inferior services, or engages in bad business practices. These business constraints are needed to maintain collective responsibility for faultless and reliable service to the same class of customers for the same prices.

This is not the “control” contemplated in employer–employee relationships. Control in such relationships addresses the details of day to day work like assigning the particular task that has to be done, monitoring the way tasks are done and their results, and determining the time during which the employee must report for work or accomplish his assigned task.

Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employeremployee relationship with Bandag. These funds do not represent wages. They are more in the nature of capital advances for operations that Bandag conceptualized to attract prospective franchisees. Petitioners’ incomes depended on the profits they make, controlled by their individual abilities to increase sales, and reduce operating costs.

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Royale Homes Marketing Corp. vs. Alcantara (G.R. No. 195190 July 28, 2014)

FACTS:

Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its Marketing Director for a fixed period of one year. His work consisted mainly of marketing Royale Homes' real estate inventories on an exclusive basis. Royale Homes reappointed him for several consecutive years On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal against Royale Homes alleging that he was dismissed from work without any valid or just cause and in gross disregard of the proper procedure for dismissing employees. He prayed t to be reinstated to his former position without loss of seniority rights and other privileges, as well as to be paid back wages, moral and exemplary damages, and attorney's fees

Royale Homes denied that Alcantara is its employee because: (1) it engaged his services as an independent sales contract for one year only; (2) he never received any salary, 13th month pay, overtime pay or holiday pay; (3) he was paid on commission basis; (4) it had no control on how Alcantara would accomplish his tasks

Labor Arbiter rendered a Decision holding that Alcantara is an employee of Royale Homes

NLRC rendered its Decision ruling that Alcantara is not an employee but a mere independent contractor of Royale Homes. It based its ruling mainly on the contract

CA promulgated its Decision reversing the NLRC's Decision pointing out that Royale Homes exercised some degree of control over Alcantara since his job is subject to company rules, regulations, and periodic evaluations.

ISSUE: whether Alcantara was an independent contractor or an employee of Royale Homes

RULING:

Alcantara is not an employee of Royal Home but a mere independent contractor

The juridical relationship of the parties based on their written contract

The primary evidence of the nature of the parties' relationship in this case is the written contract that they signed. While the existence of employer-employee relationship is a matter of law, the characterization made by the parties in their contract as to the nature of their juridical relationship cannot be simply ignored, particularly in this case where the parties' written contract unequivocally states their intention at the time they entered into it.

In this case, the contract duly signed and not disputed by the parties, conspicuously provides that "no employer-employee relationship exists between" Royale Homes and Alcantara, as well as his sales agents. It is clear that they did not want to be bound by employer-employee relationship at the time of the signing of the contract

Since "the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations should control. “No construction is even needed as they already expressly state their intention.

The juridical relationship of the parties based on Control Test

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In determining the existence of an employer-employee relationship, this Court has generally relied on the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the 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 employer- employee relationship is the "right of control test".

In the case, the CA ratiocinated that since the performance of his tasks is subject to company rules, regulations, code of ethics, and periodic evaluation, the element of control is present.

The court disagrees. Not every form of control is indicative of employer-employee relationship. A person who performs work for another and is subjected to its rules, regulations, and code of ethics does not necessarily become an employee. As long as the level of control does not interfere with the means and methods of accomplishing the assigned tasks, the rules imposed by the hiring party on the hired party do not amount to the labor law concept of control that is indicative of employer-employee relationship

In this case, the rules, regulations, code of ethics, and periodic evaluation alluded to by Alcantara do not involve control over the means and methods by which he was to perform his job. In Tongko Case, this Court held that guidelines or rules and regulations that do not pertain to the means or methods to be employed in attaining the result are not indicative of control as understood in labor law

Neither does the repeated hiring of Alcantara prove the existence of employer-employee relationship. The continuous rehiring of Alcantara simply signifies the renewal of his contract with Royale Homes, and highlights his satisfactory services warranting the renewal of such contract

Payment of Wages

The element of payment of wages is also absent in this case. Alcantara's remunerations consist only of commission override of 0.5%, budget allocation, sales incentive, and other forms of company support. There is no proof that he received fixed monthly salary. No pay slip or payroll was ever presented and there is no proof that Royale Homes deducted from his supposed salary withholding tax or that it registered him with the Social Security System, Philippine Health Insurance Corporation, or Pag-Ibig Fund

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Fuji Television Network, Inc., vs. Arlene S. Espiritu (G.R. No. 204944-45 December 3,

2014)

FACTS:

In 2005, Fuji Television Network engaged Arlene, Inc. (Fuji) as a news correspondent/producer. Her employment contract initially provided for a term of one (1) year but was successively renewed on a yearly basis with salary adjustment upon every renewal

In 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition. In turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene that the company will have a problem renewing her contract since it would be difficult for her to perform her job.

Then Arlene and Fuji signed a non-renewal contract on May 5, 2009 where it was stipulated that her contract would no longer be renewed. The day after Arlene signed the non-renewal contract, on May 6, 2009, she filed a complaint for illegal dismissal.

She alleged that she was forced to sign the non-renewal contract when Fuji came to know of her illness and that Fuji withheld her salaries and other benefits for March and April 2009 when she refused to sign. She further alleged that claimed that she was left with no other recourse but to sign the non- renewal contract, and it was only upon signing that she was given her salaries and bonuses, in addition to separation pay equivalent to four (4) years.

Labor Arbiter Borbolla dismissed Arlene's complaint because applying the four-fold test Arlene was not Fuji's employee but an independent contractor.

National Labor Relations Commission reversed the Labor Arbiter's decision and held that Arlene was a regular employee with respect to the activities for which she was employed since she continuously rendered services that were deemed necessary and desirable to Fuji's business

Court of Appeals affirmed the National Labor Relations Commission with the modification that Fuji immediately reinstate Arlene to her position as News Producer without loss of seniority rights, and pay her back wages, 13th-month pay, mid-year and year-end bonuses, sick leave and vacation leave with pay until reinstated, moral damages, exemplary damages, attorney's fees, and legal interest of 12% per annum of the total monetary awards

CONTENTION OF FUJI: that Arlene was hired as an independent contractor; that Fuji had no control over her work; that there was no illegal dismissal because she freely agreed not to renew her fixed-term contract as evidenced by her e-mail correspondences with Yoshiki Aoki ISSUE: W/N Arlene was a regular employee, not an independent contractor

RULING:

The Court has often used the four-fold test to determine the existence of an employer-employee relationship. Under the four-fold test, the "control test" is the most important. In proving employer employee relationship through evidence, the Court ruled that:

There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security

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registration, appointment letters or employment contracts, payrolls, organization charts, and personnel lists, serve as evidence of employee status.

Arlene claims to be a regular employee. However, Fuji insists that she was an independent employee. The burden of proving that she was an independent contractor lies with Fuji. In labor cases, the quantum of proof required is substantial evidence.

Under Article 280, the provision classifies employees into regular, project, seasonal, and casual. It further classifies regular employees into two kinds:

Those "engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer" (regular employees)

Casual employees who have "rendered at least one year of service, whether such service is continuous or broken."

The Court defines independent contractor as:

one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under one's own responsibility according to one's own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.

Moreover, no employer-employee relationship exists between independent contractors and their principals who engage the contractor's services, but there is an employer-employee relationship between the contractor and workers hired to accomplish the work for the principal. Thus, their contracts are governed by the Civil Code provisions on contracts and other applicable laws.

In the facts of the case and using the four-fold test, Arlene was hired by Fuji as a news producer, but there was no showing that she was hired because of unique skills that would distinguish her from ordinary employees. Neither was there any showing that she had a celebrity status. Her monthly salary amounting to US$1,900.00 appears to be a substantial sum. Fuji had the power to dismiss Arlene, as provided for in her professional employment contract. Even the mode of transportation in carrying out Fuji controlled her functions. Therefore, Arlene is a regular employee and not an independent contractor.

There is also a test for determining regular employment where there is a reasonable connection between the employee's activities and the usual business of the employer. Article 280 provides that the nature of work must be "necessary or desirable in the usual business or trade of the employer" the test for determining regular employment. However, there may also be a situation where an employee's work is necessary but is not always desirable in the usual course of business of the employer. In this situation, there is no regular employment.

employer. In this situation, there is no regular employment. Fuji is engaged in the business of

Fuji is engaged in the business of broadcasting, including news programming. It is based in Japan and has overseas offices to cover international news. Based on the record, Fuji's Manila Bureau Office is a small unit and has a few employees. Arlene had to do all activities related to news gathering.

Arlene's tasks included "monitoring and getting news stories, reporting, and interviewing subjects in front of a video camera, timely submission of news and current events reports pertaining to the Philippines and going to Fuji's regional office in Thailand." She also had to report for work in Fuji's office in Manila from Mondays to Fridays, eight (8) hours per day. She had no equipment and had to

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use the facilities of Fuji to accomplish her tasks. Therefore, the successive renewals of Arlene's contract indicated the necessity and desirability of her work in the usual course of Fuji's business. Arlene had become a regular employee with the right to security of tenure.

Also, Arlene's contract indicating a fixed term did not automatically mean that she could never be a regular employee. An employee can be a regular employee with a fixed-term contract. The law does not preclude the possibility that a regular employee may opt to have a fixed-term contract for valid reasons. In the case of Brent: for as long as it was the employee who requested, or bargained, that the contract have a "definite date of termination," or that the fixed-term contract be freely entered into by the employer and the employee, then the validity of the fixed-term contract will be upheld.

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Cabaobas et. al. vs. Pepsi Cola (G.R. No. 176908 March 25, 2015)

FACTS:

Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic corporation engaged in manufacturing, bottling and distribution of soft drink products, which operates plants all over the country. One of which is in Tanauan, Leyte. The Tanauan Plant allegedly incurred business losses in the amount of Php29,167,390.00. Thus, PCPPI implemented a company-wide retrenchment program denominated as Corporate-Wide Rightsizing Program from 1999 to 2000. In July 31, 1999, it retrenched 47 employees from the Tanauan Plant, 27 of which filed complaints for illegal dismissal entitled Molon, et.al. v. Pepsi- Cola Products, Philippines, Inc. Another batch of employees were retrenched on January 15, 2000. These are the petitions in this case.

Petitioners allege that PCPPI was not facing serious financial losses because after their termination, it regularized four employees and hired replacements for the 47 previously dismissed employees. They also allege that the retrenchment was designed to prevent their union, Leyte Pepsi-Cola Employees Union Associated Labor Union (LEPCEU-ALU) from becoming the certified bargaining agent of PCPPI’s rank and-file employees.

PCPPI countered that petitioners were dismissed to save the company from total bankruptcy and collapse. It also submitted audited financial statements showing that it suffered financial reverses in 1998 in the amount of 700 million pesos where 27 million pesos were incurred in the Tanauan Plant.

The Labor Arbiter found the dismissal of petitioners as illegal. Upon appeal by PCPI, the NLRC found that it was not guilty of union-busting/unfair labor practice and declared LEPCEU-ALU’s strike as illegal. The NLRC also dismissed the complaints for illegal dismissal and declared the retrenchment program a valid exercise of management prerogative. It also ordered PCPPI to pay the employees their package separation benefits. From the NLRC decision, both petitioners and PCPPI appealed to the CA. The CA’s 18th division rendered a decision affirming the NLRC decision.

In contrast, when Molon, et.al earlier questioned the consolidated decision of the NLRC, the CA’s 20th division rendered a Decision granting their petition and reversing the NLRC. Aggrieved, petitioners come before the Court in this petition for review on certiorari assailing the CA 18th Decision.

ISSUE: The issues raised by petitioner boil down to the legality of their dismissal pursuant to PCPPI’s retrenchment program.

RULING:

Petition has no merit.

During the pendency of this petition, the Court rendered a Decision which reversed the CA ruling on the Molon, et.al petition. In the same petition, the Court ruled that PCPPI had validly implemented its retrenchment program. The prerogative of an employer to retrench its employees must be exercised only as a last resort. The requirements have been fulfilled in this case. Firstly, records disclose that both the CA and the NLRC had already determined that Pepsi complied with the requirements of substantial loss and due notice to both the DOLE and the workers to be retrenched. Secondly, records show that the respondents had already been [aid the requisite separation pay as evidenced by the quitclaims signed by them. Thirdly, the Corporate Rightsizing Program was a company-wide program which had been implemented in its other plants in Bacolod, Iloilo, Davao, General Santos, and Zamboanga. Pepsi’s

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management also exerted conscious efforts to incorporate employee participation during the implementation of its retrenchment program.

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Begino et.al. v. ABS-CBN Corp. (G.R. No. 199166 April 20, 2015)

FACTS:

ABS-CBN Regional Network Group in Naga City employed Amalia Villafuerte as a manager. In 1996, ABS-CBN employed then petitioners Begino and Del Valle as cameramen/Editors for TV broadcasting, ABS-CBN also employed Sumayao and Monina. Petitioners engaged their services thru Talent Contracts which are regularly renewed over three months to 1 year. Petitioners were also given Project Assignment forms which determined the duration of a particular project as well as the budget and the technical requirements thereof. Petitioners were then tasked to work on subsequent daily airings in respondent’s TV Patrol Bicol Program. The Talent contracts specifically provided that there is no employee-employer (ER-EE) relationship between petitioners and respondents, but it additionally provided for:

Creation and performance of work according to ABS-CBN’s standards, policies, and guidelines;

The petitioners should not work for ABS-CBN’s competing companies or any of the same that had an adverse interest to that of ABS-CBN;

The work they are doing is results oriented, which does not require them to have fixed or normal hours of work;

Petitioner’s remunerations were denominated as talent fees.

Petitioners, claiming that they are employees of the respondent, filed a complaint against ABS-CBN in the

NLRC Sub-Regional Arbitration Branch for regularization, underpayment of overtime pay, holiday pay, 13th month pay, Service incentive leave pay, damages and Atty’s fees, contending that:

They performed functions necessary and desirable in ABS-CBN business;

They are mandated to wear company ID’s;

They are provided all the equipment needed;

They worked under the direct control and supervision of respondent Villafuerte;

They were also bound on ABS-CBN’s policy on attendance and punctuality;

That ABS-CBN due to the Contracts, they earn less than what respondents usually pay their regular rank-and-file employees.

Respondents refuted the petitioners claim saying that:

The petitioners are independent contractors, they employed them due to lack of manpower to man the business;

They are known as talents and required to inform ABS-CBN of their availability through Talent Information Forms to facilitate their appearance on designated project days;

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They cannot afford employing regular workers due to unpredictable viewer preferences;

That through the talent contracts, petitioners were engaged because of their skills, knowledge and expertise;

That the policies were general guidelines only and does not subject petitioners to control; 6. were never subjected to control over the means and methods by which they do their tasks.

They

During the pendency of their case, petitioners were dismissed and they filed a second complaint, adding illegal dismissal and unfair labor practice to their previous claims 2nd claim of petitioners were dismissed for violation of rules against non-forum shopping because the issues in the 1st complaint must be resolved first before resolving the 2nd complaint.

Labor Arbiter resolved the first complaint in favor of petitioners, ordering ABS-CBN to pay a total of P2, 440,908.36 representing salaries/wage differentials, holiday pay, SIL, 13th month pay and Atty’s fees. LA also ordered respondents to admit back complainants under the same terms prevailing prior to their separation. LA said that they are employees because:

Petitioners have worked for more than a year;

Petitioners are bound by exclusivity clause in the talent contracts;

There was substantial control over them;

Respondents appealed to the NLRC which affirmed the LA’s decision. Appealed to the CA, CA reversed,

Petitioners then appealed to SC

RULING:

SC finds the petition impressed with merit. SC applied the four-fold test and the control test and found that there is a presence of an EE-ER relationship. Based on article 280 of the Labor Code, petitioners are regular employees of ABS-CBN due to the reasonable connection between the activity performed by the petitioners and the business or trade of ABS-CBN. Also, petitioners were continuously rehired over the years for its long running news program which indicates that petitioners are regular employees. Even if the performance is not continuous or merely intermittent, the law deems the repeated or continuing performance as sufficient evidence of the necessity, if not indispensability of that activity in the business. Indeed, an employment stops being co-terminus with specific projects where the employee is continuously re-hired due to the demands of the employer’s business. Exclusivity clause and the provision on equipment’s essential for their functions shows that petitioners were subject to control of the respondents. Even if the performance is not continuous or merely intermittent, the law deems the repeated or continuing performance as sufficient evidence of the necessity, if not indispensability of that activity in the business.29 Indeed, an employment stops being co-terminus with specific projects where the employee is continuously re-hired due to the demands of the employer’s business. SC Reversed the CA decision and reinstated NLRC decision.

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Social Security System vs Ubana (G.R. No 200144 August 25, 2015)

FACTS:

On May 28, 1996, she was made to sign a six-month Service Contract Agreement by DBP Service Corporation, appointing her as clerk for assignment with SSS Daet branch effective May 27, 1996, with

a daily wage of only P171.00. - She was assigned as "Frontliner" of the SSS Members Assistance Section

until December 15, 1999. - From December 16, 1999 to May 15, 2001, she was assigned to the Membership Section as Data Encoder. - On December 16, 2001, she was transferred to the SSS Retirees Association as Processor at the Membership Section until her resignation on August 26, 2002. - As Processor, she was paid only P229.00 daily or P5,038.00 monthly, while a regular SSS Processor receives a monthly salary of P18,622.00 or P846.45 daily wage. - On December 26, 2002, respondent Debbie Ubana filed a civil case for damages against the DBP Service Corporation, petitioner Social Security System (SSS), and the SSS Retirees Association before the RTC of Daet, Camarines Norte. The case was docketed as Civil Case No. 7304 and assigned to RTC Branch 39. - Petitioner and its co-defendants SSS Retirees Association and DBP Service Corporation filed their respective motions to dismiss, arguing that the subject matter of the case and respondent's claims arose out of employer-employee relations, which are beyond the RTC's jurisdiction and properly cognizable by the National Labor Relations Commission (NLRC). Ruling of

the Regional Trial Court - Motion to Dismiss the complaint of the herein plaintiff for lack of jurisdiction

is hereby GRANTED. - Motion for Reconsideration is hereby GRANTED. Ruling of the Court of Appeals

The instant petition is DENIED. - Petitioner filed a Motion for Reconsideration, but the CA denied the same in its January 10, 2012 Resolution. Hence, the present Petition.

ISSUE: WHETHER OR NOT THE RTC HAS JURISDICTION TO HEAR AND DECIDE CIVIL CASE NO.

7304.

RULING: The rule is that, the nature of an action and the subject matter thereof, as well as, which court or agency of the government has jurisdiction over the same, are determined by the material allegations of the complaint in relation to the law involved and the character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any or all of such reliefs. Article 217 of the Labor Code as amended vests upon the labor arbiter’s exclusive original jurisdiction only over the following:

Unfair labor practices;

Termination disputes;

If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates

of pay, hours of work and other terms and conditions of employment;

Claims for actual, moral, exemplary, and other forms of damages arising from employer employee relations;

Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes and lockouts; and

Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer- employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

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In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite. Since there is no employer-employee relationship between the parties herein, then there is no labor dispute cognizable by the Labor Arbiters or the NLRC. There being no employer-employee relation or any other definite or direct contract between respondent and petitioner, the latter being responsible to the former only for the proper payment of wages, respondent is thus justified in filing a case against petitioner, based on Articles 19 and 20 of the Civil Code, to recover the proper salary due her as SSS Processor. In this jurisdiction, the "long honored legal truism of 'equal pay for equal work" has been "impregnably institutionalized;" persons who work with substantially equal qualifications, skill, effort, and responsibility, under similar conditions, should be paid similar salaries. The very broad Article 19 of the Civil Code requires every person, 'in the exercise of his rights and in the performance of his duties, to act with justice, give everyone his due, and observe honesty and good faith'. WHEREFORE, the Petition is DENIED. The assailed July 29, 2011 Decision and January 10, 2012 Resolution of the Court of Appeals in CAG.R. SP No. 110006 are AFFIRMED. The case is ordered remanded with dispatch to the Regional Trial

Court of Daet, Camarines Norte, Branch 39, for continuation of proceedings

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Century Properties, Inc., v. Edwin Babiano and Emma Concepcion (G.R. No. 220978 July 5, 2016)

FACTS:

On October 2, 2002, Edwin 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. As Vice President, his monthly salary was 70,000.00 pesos and 0.5% override commission for completed sales. His employment contract contained a “Confidentiality of Documents and Non-Compete Clause” which bars him from disclosing confidential information and from working in any business enterprise that is in direct competition with CPI while he is employed and for a period of one (1) year from date of resignation or termination. If Babiano breaches the terms, his forms of compensation, including commissions and incentives will be forfeited.

Concepcion was also hired by the company during the same period. She was hired as a Sales Agent and was eventually promoted as Project Director. Her employment contract provided that she would directly report to Babiano and that there is no employer-employee relationship existing between Concepcion and CPI.

Sometime in February 2009, it was discovered that Babiano breached his employment contract by, among others, providing a competitor with information regarding CPI and spreading false information regarding CPI. On February 5, 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 also resigned as CPI’s Project Director on February 23, 2009.

On August 8, 2011, respondents filed a complaint before the NLRC for non-payment of commission and damages against CPI claiming that their repeated demands for the payment and release of their commissions remained unheeded.

CPI contended that it validly withheld Babiano’s commissions because he violated the “Confidentiality of Documents and Non-compete Clause”. CPI also contended that there was no employer-employee relationship between CPI and Concepcion, and thus Concepcion should have filed the case in a civil court and not with the NLRC.

The Labor Arbiter ruled in CPI’s favor. Upon respondents’ appeal, the NLRC reversed the Labor Arbiter’s decision and ordered CPI to pay Babiano and Concepcion the commissions due them from August 9, 2008 to August 8, 2011. Upon CPI’s appeal, the Court of Appeals affirmed the ruling of NLRC with a modification increasing the payment to Babiano and Concepcion. Hence, CPI elevated the case to the Court with the following contentions.

ISSUES:

The CA erred in holding CPI liable for the unpaid commission of Babiano.

There was no employer-employee relationship between CPI and Concepcion.

The CA erred increasing the amount of unpaid commissions due to Concepcion considering that she did not appeal the NLRC’s computation of the same.

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RULING:

The Court of Appeals erred in holding CPI liable for the unpaid commissions. The contract between Babiano and CPI was clear. The Civil Code provides that “if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulation shall control”. The contract between Babiano and CPI clearly stated that should Babiano violate its terms, forms of compensation including commissions shall be forfeited. Obligations arising from contracts, including employment contracts, have the force of law between the contracting parties and should be complied with in good faith.

Babiano himself categorically admitted in his resignation letter that he sought employment from First Global (while still employed by CPI) and five days later he was admitted thereto as Vice President. This is glaring violation of the contract between CPI and Babiano as he was still employed with CPI when he sought employment with First Global, thus, the forfeiture of his unpaid commissions is justified.

There exists an employer-employee relationship between CPI and Concepcion. The presence of (a) power to hire (selection and engagement), (b) payment of wages, (c) power of dismissal, and (d) power to control the employee’s conduct (or the so-called “control test”) determines the existence of an employer-employee relationship.

The Court finds that Concepcion was an employee of CPI considering that (a) CPI continuously hired and promoted Concepcion, thus showing that CPI had the power of selection and engagement over Concepcion, (b) Concepcion was receiving remuneration from CPI, (c) CPI had the power to discipline or dismiss Concepcion as the contract between CPI and Concepcion states that CPI can terminate her if she fails to comply with CPI’s performance standards, and (d) CPI possessed the power of control over Concepcion because she was subject to the direct supervision of CPI, through Babiano.

The Court of Appeals correctly ruled that CPI remains liable remains liable for the unpaid commissions of Concepcion and in increasing the amount of the said commission. Concepcion’s right to her unpaid commissions is a substantive right which cannot be impaired by an erroneous computation of what she really is entitled to. The ruling of the CA increasing the amount of unpaid commissions of Concepcion is correct as CA aptly pointed out that NLRC failed to account for all the unpaid commissions due to Concepcion for the period of August 9, 2008 and August 8, 2011. Thus, CA correctly recomputed Concepcion’s unpaid commission, notwithstanding her failure to seek a review of NLRC’s computation.

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Lu vs. Enopia (G.R. No. 197899 March 6, 2017)

FACTS:

Respondents were hired in January 20, 1994 to March 20, 1996 as crew members of the fishing mother boat F/B MG-28 owned by petitioner Joaquin “Jake” Lu who is the sole proprietor of Mommy Gina Tuna Resources (MTGR for brevity) based in General Santos City. Petitioner and respondents have an income sharing agreement of 55% and 45% respectively. With an additional 4% thereof, as “backing incentive”. Both parties also equally share in the maintenance and repair of the said boat.

On August 25, 1997 petitioner asked respondents to sign a Joint Venture Fishing Agreement, to which respondents refused due to the yearly renewal. In lieu of the refusal, petitioner dismissed the respondents on August 18, 1997. On August 25, 1997 respondents filed a case for illegal dismissal, monetary claims, and damages. Amicable settlement did not prosper in the case, and the case proceeded.

Respondents alleged that the dismissal for refusal to sign the Joint Venture is not a just cause for their termination. Petitioner denied such allegation and averred that what they have is a joint venture and not an employee-employer Relationship.

Petitioner further argues that: it was the piado who hired the respondents, no wages was paid as it was

a sharing agreement, and they were not subject to his discipline and control over their fishing

operations, albeit, they stayed in contact with petitioner’s radio operator. He alleged this was for

logistics purposes vis a vis the need to resupply and transfer the fish.

Labor Arbiter dismissed the case, an appeal was filed with the National Labor Relations Commission

(NLRC for brevity) who affirmed decision of the arbiter, appeal was course through Court of Appeals (CA for brevity) which reversed the decision. Hence, the petition at bar.

ISSUES:

Whether or not there was an Employee-Employer Relationship?

Whether or not the dismissal was illegal?

RULING:

(1)

Yes, there was an employee-employer relationship existing between the parties.

All the elements of an Employee-Employer Relationship which is: (1) the selection and engagement of the workers; (2) the power to control the worker’s conduct; and (3) the payment of wages by whatever means.

The fact that the respondents have in their possession proof in the form of their Social Security System (SSS for brevity), the employer as MGTR. Furthermore, the said dates of contributions coincided with their employment with said petitioner. Failure to rebut, proves that said respondents are indeed employee of the petitioner.

In control, what is surmised is only the existence of the right to control and not actual control thereof.

The constant communication between petitioner, through its radio operator, showed their control and

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supervision of the said fishing operation. Furthermore, the fact that petitioner has already invested millions in the venture further strengthens such control.

Lastly, there is a payment of wages, taken in the form of their sharing agreement. Payment through commission is construed as wage as enunciated in previous jurisprudence on the same.

(2)

Yes, the dismissal of Petitioner of the Respondent is illegal.

Petitioner wielded the power of dismissal, when he dismissed the respondents when they refused to sign the joint fishing venture agreement. The respondents being regular employee, they are being directly related and necessary to petitioner’s business operations and the fact that they have been performing their respective jobs for more than a year construes that they are regular employees.

Being regular employees, the said respondents are entitled to their security of tenure as enunciated in the Constitution and the Labor Code. Wherefore, the act of the petitioner of asking the respondents to sign said joint venture, and dismissing them for their refusal. Is a clear act of an illegal dismissal, furthermore, the stipulation in the joint venture wherein, the petitioner is given the discretion to end said venture or non-renewal thereof is a clear violation of their security of tenure.

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185450 HIRING OF EMPLOYEE

PT &T vs. NLRC (G.R. No. 118978 May 23, 1997)

FACTS:

Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under the Reliever Agreement which she signed with Petitioner Company, her employment was to be immediately terminated upon expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondent’s services as reliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated.

It now appears that private respondent had made the representation that she was single even though she contracted marriage months before, in the two successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor sent to private respondent a memorandum requiring her to explain the discrepancy. In that memorandum, she was reminded about the company’s policy of not accepting married women for employment.

Private respondent was dismissed from the company effective January 29, 1992, which she readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed down a decision declaring that private respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner. On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor arbiter and it ruled that private respondent had indeed been the subject of an unjust and unlawful discrimination by her employer, PT&T.

ISSUE: Whether or not discrimination merely by reason of the marriage of a female employee is expressly prohibited by Article 136.

RULING:

SC ruled that the stipulation is violative of Art. 136 of the Labor Code.

An employer is free to regulate, according to his discretion and best business judgment, all aspects of employment, “from hiring to firing,” except in cases of unlawful discrimination or those which may be provided by law. Petitioner’s policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution.

Respondent’s act of concealing the true nature of her status from PT&T could not be properly characterized as willful or in bad faith as she was moved to act the way she did mainly because she wanted to retain a permanent job in a stable company. In other words, she was practically forced by that very same illegal company policy into misrepresenting her civil status for fear of being disqualified from work.

The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:

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“ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage.” Under American jurisprudence, job requirements which establish employer preference or conditions relating to the marital status of an employee are categorized as a “sex-plus” discrimination where it is imposed on one sex and not on the other. Further, the same should be evenly applied and must not inflict adverse effects on a racial or sexual group which is protected by federal job discrimination laws.

Petitioner’s policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right.

Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioner’s policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage.

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Duncan Asso. Of Detailman-PTGWO vs. GlaxoSmithKlein Phils. (G.R. No. 162994 Sept. 17, 2004)

FACTS:

Petitioner Pedro Tecson was hired by respondent GlaxoSmithKlein Philippines(Glaxo) as medical representative on Oct.24,1994 thereafter signed a contract of employment which stipulates among others that he agrees to study and abide existing company rules; to disclose to management any existing of future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and if ever that such management find such conflict of interest, he must resign. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies. If management perceives a conflict of interest or a potential conflict between such relationship and the employee’s employment with the company, the management and the employee will explore the possibility of a “transfer to another department in a non- counterchecking position” or preparation for employment outside the company after six months.

Reminders from Tecson’s district manager did not stop him from marrying. Tecson married Betsy, an Astra’s Branch Coordinator in Albay. She supervised the district managers and medical representatives of her company and prepared marketing strategies for Astra in that area.

Tecson was reassigned to another place and was not given products that the Astra company has and he was not included in products seminars and training.

Tecson requested for time in complying said policy by asking for a transfer in the Glaxo’s milk division in which the other company had no counterpart. Thereafter, he bought the matter to Grievance Committee but the parties failed to resolve such issue, Glaxo offered Tecson a separation pay of one- half (½) month pay for every year of service, or a total of P50,000.00 but he declined the offer. On November 15, 2000, the National Conciliation, and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxo’s policy on relationships between its employees and persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.

Tecson filed for a petition for review on the CA and the CA promulgated that the NCMB did not err in rendering its decision. A recon was filed in appellate court but it was denied, hence this petition for certiorari. Petitioners contention it was violative of constitutional law which is the equal protection clause and he was constructively dismissed while the respondent’s contention that it is a valid exercise of its management prerogatives.

ISSUE: Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying employees of another pharmaceutical company is valid?

RULING:

This petition was denied. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims

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to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth.

The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erroneously suggest. It is a settled principle that the commands of the equal protection clause are addressed only to the state or those acting under color of its authority.

From the wordings of the contractual provision and the policy in its employee handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships.

There was no merit in Tecson’s contention that he was constructively dismissed when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur sales area, and when he was excluded from attending the company’s seminar on new products which were directly competing with similar products manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. The record does not show that Tecson was demoted or unduly discriminated upon by reason of such transfer.

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Star Paper Corp., vs Simbol (G.R. 164774 April 12, 2006)

FACTS:

Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of the company, whom he married. Prior to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company policy to which Simbol complied.

New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of relationship, already employed by the company.

In case of two of our employees (both singles [sic], one male and another female) developed a friendly relationship during the course of their employment and then decided to get married, one of them should resign to preserve the policy stated above.

ISSUE: WON the policy of the employer banning spouses from working in the same company violates the rights of the employee under the Constitution and the Labor Code or is a valid exercise of management prerogative?

RULING:

Petitioners’ sole contention that "the company did not just want to have two or more of its employees related between the third degree by affinity and/or consanguinity" is lame.

Article 136 of the Labor Code which provides:

It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.

The requirement is that a company policy must be reasonable under the circumstances to qualify as a valid exercise of management prerogative. It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co- employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations. The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employee’s right to security of tenure.

The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company.

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Del Monte Phils. V. Velasco (G.R. No. 153477 March 6, 2007)

FACTS:

Lolita Velasco was hired by Del Monte as seasonal employee and was subsequently regularized by Del Monte. On June 1987, petitioner warned Velasco of its absences and was repeatedly reminded that her absence without permission may result to forfeiture of her vacation leave.

Another warning was sent due to her absences without permission which eventually led to the forfeiture of her vacation entitlement. On September 1994, a notice of hearing was sent to Velasco informing her of the charges filed against her for violating the Absence without leave rule. On January 1995, after the hearing, Del Monte terminated the services of Velasco due to excessive absence without leave. Feeling aggrieved, Velasco filed a case for illegal dismissal. She asserted that she was absent since she was suffering urinary tract infection and she was pregnant.

She sent an application for leave to the supervisor. Upon check-up of the company doctor, Velasco was advised to rest. On the following check-ups, she was again advised to rest where this time, she was not able to get secure a leave.

The Labor Arbiter rendered decision that she was an incorrigible absentee. Respondent appealed to the NLRC. NLRC vacated the decision of the Labor Arbiter. It decided that respondent was illegally dismissed and was entitled to reinstatement. Petitioner appealed to CA where it dismissed its claim and affirmed NLRC, thus, this petition.

ISSUE: Whether or not the dismissal was illegal?

RULING: Yes. In this case, by the measure of substantial evidence, what is controlling is the finding of the NLRC and the CA that respondent was pregnant and suffered from related ailments. It would be unreasonable to isolate such condition strictly to the dates stated in the Medical Certificate or the Discharge Summary. It can be safely assumed that the absences that are not covered by, but which nonetheless approximate, the dates stated in the Discharge Summary and Medical Certificate, are due to the continuing condition of pregnancy and related illnesses, and, hence, are justified absences.

The termination was illegal since it comes within the purview of the prohibited acts provided in Article 137 of the Labor Code. Based on Article 137, it shall be unlawful for any employer (1) to deny any woman employee the benefits provided for in this Chapter or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the benefits provided under this Code; (2) to discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy; and (3) to discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant.

The respondent was illegally dismissed by the petitioner on account of her pregnancy. The act of the employer is unlawful, it being contrary to law.

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Yrasuegui vs. Philippine Airline (G.R No. 168081 Oct. 17, 2008)

FACTS:

This case portrays the peculiar story of an international flight steward who was dismissed because of his failure to adhere to the weight standards of the airline company.

Petitioner was a former international flight steward of PAL. He had problems meeting the required weight standards for cabin and crew. He was advised to go on leave without pay several times to address his weight concerns, to no avail. PAL had him grounded until such time he satisfactorily complies with the weight standards and he was directed to report every two weeks for weight checks.

On November 5, 1992, petitioner weighed 205 lbs., way beyond his ideal weight of 166 lbs. On June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal weight, and considering the utmost leniency extended to him which spanned a period covering a total of almost five (5) years, his services were considered terminated effective immediately

The Labor Arbiter ruled that he was illegally dismissed. The Labor Arbiter held that the weight standards of PAL are reasonable in view of the nature of the job of petitioner.[15] However, the weight standards need not be complied with under pain of dismissal since his weight did not hamper the performance of his duties.[16] Assuming that it did, petitioner could be transferred to other positions where his weight would not be a negative factor. NLRC affirmed the decision of the Labor Arbiter, with modifications.

The CA, however, reversed the ruling. Contrary to the NLRC ruling, the weight standards of PAL are meant to be a continuing qualification for an employee’s position. The failure to adhere to the weight standards is an analogous cause for the dismissal of an employee under Article 282(e) of the Labor Code in relation to Article 282(a). It is not willful disobedience as the NLRC seemed to suggest.

ISSUE: Whether or not the petitioner was illegally dismissed.

RULING: I. The obesity of petitioner is a ground for dismissal under Article 282(e)[44] of the Labor Code. [T]he standards violated in this case were not mere orders of the employer; they were the prescribed weights that a cabin crew must maintain in order to qualify for and keep his or her position in the company. In other words, they were standards that establish continuing qualifications for an employee’s position.

By its nature, these qualifying standards are norms that apply prior to and after an employee is hired. They apply prior to employment because these are the standards a job applicant must initially meet in order to be hired. They apply after hiring because an employee must continue to meet these standards while on the job in order to keep his job. Under this perspective, a violation is not one of the faults for which an employee can be dismissed

II. The dismissal of petitioner can be predicated on the bona fide occupational qualification defense. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Being overweight impedes mobility in times of emergencies where seconds are precious.

Petitioner was not, therefore, illegally dismissed. He is entitled to a separation pay, including his regular allowances.

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185451 WAGE & THE WAGE RATIONALIZATION ACT

SIP Food House et al vs. Batolina (G.R. No. 192473 October 11, 2010)

FACTS:

The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the Government Service Insurance System (GSIS). Incidental to its purpose, GMPC wanted to operate a canteen in the new GSIS Building, but had no capability and expertise in this 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.

In February 2004, GMPC terminated SIP’s “contract as GMPC concessionaire. The termination of the concession contract caused the termination of the respondents’ employment, prompting them to file a complaint for illegal dismissal, with money claims, against SIP and the spouses Pablo. NLRC ruled in favor of the petitioner and CA affirmed the ruling of NLRC.SIP seeks a reversal of the appellate court’s ruling that it was the employer of the respondents, claiming that it was merely a labor-only contractor of

GMPC

ISSUE: Whether or not SIP was liable to them for their statutory benefits, although it was not made to answer for their lost employment due to the involuntary nature of the canteen’s closure

RULING: The employer-employee relationship issue.

The CA ruled out SIP’s claim that it was a labor-only 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 CA’s findings.

The respondent’s money claims

We likewise affirm the CA ruling on the monetary award to Batolina and the other complainants. The free board and lodging SIP furnished the employees cannot operate as a set-off for the underpayment of their wages. We held in Mabika v. National Labor Relations Commission that the employer cannot simply deduct from the employee’s wages the value of the board and lodging without satisfying the following requirements: (1) proof that the trade customarily furnishes such facilities; (2) voluntary acceptance in writing by the employees of the deductible facilities; and (3) proof of the fair and reasonable value of the facilities charged. As the CA aptly noted, it is clear from the records that SIP failed to comply with these requirements.

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 absence of evidence that the employees worked for 26 days a month, no need

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exists to recompute 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.”

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SLL International Cables Specialist vs. NLRC (G.R. No. 172161 March 2, 2011)

Facts: Sometime in 1996, and January 1997, private respondents were hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since they were only trainees, they did not report for work regularly but came in as substitutes to the regular workers or in undertakings that needed extra workers to expedite completion of work. Soon after they were engaged as private employees for their Islacom project in Bohol. Private respondents started on March 15, 1997 until December 1997. Upon the completion of their project, their employment was also terminated. Private respondents received the amount of P145.00, the minimum prescribed daily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 and in October of the same year, the latter was increased to P155.00.

On May 21, 1999, private respondents for the 4th time worked with Lagon's project in Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their contract would expire on February 28, 2000, the period of completion of the project. From May 21, 1997-December 1999, private respondents received the wage of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In January to February 28, the three received the wage of P165.00. The existing rate at that time was P213.00.

For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project was not completed on the scheduled date of completion. Face[d] with economic problem[s], Lagon was constrained to cut down the overtime work of its worker[s] [,] including private respondents. Thus, when requested by private respondents on February 28, 2000 to work overtime, Lagon refused and told private respondents that if they insist, they would have to go home at their own expense and that they would not be given any more time nor allowed to stay in the quarters. This prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, private respondents filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as damages and attorney's fees

Issue: Whether or not the respondent should be allowed to recover the differential due to the failure of the petitioner to pay the minimum wage.

Whether or not value of the facilities that the private respondents enjoyed should be included in the computation of the "wages" received by them

Ruling: As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving it. Specifically, with respect to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale being that the pertinent personnel files, payrolls, records, remittances, and other similar documents -- which will show that overtime, differentials, service incentive leave and other claims of workers have been paid -- are not in the possession of the worker but in the custody and absolute control of the employer.

In this case, petitioners, aside from bare allegations that private respondents received wages higher than the prescribed minimum, failed to present any evidence, such as payroll or pay slips, to support their defense of payment. Thus, petitioners utterly failed to discharge the onus probandi.

On whether the value of the facilities should be included in the computation of the "wages" received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide subsidized meals and snacks to his employees provided that the subsidy shall not be less than 30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from the

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wages of the employees not more than 70% of the value of the meals and snacks enjoyed by the latter, provided that such deduction is with the written authorization of the employees concerned.

Moreover, before the value of facilities can be deducted from the employees' wages, the following requisites must all be attendant: first, proof must be shown that the trade customarily furnishes such facilities; second, the provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must be charged at reasonable value. Mere availment is not sufficient to allow deductions from employees' wages.

These requirements, however, have not been met in this case. SLL failed to present any company policy or guideline showing that provisions for meals and lodging were part of the employee's salaries. It also failed to provide proof of the employees' written authorization, much less show how they arrived at their valuations. At any rate, it is not even clear whether private respondents actually enjoyed said facilities.

In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus, or sick leave) given, but in the purpose for which it is given. In the case at bench, the items provided were given freely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working at their respective projects.

For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these were cases of dismissal with just and authorized causes. The present case involves the matter of the failure of the petitioners to comply with the payment of the prescribed minimum wage.

The Court sustains the deletion of the award of differentials with respect to respondent Roldan Lopez. As correctly pointed out by the CA, he did not work for the project in Antipolo.

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Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. (G.R. No. 176985 April 1, 2013)

Fact: Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Piñas City, Metro Manila.

As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time, the Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average Performance Incentive (which is the total performance incentive earned during the year immediately preceding 12 months) No. of Years in Service.

Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives (SMI) and to the amount of PhP496,016.67which respondent allegedly deducted illegally, representing the unpaid accounts of two dealers within his jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary Damages, and Attorney's Fees."

(Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice. The only two pieces of evidence that he stubbornly presented throughout the entirety of this case are the sworn statements of Renato C. Hidalgo (Hidalgo) and Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000 and 1998, respectively. They claimed that the SMI was included in their retirement package even if they did not meet the sales and collection qualifiers. Therefore, the failure of employer to grant him his SMI is a violation on the principle of non-diminution of benefits.)

Issue: WON the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice

Ruling: Generally, employees have vested right over existing benefits voluntarily granted to them by their employer. Thus, any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued, or eliminated by the employer. The principle of non-diminution of benefits is actually founded on the Constitutional mandate to protect the rights of workers, to promote their welfare, and to afford them full protection. In turn, said mandate is the basis of Article 4 of the Labor Code which states that "all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations, shall be rendered in favor of labor."

There is diminution of benefits when the following requisites are present:

the grant or benefit is founded on a policy or has ripened into a practice over a long period of time;

the practice is consistent and deliberate;

the practice is not due to error in the construction or application of a doubtful or difficult question of law; and

The employer unilaterally does the diminution or discontinuance.

To be considered as a regular company practice, the employee must prove by substantial evidence that the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately. Jurisprudence has not laid down any hard-and-fast rule as to the length of time that

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company practice should have been exercised in order to constitute voluntary employer practice. The common denominator in previously decided cases appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit over a considerable period of time.

Upon review of the entire case records, we find no substantial evidence to prove that the grant of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice.

The granting of the SMI in the retirement package of Velazquez was an isolated incident and could hardly be classified as a company practice that may be considered an enforceable obligation. To repeat, the principle against diminution of benefits is applicable only if the grant or benefit is founded on an express policy or has ripened into a practice over a long period of time which is consistent and deliberate; it presupposes that a company practice, policy, and tradition favorable to the employees has been clearly established; and that the payments made by the company pursuant to it has ripened into benefits enjoyed by them. Certainly, a practice or custom is, as a general rule, not a source of a legally demandable or enforceable right. Company practice, just like any other fact, habits, customs, usage, or patterns of conduct, must be proven by the offering party who must allege and establish specific, repetitive conduct that might constitute evidence of habit or company practice.

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Royal Plant Workers Union vs. Coca-Cola Bottlers Philippines Inc. (GR No. 198783 April 15, 2013)

Facts: Under the employ of each bottling plant of Coca-Cola are bottling operators. In the case of the plant in Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are 12- 14 bottling operators who man its Bottling Line 2. All of them are male and they are members of herein respondent Royal Plant Workers Union (ROPWU).

In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their request. In 1988, the bottling operators of then Bottling Line 1 followed suit and asked to be provided also with chairs. Their request was likewise granted. Sometime in September 2008, the chairs provided for the operators were removed pursuant to a national directive of petitioner. This directive is in line with the "I Operate, I Maintain, I Clean" program of petitioner for bottling operators, wherein every bottling operator is given the responsibility to keep the machinery and equipment assigned to him clean and safe. The program reinforces the task of bottling operators to constantly move about in the performance of their duties and responsibilities.

With this task of moving constantly to check on the machinery and equipment assigned to him, a bottling operator does not need a chair anymore, hence, petitioner’s directive to remove them. Furthermore, CCBPI rationalized that the removal of the chairs is implemented so that the bottling operators will avoid sleeping, thus, prevent injuries to their persons. As bottling operators are working with machines which consist of moving parts, it is imperative that they should not fall asleep as to do so would expose them to hazards and injuries. In addition, sleeping will hamper the efficient flow of operations as the bottling operators would be unable to perform their duties competently.

Issue: Whether or not the removal of the bottling operators’ chairs was a valid exercise of management prerogative. ---YES

Ruling: According to the Union, such removal constitutes a violation of the 1) Occupational Health and Safety Standards which provide that every worker is entitled to be provided by the employer with appropriate seats, among others; 2) policy of the State to assure the right of workers to a just and humane condition of work as provided for in Article 3 of the Labor Code;8 3) Global Workplace Rights Policy of CCBPI which provides for a safe and healthy workplace by maintaining a productive workplace and by minimizing the risk of accident, injury and exposure to health risks; and 4) diminution of benefits provided in Article 100 of the Labor Code.

The Court has held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place, and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor.10

In the present controversy, it cannot be denied that CCBPI removed the operators’ chairs pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the Union to perform their duties and responsibilities more efficiently. The chairs were not removed indiscriminately. They were carefully studied with due regard to the welfare of the members of the Union. The removal of the chairs was compensated by: a) a reduction of the operating hours of the bottling operators from a two-and-one-half (2 ½)-hour rotation period to a one-and-a-half (1 ½) hour rotation period; and b) an increase of the break period from 15 to 30 minutes between rotations.

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Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to avoid instances of operators sleeping on the job while in the performance of their duties and responsibilities and because of the fact that the chairs were not necessary considering that the operators constantly move about while working. In short, the removal of the chairs was designed to increase work efficiency. Hence, CCBPI’s exercise of its management prerogative was made in good faith without doing any harm to the workers’ rights.

The rights of the Union under any labor law were not violated. There is no law that requires employers to provide chairs for bottling operators. There was no violation either of the Health, Safety, and Social Welfare Benefit provisions under Book IV of the Labor Code of the Philippines. As shown in the foregoing, the removal of the chairs was compensated by the reduction of the working hours and increase in the rest period. The directive did not expose the bottling operators to safety and health hazards.

The Union should not complain too much about standing and moving about for one and one-half (1 ½) hours because studies show that sitting in workplaces for a long time is hazardous to one’s health. The CBA between the Union and CCBPI contains no provision whatsoever requiring the management to provide chairs for the operators in the production/manufacturing line while performing their duties and responsibilities.

The Court completely agrees with the CA ruling that the removal of the chairs did not violate the general principles of justice and fair play because the bottling operators’ working time was considerably reduced from two and a half (2 ½) hours to just one and a half (1 ½) hours and the break period, when they could sit down, was increased to 30 minutes between rotations. The bottling operators’ new work schedule is certainly advantageous to them because it greatly increases their rest period and significantly decreases their working time. A break time of thirty (30) minutes after working for only one and a half (1 ½) hours is a just and fair work schedule.

The operators’ chairs cannot be considered as one of the employee benefits covered in Article 10016 of the Labor Code. In the Court’s view, the term "benefits" mentioned in the non-diminution rule refers to monetary benefits or privileges given to the employee with monetary equivalents.

Such benefits or privileges form part of the employees’ wage, salary or compensation making them enforceable obligations.

This Court has already decided several cases regarding the non-diminution rule where the benefits or privileges involved in those cases mainly concern monetary considerations or privileges with monetary equivalents. Without a doubt, equating the provision of chairs to the bottling operators is something within the ambit of "benefits'' in the context of Article 100 of the Labor Code is unduly stretching the coverage of the law. The interpretations of Article 100 of the Labor Code do not show even with the slightest hint that such provision of chairs for the bottling operators may be sheltered under its mantle.

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The National Wages and Productivity Commission et. al. vs. The Alliance of Progressive Labor et. al. (G.R. No. 150326 March 12, 2014)

Facts: On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the different regions.

Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered the NWPC to formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and national levels; to prescribe rules and guidelines for the determination of appropriate minimum wage and productivity measures at the regional, provincial or industry levels; and to review regional wage levels set by the RTWPBs to determine whether the levels were in accordance with the prescribed guidelines and national development plans, among others.

On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of Republic Act No. 6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their region, provinces, or industries therein; and to issue the corresponding wage orders, subject to the guidelines issued by the NWPC.

Consequently, the RTWPBNCR issued Wage Order No. NCR07 on October 14, 1999 imposing an increase of P25.50/day on the wages of all private sector workers and employees in the NCR and pegging the minimum wage rate in the NCR at P223.50/day.6 However, Section 2 and Section 9 of Wage Order No. NCR07 exempted certain sectors and industries from its coverage

Section 2. The adjustment in this Order does not cover the following:

[W]orkers in the following sectors which were granted corresponding wage increases on January 1, 1999 as prescribed by Wage Order No. NCR06: a.1. Agriculture workers

Plantation

P12.00

Nonplantation

 

P18.50

a.2. Cottage/handicraft industry

 

P16.00

a.3. Private hospitals with bed capacity of 100 or

P12.00

less

a.4. Retail/Service establishments

 

Employing 1115 workers

 

P12.00

not

more

than

10

P19.00

Employing

workers

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Workers in small establishments employing less that ten (10) workers.

x x x x

Section 9. Upon application with and as determined by the Board, based on documentation and other requirements in accordance with applicable rules and regulations issued by the Commission, the following may be exempt from the applicability of this Order:

Distressed establishments as defined in the NPWC Guidelines No. 01, series of 1996;

Exporters including indirect exporters with at least 50% export sales and with forward contracts with their foreign buyers/principals entered into on or twelve (12) months before the date of publication of this Order may be exempt during the lifetime of said contract but not to exceed twelve (12) months from the effectivity of this Order.

Feeling aggrieved by their noncoverage by the wage adjustment, the Alliance of Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with the NWPC assailing Section 2(A) and Section 9(2) of Wage Order No. NCR07. They contended that neither the NWPC nor the RTWPBNCR had the authority to expand the noncoverage and exemptible categories under the wage order; hence, the assailed sections of the wage order should be voided.

The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR07. It observed that the RTWPB’s power to determine exemptible categories was adjunct to its wage fixing function conferred by Article 122(e) of the Labor Code, as amended by Republic Act No. 6727; that such authority of the RTWPB was also recognized in NWPC Guidelines No. 01, Series of 1996.

The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA, contending that the power of the RTWPBNCR to determine exemptible categories was not an adjunct to its wage fixing function. CA favored the respondents and granted the petition for certiorari.

Hence, this appeal by petition for review on certiorari by the NWPC and RTWPBNCR.

Issue: Whether or not the RTWPBNCR had authority

Ruling: the RTWPBNCR had the authority to provide additional exemptions from the minimum wage adjustments embodied in Wage Order No. NCR07.

The NWPC promulgated NWPC Guidelines No. 00195 (Revised Rules of Procedure on Minimum Wage Fixing) to govern the proceedings in the NWPC and the RTWPBs in the fixing of minimum wage rates by region, province, and industry. Section 1 of Rule VIII of NWPC Guidelines No. 00195 recognized the power of the RTWPBs to issue exemptions from the application of the wage orders subject to the guidelines issued by the NWPC

(this is the rationale behind exemption)

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SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS

Exemption of establishments from compliance with the wage increases and cost of living allowances prescribed by the Boards may be granted in order to (1) assist establishments experiencing temporary difficulties due to losses maintain the financial viability of their businesses and continued employment of their workers; (2) encourage the establishment of new businesses and the creation of more jobs, particularly in areas outside the National Capital Region and Export Processing Zones, in line with the policy on industry dispersal; and (3) ease the burden of micro establishments, particularly in the retail and service sector, that have a limited capacity to pay.

The following categories of establishments may be exempted upon application with and as determined by the Board:

Distressed establishments

New business enterprises (NBEs)

Retail/Service establishments employing not more than ten (10) workers

Establishments adversely affected by natural calamities

Under the guidelines, the RTWPBs could issue exemptions from the application of the wage orders as long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs had the authority to include in the wage orders establishments that belonged to, or to exclude from the four enumerated exemptible categories.

If the exemption was outside of the four exemptible categories, like here, the exemptible category should be: (1) in accord with the rationale for exemption; (2) reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the wage order must submit a strong and justifiable reason or reasons for the inclusion of such category. It is the compliance with the second requisite that is at issue here.

The NWPC, in arriving at its decision, weighed the arguments of the parties and ruled that the RTWPBNCR had substantial and justifiable reasons in exempting the sectors and establishments enumerated in Section 2(A) and Section 9(2) based on the public hearings and consultations, meetings, socialeconomic data and information gathered prior to the issuance of Wage Order No. NCR07.The very fact that the validity of the assailed sections of Wage Order No. NCR07 had been already passed upon and upheld by the NWPC meant that the NWPC had already given the wage order its necessary legal imprimatur. Accordingly, the requisite approval or review was complied with.

The RTWPBs are the thinking group of men and women guided by statutory standards and bound by the rules and guidelines prescribed by the NWPC. In the nature of their functions, the RTWPBs investigate and study all the pertinent facts to ascertain the conditions in their respective regions. Hence, they are logically vested with the competence to determine the applicable minimum wages to be imposed as well as the industries and sectors to exempt from the coverage of their wage orders.

Lastly, Wage Order No. NCR07 is presumed to be regularly issued in the absence of any strong showing of grave abuse of discretion on the part of RTWPBNCR. The presumption of validity is made stronger by the fact that its validity was upheld by the NWPC upon review.

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LABOR STANDARDS

David/Yield Hog Dealer v. Macasio (G.R. No. 195466 July 2, 2014)

Facts: In January 2009, Macasio filed before the LA a complaint against petitioner Ariel L. David, doing business under the name and style "Yiels Hog Dealer," for non-payment of overtime pay, holiday pay and 13th month pay. He also claimed payment for moral and exemplary damages and attorney’s fees. Macasio also claimed payment for service incentive leave (SIL).

Macasio alleged before the LA that he had been working as a butcher for David since January 6, 1995. Macasio claimed that David exercised effective control and supervision over his work, pointing out that David: (1) set the work day, reporting time and hogs to be chopped, as well as the manner by which he was to perform his work; (2) daily paid his salary of P700.00, which was increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that David owned the hogs delivered for chopping, as well as the work tools and implements; the latter also rented the workplace. Macasio further claimed that David employs about twenty-five (25) butchers and delivery drivers.

In his defense, David claimed that he started his hog dealer business in 2005 and that he only has ten employees. He alleged that he hired Macasio as a butcher or chopper on "pakyaw" or task basis who is, therefore, not entitled to overtime pay, holiday pay and 13th month pay pursuant to the provisions of the Implementing Rules and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier, depending on the volume of the delivered hogs; (2) received the fixed amount of P700.00 per engagement, regardless of the actual number of hours that he spent chopping the delivered hogs; and (3) was not engaged to report for work and, accordingly, did not receive any fee when no hogs were delivered.

Issue: Whether or not Respondent Macasio is entitled to overtime pay, holiday pay, 13th month pay, and service incentive leave (SIL)

Ruling: Respondent Macasio is entitled to such monetary claims except 13th month pay. Macasio is engaged on "pakyaw" or task basis.

At this point, we note that all three tribunals the 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.

In Macasio’s case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the workplace or of the total number of the hogs assigned to him for chopping, Macasio would receive the fixed amount of P700.00 once he had completed his task. Clearly, these circumstances show a "pakyaw" or task basis engagement that all three tribunals uniformly found.

Cyrus Vincent Tronco

LABOR STANDARDS

In determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and SIL pay, the presence (or absence) of employer supervision as regards the worker’s time and performance is the key: if the worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless exempted from the exceptions specifically provided under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the meaning of "field personnel" under the law, then he is not entitled to these monetary benefits.

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. 851 enumerates the exemptions from the coverage of 13th month pay benefits. Under Section 3(e), "employers of those who are paid on xxx 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.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations Implementing PD No. 851 exempts employees "paid on task basis" without any reference to "field personnel." This could only mean that insofar as payment of the 13th month pay is concerned; the law did not intend to qualify the exemption from its coverage with the requirement that the task worker be a "field personnel" at the same time.

Cyrus Vincent Tronco

LABOR STANDARDS

Our Haus Realty Corporation vs. Parian (G.R. No. 204651 August 6, 2014)

Facts: Respondents are laborers of petitioner-corporation (construction business). Because of financial distress, the corporation suspended some projects, which resulted in giving vacation leaves to the affected workers, including respondents. Instead of going back to work after their vacation leaves, respondents filed a complaint with the Labor Arbiter, citing underpayment of wages and Our Haus’ failure to pay their holiday, SIL, 13th month and overtime pays.

One of their contentions, respondent-laborers claim that value of their meals should not be considered in determining their wage total amount since Our Haus failed to comply with the requirement of agreement in writing under DOLE Memorandum Circular No. 2 and that the value of the facilities was not fair and reasonable. Labor Arbiter ruled in favor of Our Haus, stating that respondents failed to substantiate their claims and if the values of board and lodging would be taken into consideration, respondent’s wages would meet the minimum wage rate. On appeal to the NLRC, the decision was reversed, stating that respondents did not authorize Our Haus in writing to charge the values of their board and lodging to their wages.

Our Haus moved to reconsider but was denied, so they filed a petition for certiorari with the CA with a new theory regarding a significant distinction between ‘deduction’ and ‘charging’. They contended that

a

written authorization is only necessary if the facility's value will be ‘deducted’ and will not be needed

if

it will merely be ‘charged’/included in the computation of wages. Thus, according to them, they did

not actually deduct the values of the meals and housing benefits. They only considered these in computing the total amount of wages paid to the respondents for purposes of compliance with the minimum wage law. CA denied this contention citing no difference between ‘deduction’ and ‘charging’. Our Haus filed a petition for review on certiorari under Rule 45 after their motion for reconsideration

was denied.

Issue: Whether or not the facilities value will be deducted or merely included in the computation of the wages.

Held: Petition DENIED;

In reality, deduction and charging both operate to lessen the actual take-home pay of an employee; they are two sides of the same coin. In both, the employee receives a lessened amount because supposedly, the facility's value, which is part of his wage, had already been paid to him in kind. As there is no substantial distinction between the two, the requirements set by law must apply to both.

Requisites of fair and reasonable facilities:

proof must be shown that the trade customarily furnishes such facilities;

the provision of deductible facilities must be voluntarily accepted in writing by the employee; and

The facilities must be charged at fair and reasonable value.

For the first requisite:

The sinumpaang salaysay presented by Our Haus is (1) self-serving; (2) on a per project basis; and (3) cannot prove that other employees enjoyed it thus negating its claimed customary nature. Even if the trade customarily provides the benefit, it must still pass the purpose test set by jurisprudence. Under

Cyrus Vincent Tronco

LABOR STANDARDS

this test, if a benefit or privilege granted to the employee is clearly for the employer's convenience, it will not be considered as a facility but a supplement.

Our Haus is engaged in the construction business, a labor-intensive enterprise. The success of its projects is largely a function of the physical strength, vitality, and efficiency of its laborers. Its business will be jeopardized if its workers are weak, sickly, and lack the required energy to perform strenuous physical activities. Thus, by ensuring that the workers are adequately and well fed, the employer is actually investing on its business. Even under the purpose test, the subsidized meals and free lodging provided by Our Haus are actually supplements. Although they also work to benefit the respondents, an analysis of the nature of these benefits in relation to Our Haus' business shows that they were given primarily for Our Haus' greater convenience and advantage. If weighed on a scale, the balance tilts more towards Our Haus' side. Accordingly, their values cannot be considered in computing the total amount of the respondents' wages.

For the second requisite:

Oddly, Our Haus only offered these documents when the NLRC had already ruled that respondents did not accomplish any written authorization, to allow deduction from their wages. The five kasunduans were also undated, making the SC wonder if they had really been executed when respondents first assumed their jobs.

For the third requisite:

Our Haus never explained how it came up with the values it assigned for the benefits it provided; it merely listed its supposed expenses without any supporting document. The records however, are bereft of any evidence to support Our Haus' meal expense computation. Without any corroborative evidence, it cannot be said that Our Haus complied with this third requisite.

Respondents are entitled to other monetary benefits. A party who alleges payment as a defense has the burden of proving it. Particularly in labor cases, the burden of proving payment of monetary claims rests on the employer. Records will disclose the absence of any credible document which will show that respondents had been paid their 13th month pay, holiday and SIL pays. Our Haus merely presented a hand-written certification from its administrative officer that its employees automatically become entitled to five days of service incentive leave as soon as they pass probation.

Cyrus Vincent Tronco

LABOR STANDARDS

Milan, et al vs. NLRC and Solid Mills (G.R. No. 202961 February 4, 2015)

Facts: Petitioners are the employees of respondent Solid Mills Inc. They are represented by their collective bargaining agent, NAFLU.

Petitioners were allowed to occupy SMI Village (property owned by Solid Mills) out of liberality and for the convenience of its employees. They further agreed that petitioners would vacate the lot anytime the company deems fit. On October 2003, Solid Mills would cease operations due to serious business losses.

Petitioners were sent individual notices to vacate SMI Village. They were asked to sign a Memorandum of Agreement with Release and Quitclaim; employees who signed it were considered to have agreed to vacate SMI Village as a condition for the release of their termination benefits and separation pay. Petitioners however refused to sign it and demanded their benefits and separation pay.

Thereafter Petitioners Milan, et al filed a complaint before the Labor Arbiter on the ground that their accrued benefits and separation pay cannot be withheld because it is based on company policy and practice. Solid Mills countered by saying the complaint was premature because they have not vacated the property in view of the Memorandum of Agreement.

The Labor Arbiter favored the petitioners, stating Solid Mills’ illegality of the withholding of benefits. Solid Mills appealed to the NLRC and reversed pertinent parts of the decision. Petitioners moved to reconsider but was denied, so they file a petition for certiorari with the CA. This was dismissed, hence their present petition.

Issue: Whether or not Solid Mills Inc. may validly and legally withhold the benefits of Petitioners

Held: Petition DENIED; Solid Mills may validly and legally withhold the benefits.

The Civil Code provides that the employer is authorized to withhold wages for debts due: Article 1706. Withholding of the wages, except for a debt due, shall not be made by the employer.

"Debt" in this case refers to any obligation due from the employee to the employer. It includes any accountability that the employee may have to the employer. There is no reason to limit its scope to uniforms and equipment, as petitioners would argue.

More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the release of petitioners' benefits shall be "less accountabilities."

"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the term "accountability" does not limit the definition of accountability to those incurred in the worksite. As long as the debt or obligation was incurred by virtue of the employer-employee relationship, it shall be included in the employee's accountabilities that are subject to clearance procedures.

Petitioners do not categorically deny respondent Solid Mills' ownership of the property, and they do not claim superior right to it. What can be gathered from the findings of the Labor Arbiter, NLRC, and the CA is that respondent Solid Mills allowed the use of its property for the benefit of petitioners as its employees. Petitioners were merely allowed to possess and use it out of respondent Solid Mills' liberality.

The employer may, therefore, demand the property at will.

Cyrus Vincent Tronco

LABOR STANDARDS

Withholding of payment by the employer does not mean that the employer may renege on its obligation

to pay employees their wages, termination payments, and due benefits. The employees' benefits are also

not being reduced. It is only subjected to the condition that the employees return properties properly

belonging to the employer. This is only consistent with the equitable principle that "no one shall be unjustly enriched or benefited at the expense of another.]

Toyota v De Peralta

A complaint for illegal dismissal, illegal deduction, unpaid commission, annual profit sharing, damages,

and attorney's fees filed by respondent against petitioner. Respondent alleged that petitioner initially hired her as a cashier. She worked her way up to the position of Insurance Sales Executive (ISE) which she held from 2007 to 2012 and where she received various distinctions from petitioner. However, things

turned sour when her husband, Romulo De Peralta, also petitioner's employee and the President of the Toyota Shaw-Pasig Workers Union - Automotive Industry Workers Alliance (TSPWU-AIWA), organized a collective bargaining unit through a certification election. According to respondent, petitioner suddenly dismissed from service the officials/directors of TSPWU-AIWA, including her husband. Thereafter, petitioner allegedly started harassing respondent for her husband's active involvement in TSPWU-AIWA. Accordingly, she was preventively suspended and she received a Notice of Termination, which prompted her to file the instant complaint, where she also prayed for the payment of her earned substantial commissions, tax rebates, and other benefits dating back from July 2011 to January 2012, amounting to P617, 248.08.

In their defense, petitioner and Lim, et al. maintained that respondent was dismissed from service for just cause and with due process. They explained that respondent was charged and proven to have committed acts of dishonesty and falsification by claiming commissions for new business accounts which should have been duly credited to the dealership's marketing department. They further averred that respondent's claims for commissions, tax rebates, and other benefits were unfounded and without documentation and validation.

The CA Ruling

It held that the NLRC did not gravely abuse its discretion in declaring respondent to have been

dismissed for just cause as such finding conform with the facts and the law on the matter. Similarly, it

held that no grave abuse of discretion may be ascribed to the NLRC in awarding respondent her other monetary claims, considering that petitioner failed to discharge its burden of proving that respondent was not entitled to the same.

The Issue

Whether or not the CA correctly upheld petitioner's liability to respondent in the amount of P617,248.08 representing the latter's unpaid commissions, tax rebate for achieved monthly targets, salary deductions, salary for the month of January 2012, and success share/profit sharing.

Ruling:

The CA correctly upheld petitioner's liability to respondent in the amount of P617,248.08 Section 97 (f) of the Labor Code reads:

(f) "Wage" paid to any employee shall mean the remuneration of earnings, however designated, capable

of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission

basis.

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LABOR STANDARDS

The aforesaid provision explicitly includes commissions as part of wages. While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of a salesman's wage or salary. This, however, does not detract from the character of such commissions as part of the salary or wage paid to each of its salesmen for rendering services to the corporation.

In this case, respondent's monetary claims, such as commissions, tax rebates for achieved monthly targets, and success share/profit sharing, are given to her as incentives or forms of encouragement in order for her to put extra effort in performing her duties as an ISE. Clearly, such claims fall within the ambit of the general term "commissions" which in tum, fall within the definition of wages pursuant to prevailing law and jurisprudence. Thus, respondent's allegation of nonpayment of such monetary benefits places the burden on the employer, i.e., petitioner, to prove with a reasonable degree of certainty that it paid said benefits and that the employee, i.e., respondent, actually received such payment or that the employee was not entitled thereto.

The Court's pronouncement in Heirs of Ridded v. Gregorio Araneda University Foundation41 is instructive on this matter

Well-settled is the rule that once the employee has set out with particularity in his complaint, position paper, affidavits, and other documents the labor standard benefits he is entitled to, and which he alleged that the employer failed to pay him, it becomes the employer's burden to prove that it has paid these money claims. One who pleads payment has the burden of proving it, and even where the employees must allege nonpayment, the general rule is that the burden rests on the employer to prove payment, rather than on the employees to prove non-payment.

In this case, petitioner simply dismissed respondent's claims for being purely self-serving and unfounded, without even presenting any tinge of proof showing that respondent was already paid of such benefits or that she was not entitled thereto. In fact, during the proceedings before the LA, petitioner was even given the opportunity to submit pertinent company records to rebut respondent's claims but opted not to do so, thus, constraining the LA to direct respondent to submit her own computations.

It is well-settled that the failure of employers to submit the necessary documents that are in their possession gives rise to the presumption that the presentation thereof is prejudicial to its cause. Indubitably, petitioner failed to discharge its afore-described burden.

Hence, it is bound to pay the monetary benefits claimed by respondent. As aptly pointed out by the NLRC, since respondent already earned these monetary benefits, she must promptly receive the same, notwithstanding the fact that she was legally terminated from employment.

THE PETITION IS DENIED.

Cyrus Vincent Tronco

LABOR STANDARDS

185452 WAGE ENFORCEMENT AND RECOVERY

Tiger Construction and Development Corp. vs. Abay et al. (G.R. No. 164141 February 26, 2010)

The general rule is that any decision rendered without jurisdiction is a total nullity and may be struck down at any time, the party that asserts it must be in good faith and not evidently availing thereof simply to thwart the execution of an award that has long become final and executory.

Facts: On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the Regional Office of the Department of Labor and Employment (DOLE), an inspection was conducted by DOLE officials at the premises of petitioner TCDC. Several labor standard violations were noted, such as deficiencies in record keeping, non-compliance with various wage orders, non-payment of holiday pay, and underpayment of 13th month pay. The case was then set for summary hearing.

Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the same

Code, this instant case should be referred back to the National Labor Relations Commission (NLRC) Sub Arbitration Branch V, Naga City, on the ground that the aggregate money claim of each worker exceeds the jurisdictional amount of this Office [which] is (sic) Five Thousand Pesos Only (P5,000.00).

Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary Sto. Tomas), in an apparent reversal of Director Manalo’s endorsement, issued another inspection authority on August 2, 2002 in the same case. Pursuant to such authority, DOLE officials conducted another investigation of petitioner’s premises and the same violations were discovered.

According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of lack of jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE regional office after July 25, 2002 were null and void for want of jurisdiction.

Having the case in her office once more, Director Manalo finally issued an Order dated January 29, 2003 denying petitioner’s motion for reconsideration for lack of merit

Issue: Whether or not the petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has attained finality and is already in the execution stage.

Ruling: The petition lacks merit. Petitioner admits that it failed to appeal the January 29, 2003 Order within the period prescribed by law. It likewise admits that the case was already in the execution process when it resorted to a belated appeal to the DOLE Secretary. Petitioner, however, excuses itself from the effects of the finality of the Order by arguing that it was allegedly issued without jurisdiction and may be assailed at any time.

Director Manalo’s initial endorsement of the case to the NLRC, on the mistaken opinion that the claim was within the latter’s jurisdiction, did not oust or deprive her of jurisdiction over the case. She therefore retained the jurisdiction to decide the case when it was eventually returned to her office by the DOLE Secretary. Jurisdiction or authority to try a certain case is conferred by law and not by the interested parties, much less by one of them, and should be exercised precisely by the person in authority or body in whose hands it has been placed by the law.

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LABOR STANDARDS

We also cannot accept petitioner’s theory that Director Manalo’s initial endorsement of the case to the NLRC served as a dismissal of the case, which prevented her from subsequently assuming jurisdiction over the same. The said endorsement was evidently not meant as a final disposition of the case; it was a mere referral to another agency, the NLRC, on the mistaken belief that jurisdiction was lodged with the latter. It cannot preclude the regional director from subsequently deciding the case after the mistake was rectified and the case was returned to her by the DOLE Secretary, particularly since it was a labor case where procedural lapses may be disregarded in the interest of substantial justice.

In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and can no longer be questioned (as it is final and executory), we can no longer entertain petitioner’s half-hearted and unsubstantiated arguments that the said Order was allegedly based on erroneous computation and included non-employees. Likewise, we find no more need to address petitioner’s contention that the CA erred in dismissing its petition on the ground of its belated compliance with the requirement of certification against forum-shopping.

Cyrus Vincent Tronco

LABOR STANDARDS

People’s Broadcasting (Bombo Radyo Phils) vs. Sec of DOLE et al. (G.R. No. 179652 May 8, 2009)

March 6, 2012 Resolution on the main Decision of May 8, 2009

Facts: Jandeleon Juezan (“Juezan”) filed a complaint before the DOLE against Bombo Radyo Phils. (“Bombo Radyo”) for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth. On the basis of the complaint, the DOLE conducted

a plant level inspection. The Labor Inspector in his report wrote, Management representative informed

that (Juezan) complainant is a drama talent hired on a per drama ‘participation basis’ hence no employer employee relationship existed between them. As proof of this, management presented photocopies of cash vouchers, billing statement, employments of specific undertaking, etc. The management has no

control of the talent if he ventures into another contract with other broadcasting industries.

Issue: Whether or not the Secretary of Labor has the power to determine the existence of an employer employee relationship.

Ruling: Yes. No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-employee relationship. No procedure was laid down where the DOLE would only make

a preliminary finding, that the power was primarily held by the NLRC. The law did not say that the

DOLE would first seek the NLRC’s determination of the existence of an employer-employee relationship, or that should the existence of the employer-employee relationship be disputed, the DOLE

would refer the matter to the NLRC. The DOLE must have the power to determine whether or not an employer employee relationship exists, and from there to decide whether or not to issue compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by RA 7730.

The DOLE, in determining the existence of an employer-employee relationship, has a ready set of guidelines to follow, the same guide the courts themselves use. The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; (4) the employer’s power to control the employee’s conduct. The use of this test is not solely limited to the NLRC. The DOLE Secretary, or his or her representatives, can utilize the same test, even in the course of inspection, making use of the same evidence that would have been presented before the NLRC.

The determination of the existence of an employer-employee relationship by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple expedient of disputing the employer employee relationship, force the referral of the matter to the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an employer employee relationship.

If the DOLE makes a finding that there is an existing employer-employee relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would have no jurisdiction only if the employer employee relationship has already been terminated, or it appears, upon review, that no employer employee relationship existed in the first place.

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LABOR STANDARDS

It must also be remembered that the power of the DOLE to determine the existence of an employer employee relationship need not necessarily result in an affirmative finding. The DOLE may well make the determination that no employer-employee relationship exists, thus divesting itself of jurisdiction over the case. It must not be precluded from being able to reach its own conclusions, not by the parties, and certainly not by this Court.

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully empowered to make a determination as to the existence of an employer-employee relationship in the exercise of its visitorial and enforcement power, subject to judicial review, not review by the NLRC.

To recapitulate, if a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE, however, may still be questioned through a petition for certiorari under Rule 65 of the Rules of Court.

Cyrus Vincent Tronco

LABOR STANDARDS

Superior Package Corp. v. Balagsay (G.R. No. 178909 October 10, 2012)

Facts: Petitioner engaged services of Lancer Staffing and Services (provided respondents as laborers for petitioner). Herein respondents were engaged for 4 months and included tasks such as loading, unloading and segregation of boxes.

Pursuant to a complaint filed by respondents against petitioner Superior Package, DOLE conducted an inspection of petitioner’s workplace and found several violations (non-presentation of payrolls and daily time records; non-submission of annual report of safety organization; medical/illness reports; no trained first aid) Because petitioners failed to appear in the summary investigations conducted by DOLE, an order was issued ordering petitioners to pay PHP840,463.38.

Petitioners moved to reconsider, stating that the respondents are not their employees, but of Lancer Staffing and Services, but this was denied. The DOLE stated that petitioners failed to support their claim and even if they were employees of Lancer they could not escape liability as Section 13 of the Department Order No. 10, Series of 1997, makes a principal jointly and severally liable with the contractor to contractual employees to the extent of the work performed when the contractor fails to pay its employees' wages. The appeal to the SOLE, motion for reconsideration to the SOLE, petition for certiorari to the CA and motion for reconsideration to the CA were all denied, hence the present petition.

The petitioner objects to the finding that it is engaged in labor-only contracting and is consequently an indirect employer, considering that it is beyond the visitorial and enforcement power of the DOLE to make such conclusion. According to the petitioner, such conclusion may be made only upon consideration of evidentiary matters and cannot be determined solely through a labor inspection.

Issue: Whether or not DOLE has the jurisdiction to inspect in petitioner’s workplace, pursuant to its visitorial and enforcement power;

Whether or not Superior Package Corp. may be held solidarily liable with Lancer Staffing for respondent’s unpaid money claims;

Held: Petition DENIED; DOLE may inspect the petitioner’s workplace pursuant to its visitorial and enforcement power; Petitioner may be held solidarily liable;

First Issue:

The DOLE clearly acted within its authority when it determined the existence of an employer-employee relationship between the petitioner and respondents as it falls within the purview of its visitorial and enforcement power under Article 128 (b) of the Labor Code.

In People's Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and Employment, the Court stated that it can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a determination of the existence of an employer-employee relationship. Such determination, however, is merely preliminary, incidental, and collateral to the DOLE's primary function of enforcing labor standards provisions.

Also, the existence of an employer-employee relationship is ultimately a question of fact. The determination made in this case by the DOLE, albeit provisional, and as affirmed by the Secretary of DOLE and the CA is beyond the ambit of a petition for review on certiorari.

Second Issue:

Cyrus Vincent Tronco

LABOR STANDARDS

At the time of the respondents' employment in 1998, the applicable regulation was DOLE Department Order No. 10, Series of 1997. (“Labor-only contracting is prohibited and the person acting as contractor [Lancer] shall be considered merely as an agent or intermediary of the employer [Superior Package] who shall be responsible to the workers in the same manner and extent as if the latter [Superior Package] were directly employed by him”)

The marked disparity between the petitioner's actual capitalization (P25,000.00) and the resources needed to maintain its business, i.e., "to establish, operate and manage a personnel service company which will conduct and undertake services for the use of offices, stores, commercial and industrial services of all kinds," supports the finding that Lancer was, indeed, a labor-only contractor. Aside from these is the undisputed fact that the petitioner failed to produce any written service contract that might serve as proof of its alleged agreement with Lancer.

Finally, a finding that “a contractor is a "labor-only" contractor” is equivalent to declaring that there is an employer-employee relationship between the principal and the employees of the supposed contractor, and the "labor-only" contractor is considered as a mere agent of the principal, the real employer. The former becomes solidarily liable for all the rightful claims of the employees. Superior Package therefore, being the principal employer and Lancer, being the labor-only contractor, are solidarily liable for respondents' unpaid money claims.

Cyrus Vincent Tronco

LABOR STANDARDS

WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES

SHS Perforated Materials, Inc. et al., vs. Diaz (GR No. 185814 Oct. 13, 2010)

Facts: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing under the laws of the Republic of the Philippines and registered with the Philippine Economic Zone Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its president. Thus, the wages of SHS employees are paid out by ECCP, through its Accounting Services Department headed by Juliet Taguiang (Taguiang). Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business Development on probationary status

During respondent’s employment, Hartmannshenn was often abroad and, because of business exigencies, his instructions to respondent were either sent by electronic mail or relayed through telephone or mobile phone. During meetings with the respondent, Hartmannshenn expressed his dissatisfaction over respondent’s poor performance. respondent acknowledged his poor performance and offered to resign from the company.

On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on November 22 and 24, 2005, notified respondent of his arrival through electronic mail messages and advised him to get in touch with him. Respondent claimed that he never received the messages. Hartmannshenn instructed Taguiang not to release respondent’s salary.

Respondent served on SHS a demand letter and a resignation letter. It is precisely because of illegal and unfair labor practices such as these that I offer my resignation with neither regret nor remorse.

Appealing for the release of his salary respondent filed a Complaint against the petitioners for illegal dismissal; non-payment of salaries/wages and 13th month pay with prayer for reinstatement and full back wages; exemplary damages, and attorney’s fees, costs of suit, and legal interest.

Issues: Whether or not the temporary withholding of respondent’s salary/wages by petitioners was a valid exercise of management prerogative.

Ruling: Withholding respondent’s salary was not a valid exercise of management prerogative.

Management prerogative refers “to the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of work.” Although management prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the employee.

Any withholding of an employee’s wages by an employer may only be allowed in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code, as set forth below: ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:

In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;

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For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice by him except to forego his continued employment. It exists where there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as an offer involving a demotion in rank and a diminution in pay.

In this case, the withholding of respondent’s salary does not fall under any of the circumstances provided under Article 113. Neither was it established with certainty that respondent did not work from November 16 to 30, 2005.

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LABOR STANDARDS

Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo (G.R. No. 188169 November 28, 2011)

Facts: Respondents were employed as goldsmiths by the petitioner Niña Jewelry Manufacturing of Metal Arts, Inc. There were incidents of theft involving goldsmiths in Niña Jewelry's employ:

The petitioner imposed a policy for goldsmiths, which were intended to answer for any loss or damage which Niña Jewelry may sustain by reason of the goldsmiths' fault or negligence in handling the gold entrusted to them, requiring them to post cash bonds or deposits in varying amounts but in no case exceeding 15% of the latter's salaries per week.

The petitioner alleged that the goldsmiths were given the option not to post deposits, but to sign authorizations allowing the former to deduct from the latter's salaries amounts not exceeding 15% of their take home pay should it be found that they lost the gold entrusted to them. The deposits shall be returned upon completion of the goldsmiths' work and after an accounting of the gold received.

The respondents claimed otherwise insisting that petitioner left the goldsmiths with no option but to post the deposits. The next day after the policy was imposed, the respondents no longer reported for work and signified their defiance against the new policy which at that point had not even been implemented yet. The respondents alleged that they were constructively dismissed by the petitioner as their continued employments were made dependent on their readiness to post the required deposits. The respondents then filed a complaint for illegal dismissal and for the award of separation pay against the petitioner, and later filed their amended complaint which excluded their earlier prayer for separation pay but sought reinstatement and payment of back wages, attorney's fees and 13th month pay.

Issues:

Whether or not Niña Jewelry Manufacturing of Metal Arts, Inc. may impose the policy for their goldsmiths requiring them to post cash bonds or deposits; and 2) Whether or not there is constructive dismissal.

Ruling:1) NO, the Niña Jewelry may not impose the policy. Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to the general prohibition against requiring deposits and effecting deductions from the employees' salaries.

ART. 113. Wage Deduction No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except:

(a)In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance;

(b)For union dues, in cases where the right of the worker or his union to check-off has been recognized by the employer or authorized in writing by the individual worker concerned; and

(c)In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.

Article 114.Deposits for loss or damage No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations,

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or business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations.

The petitioners should first establish that the making of deductions from the salaries is authorized by law, or regulations issued by the Secretary of Labor. The petitioners failed to prove that their imposition of the new policy upon the goldsmiths under Niña Jewelry's employ falls under the exceptions specified in Articles 113 and 114 of the Labor Code.

There is NO constructive dismissal. Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.

The petitioners did not whimsically or arbitrarily impose the policy to post cash bonds or make deductions from the workers' salaries. As attested to by the respondents' fellow goldsmiths in their Joint Affidavit, the workers were convened and informed of the reason behind the implementation of the new policy. Instead of airing their concerns, the respondents just promptly stopped reporting for work.

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LABOR STANDARDS

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

Facts: Petitioner Antonio Locsin II was the Regional Sales Manager of respondent Mekeni Food Corporation. He was hired on February 2004 to oversee the NCR and Luzon operation. In addition to his compensation and benefit package, a car was offered to him under which one-half of the cost of the vehicle is to be paid by the company and the other half to be deducted from petitioner's salary. The car valued at 280,000 which Locsin paid through salary deductions of 5,000 per month.

On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted from his monthly salary and applied as part of his share in the car plan. Upon resignation, petitioner made personal and written follow-ups regarding his unpaid salaries, commissions, benefits, and offer to purchase his service vehicle. Mekeni replied that the company car plan benefit applied only to employees who have been with the company for five years; for this reason, the balance that petitioner should pay on his service vehicle stood at P116,380.00 if he opts to purchase the same.

On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a Complaint for the recovery of monetary claims consisting of unpaid salaries, commissions, sick/vacation leave benefits, and recovery of monthly salary deductions which were earmarked for his cost-sharing in the car plan.

Issue: Whether or not petitioner is entitled to a refund of all the amounts applied to the cost of the service vehicle under the car plan.

Ruling: Any benefit or privilege enjoyed by petitioner from using the service vehicle was merely incidental and insignificant, because for the most part the vehicle was under Mekeni's control and supervision. Free and complete disposal is given to the petitioner only after the vehicle's cost is covered or paid in full. Until then, the vehicle remains at the beck and call of Mekeni. Given the vast territory petitioner had to cover to be able to perform his work effectively and generate business for his employer, the service vehicle was an absolute necessity, or else Mekeni's business would suffer adversely. Thus, it is clear that while petitioner was paying for half of the vehicle's value, Mekeni was reaping the full benefits from the use thereof.

Under Article 22 of the Civil Code, “every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him." Article 2142 of the same Code likewise clarifies that there are certain lawful, voluntary, and unilateral acts which give rise to the juridical relation of quasi- contract, to the end that no one shall be unjustly enriched or benefited at the expense of another. In the absence of specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a quasi-contractual relation was created between them. Consequently, Mekeni may not enrich itself by charging petitioner for the use of its vehicle which is otherwise absolutely necessary to the full and effective promotion of its business. It may not, under the claim that petitioner's payments constitute rents for the use of the company vehicle, refuse to refund what petitioner had paid, for the reasons that the car plan did not carry such a condition; the subject vehicle is an old car that is substantially, if not fully, depreciated; the car plan arrangement benefited Mekeni for the most part; and any personal benefit obtained by petitioner from using the vehicle was merely incidental.

Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution to the cost of the vehicle; that is not property or money that belongs to him, nor was it intended to be given to him in lieu of the car plan. Mekeni's share of the vehicle's cost was not part of petitioner's compensation package. The vehicle is an asset that belonged to Mekeni. Just as Mekeni is unjustly enriched by failing

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to refund petitioner's payments, so should petitioner not be awarded the value of Mekeni's counterpart contribution to the car plan, as this would unjustly enrich him at Mekeni's expense.

Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's payments under the car plan agreement amounting only to the extent of the contribution Locsin made, totaling to the amount of P112,500.00.

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LABOR STANDARDS

TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union (G.R. No. 191714 February 26, 2014)

Facts: On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation workers union (THS-GQ Union) filed their Complaint for Unfair Labor Practice (ULP) by way of union busting, and Illegal Lockout, with moral and exemplary damages and attorney’s fees, against T&H Shopfitters Corporation (T&H Shopfitters) and Gin Queen Corporation before the Labor Arbiter (LA).

1st CAUSE:

In their desire to improve their working conditions, respondents, and other employees of held their first

formal meeting on November 23, 2003 to discuss the formation of a union. The following day, seventeen (17) employees were barred from entering petitioners’ factory premises located in Castillejos, Zambales, and ordered to transfer to T&H Shopfitters’ warehouse at Subic Bay Freeport Zone (SBFZ) purportedly because of its expansion. Afterwards, the said seventeen (17) employees were repeatedly ordered to go on forced leave due to the unavailability of work.

Respondents contended that the affected employees were not given regular work assignments, while subcontractors were continuously hired to perform their functions. Respondents sought the assistance

of the National Conciliation and Mediation Board. Subsequently, an agreement between petitioners and

THS-GQ Union was reached. Petitioners agreed to give priority to regular employees in the distribution of work assignments. Respondents averred, however, that petitioners never complied with its commitment but instead hired contractual workers. Instead, Respondents claimed that the work weeks

of those employees in the SBFZ plant were drastically reduced to only three (3) days in a month.

2nd CAUSE:

On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was issued to hold the certification election in both T&H Shopfitters and Gin Queen.

On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The officers and members of the THS-GQ Union were purportedly excluded from the field trip. On the evening of the field trip, a certain Angel Madriaga, a sales officer of petitioners, campaigned against the union in the forthcoming certification election.

When the certification election was scheduled on October 11, 2004, the employees were escorted from the field trip to the polling center in Zambales to cast their votes. The remaining employees situated at the SBFZ plant cast their votes as well. Due to the heavy pressure exerted by petitioners, the votes for "no union" prevailed.

3rd CAUSE:

A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed its

employees of the expiration of the lease contract between Gin Queen and its lessor in Castillejos, Zambales and announced the relocation of its office and workers to Cabangan, Zambales.

When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or grassland. The said union officers and members were made to work as grass cutters in Cabangan, under the supervision of a certain Barangay Captain Greg Pangan. Due to these circumstances, the employees

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LABOR STANDARDS

assigned in Cabangan did not report for work. The other employees who likewise failed to report in Cabangan were meted out with suspension.

PETITIONERS’ DEFENSE:

In its defense, Petitioners also stress that they cannot be held liable for ULP for the reason that there is no employer-employee relationship between the former and respondents. Further, Gin Queen avers that its decision to implement an enforced rotation of work assignments for respondents was a management prerogative permitted by law, justified due to the decrease in orders from its customers, they had to resort to cost cutting measures to avoid anticipated financial losses. Thus, it assigned work on a rotational basis. It explains that its failure to present concrete proof of its decreasing orders was due to the impossibility of proving a negative assertion. It also asserts that the transfer from Castillejos to Cabangan was made in good faith and solely because of the expiration of its lease contract in Castillejos. It was of the impression that the employees, who opposed its economic measures, were merely motivated by spite in filing the complaint for ULP against it.

Issues: Whether ULP acts were committed by petitioners against respondents.

Ruling: ULP were committed by petitioners against respondents.

Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly Article 248) of the Labor Code,13 to wit:

Article 257. Unfair labor practices of employers. ––It shall be unlawful for an employer to commit any of the following unfair labor practices:

(a)

To interfere with, restrain or coerce employees in the exercise of their right to self-organization; x x x

x

(c)

To contract out services or functions being performed by union members when such will interfere

with, restrain, or coerce employees in the exercise of their right to self-organization; x x x x

(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment

in order to encourage or discourage membership in any labor organization. x x x

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the exclusion of union members, before the scheduled certification election; 2) the active campaign by the sales officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3) escorting its employees after the field trip to the polling center; 4) the continuous hiring of subcontractors performing respondents’ functions; 5) assigning union members to the Cabangan site to work as grass cutters; and 6) the enforcement of work on a rotational basis for union members, taken together, reasonably support an inference that, indeed, such were all orchestrated to restrict respondents’ free exercise of their right to self-organization.

The Court is of the considered view those petitioners’ undisputed actions prior and immediately before the scheduled certification election, while seemingly innocuous, unduly meddled in the affairs of its employees in selecting their exclusive bargaining representative.

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LABOR STANDARDS

Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso. (G.R. No. 181806 March 12, 2014)

Facts: Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly organized and existing under the laws of the Philippines. Respondent Wesleyan University-Philippines Faculty and Staff Association, on the other hand, is a duly registered labor organization acting as the sole and exclusive bargaining agent of all rank-and-file faculty and staff employees of petitioner.

In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May 31, 2008.

On August 16, 2005, petitioner, through its President, Atty. Maglaya, issued a Memorandum providing guidelines on the implementation of vacation and sick leave credits as well as vacation leave commutation which states that vacation and sick leave credits are not automatic as leave credits would be earned on a month-to-month and only vacation leave is commuted or monetized to cash which is effected after the second year of continuous service of an employee.

Respondents questioned the guidelines for being violative of existing practices and the CBA which provide that all covered employees are entitled to 15 days sick leave and 15 days’ vacation leave with pay every year and that after the second year of service, all unused vacation leave shall be converted to cash and paid to the employee at the end of each school year, not later than August 30 of each year.

Respondent file a grievance complaint on the implementation of the vacation and sick leave policy. Petitioner also announced its plan of implementing a one-retirement policy which was unacceptable to respondent.

Respondent submitted affidavits to prove that there is an established practice of giving two retirement benefits, one from the Private Education Retirement Annuity Association (PERAA) Plan and another from the CBA Retirement Plan.

The Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the Memorandum dated August 16, 2005 contrary to law. CA also affirmed the ruling of the Voluntary Arbitrator.

Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan are one and the same. It maintains that there is no established company practice or policy of giving two retirement benefits to its employees. Respondent belies the claims of petitioner and asserts that there are two retirement plans as the PERAA Retirement Plan, which has been implemented for more than 30 years, is different from the CBA Retirement Plan. Respondent further avers that it has always been a practice of petitioner to give two retirement benefits and that this practice was established by substantial evidence was found by both the Voluntary Arbitrator and the CA.

Issue: Whether or not the respondents are entitled to two retirement plans.

Ruling: The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers from eliminating or reducing the benefits received by their employees. This rule, however, applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice. To be considered a practice, it must be consistently and deliberately made by the employer over a long period of time. Respondent was able to present substantial evidence in the form of affidavits to support its claim that there are two retirement plans. Based on the affidavits, petitioner has been giving two retirement benefits as early as 1997. Petitioner, on the other hand, failed to present any evidence to refute

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the veracity of these affidavits. Petitioner's assertion that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan are one and the same is not supported by any evidence.

The Memorandum dated August 16, 2005 is contrary to the existing CBA. It limits the available leave credits of an employee at the start of the school year. The Memorandum dated imposes a limitation not agreed upon by the parties nor stated in the CBA, so it must be struck down.

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LABOR STANDARDS

Bluer Than Blue Joint Ventures Co., vs. Esteban (G.R. No. 192582 April 7, 2014)

Citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo

Facts: The respondent was employed as a sales clerk and assigned at the petitioner’s boutique. Her primary tasks were attending to all customer needs, ensuring efficient inventory, coordinating orders from clients, cashiering and reporting to the accounting department. The petitioner learned that some of their employees had access to their POS system with the use of a universal password given to them by a certain Elmer Flores, who in turn learned of the password from the respondent. The petitioner then conducted an investigation and asked the petitioner to explain why she should not be disciplinarily dealt with. During the investigation, the respondent was placed under preventive suspension. After investigation, the petitioner terminated the respondent on the grounds of loss of trust or confidence. This respondent was given her final wage and benefits less the inventory variance incurred by the store. This urged the respondent to file a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and separation pay. The labor arbiter ruled in her favor awarding her back wages. The petitioner appealed the decision in the NLRC and the decision was reversed. However, upon the respondent’s petition for certiorari in the court of appeals the decision was reinstated. Hence, this petition.

Issue: Whether the negative sales variance could be validly deducted from the respondent’s wage?

Ruling: No, it cannot be deducted in this case.

Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except in cases where the employer is authorized by law or regulations issued by the Secretary of Labor and Employment, among others. The Omnibus Rules Implementin