1. Sonza vs.

ABS-CBN
G.R. 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 Sonzas services exclusively to ABS-CBN as talent for radio and television.
ABS-CBN agreed to pay Sonzas 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
th
leave, 13 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-CBNs contention and hence, dismissed the petition.

The Supreme Court ratiocinated that Independent contractors often present themselves to possess
unique skills, expertise, and 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.
Sonzas 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 Sonzas 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
Sonzas 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 Sonzas work.

2. Lazaro vs. Social Security Commission

G.R. 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 Laudatos social security contributions.

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

Ruling: Ladauto is an employee of Royal Star. It is an accepted doctrine that for the purposes of
coverage under the Social Security Act, the determination of employer-employee relationship warrants
the application of the control test, that is, whether the employer controls or has reserved the right to
control the employee, not only as to the result of the work done, but also as to the means and methods
by which the same is accomplished. The fact that Laudato was paid by way of commission does not
preclude the establishment of an employer-employee relationship. The relevant factor remains, as
stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not
only as to the result of the work to be done but also as to the means and methods by which the same is
to be accomplished. Neither does it follow that a person who does not observe normal hours of work
cannot be deemed an employee. A supervisor is exempt from the observance of normal hours of work
for his compensation is measured by the number of sales he makes. Laudato oversaw and supervised
the sales agents of the company, and thus was subject to the control of management as to how she
implements its policies and its end results. Royal Star exercised control over its sales supervisors or
agents such as Laudato as to the means and methods through which these personnel performed their
work.

3.) Phil. Global Communication 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 rose when
petitioner terminated his engagement.

In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized the
respondents 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 latters 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. 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 are 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.

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.

Principle of Law: Any agreement may provide that one party shall render services for and in behalf of
another, no matter how necessary for the latters business, even without being hired as an employee.
There was no employee-employer relationship in a case where element of control of the employer over
the employee is absent.

4.) ABS-CBN vs. Nazareno

G.R. No. 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 PAs 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,
th
and 13 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 is 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
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 ff:
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 petitioners 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.

5.) Francisco vs. NLRC

G.R. 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, she was replaced by Liza R. Fuentes as Manager. 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 petitioners motion for reconsideration, hence, the present recourse.

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

Held: 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 employers business; (2) the extent of the workers investment in equipment
and facilities; (3) the nature and degree of control exercised by the employer; (4) the workers
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.

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,
th
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. Petitioners membership in the SSS as manifested by a copy of the
SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion
of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee
relationship between petitioner and Respondent Corporation. It is therefore apparent that petitioner is
economically dependent on Respondent Corporation for her continued employment in the latters line
of business. The petition is GRANTED.

6.) Nogales et al., vs. Capitol Medical Center et al.

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 apnic, 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.

Issues: (1.) Whether CMC is vicariously liable for the negligence of Dr. Estrada;(2.) WON there is
employer-employee relationship between Dr. Estrada and CMC.

Held: 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, 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.

7.) Coca-Cola Bottlers Phils., vs. Dr. Climaco

G.R. No. 146881. February 15, 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
agreements are: 1. 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;2. 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;3. That in consideration of
the retainers fee, the DOCTOR agrees to perform the duties and obligations in the
COMPREHENSIVE MEDICAL PLAN, made an integral part of this retainer agreement;4. That the
DOCTOR shall observe clinic hours at the companys 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); 5. 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:

1. First, the agreement provide 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.
2. Secondly, the agreement showed that petitioner would compensate the doctor for P3,800/month. This
would represent the element of payment of wages.
3. Thirdly, it was provided in the agreement that the same shall be valid only for 1 year. the said term
 notwithstanding, either party may terminated the contract upon giving 30-day written notice.
This would show that petitioner had the power to dismissal.
4. Lastly, the agreement reveal that Coca-cola control over the conduct of respondent in the latters
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 achievedbut 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 employers 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 companys 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.

8.) Calamba Medical Center vs. NLRC et al.

G.R. No. 176484. November 25, 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.

9.) Escasinas et al., vs. Shangri-las 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-lasMactan 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 or not there exists an employer-employee relationship between Shangri-la and
petitioners.

Ruling: 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-las 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 employees 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-las 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-las 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.
10.) Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al.
G.R. No. 167622. January 25, 2011 [see June 29, 2010 Main Decision]

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

In the Agreement, it is provided that:

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

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

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

In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he
became a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife,
consisting of commissions, persistency income, and management overrides. The problem started
sometime in 2001, when Manulife instituted manpower development programs in the regional sales
management 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 Tongkos 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 dismissalIn 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: 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.

11.) 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 Gallera 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 Gallera 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 Arbiters 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.

Issues: 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 four-fold 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 employees 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.

12.) 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.

Labor Arbiters 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 attorneys fees.

In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiters judgment. 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 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?
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 denied the motion for reconsideration.

Issues: 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 Arbiters 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 employers 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 petitioners 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.

13.) 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 Sonicmix 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 Sonicmix Recording Studio (Celkor).
He was employed to manage and operate Celkor and to promote and sell the recording studio's services
to music enthusiasts and other prospective clients. He received a monthly salary of P7,000.00. They
also agreed that he was entitled to an additional commission of P100.00 per hour as recording
technician 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, respondent was tasked by petitioner 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 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 respondents 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.

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

In defense, petitioner stated in his Position Paper 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
Sonicmix 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
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 employers power to control the employees conduct. The most important element is the
employers control of the employees 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, which showed that respondent received a monthly salary of
th th
P7,000.00 (P3,500.00 every 15 of the month and another P3,500.00 every 30 of the month) with
the corresponding deductions due to absences incurred by respondent; and (2) copies of petty cash
[32]
vouchers, 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.

14.) Jao vs. BCC Products Sales Inc.

G.R. 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 backwages, non-payment of wages, damages and attorney's fees.

Respondents countered that petitioner was not their employee but the employee of Sobien Food
Corporation (SFC), the major creditor and supplier of BCC; and that SFC had posted him as its
comptroller in BCC to oversee BCC's finances and business operations and to look after SFC's interests
or investments in BCC.; that their issuance of the ID to petitioner was only for the purpose of
facilitating his entry into the BCC premises in relation to his work of overseeing the financial
operations of BCC for SFC; that the ID should not be considered as evidence of petitioner's
employment in BCC; that petitioner executed an affidavit in March 1996, 20 stating, among others, as
follows:
5. I am a CPA (Certified Public Accountant) by profession but presently associated with, or employed
by, Sobien Food Corporation with the same business address as abovestated;
6. 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 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.

15.) Legend Hotel (Manila) vs. Realuyo

G.R. No. 153511. July 18, 2012

Facts: This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a
hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for
alleged unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his
premium pay for holidays, separation pay, service incentive leave pay, and 13111 month pay.

Respondent averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night that was given to him after each nights
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 Hotels restaurant manager had required him to conform with
the venues 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.

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 employees wages, who has the power to dismiss the employee, and who exercises control of the
10
methods and results by which the work of the employee is accomplished. Although no particular
form of evidence is required to prove the existence of the relationship, and any competent and relevant
evidence to prove the relationship may be admitted, a finding that the relationship exists must
nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable
mind might accept as adequate to justify a conclusion.

A review of the circumstances reveals that respondent was, undeniably employed as a pianist in
petitioners 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 petitioners insistence
that respondent had only offered his services to provide live music at petitioners Tanglaw Restaurant,
and despite petitioners 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, petitioners 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 Velazcos
recommendation. There is no denying that the remuneration denominated as talent fees was fixed on
the basis of his talent and skill and the quality of the music he played during the hours of performance
each night, taking into account the prevailing rate for similar talents in the entertainment industry

Respondents 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
petitioners supervision and control. Specifically, petitioners control of both the end achieved and the
manner and means used to achieve that end was demonstrated by the following, to wit:
7. a) 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;
8. b) He could not choose the place of his performance;
9. c) The restaurants 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
10. d) He was subjected to the rules on employees representation check and chits, a privilege granted to
other employees.

16.) The New Philippine Skylanders, Inc., vs. Dakila

G.R. No. 199547. September 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 PAFLUs
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 PSIs 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 PSEAs 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 PSEAs disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and
their respective officers guilty of unfair labor practice.

As PSEA-NCWs 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 ofthe 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 disauthorized 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.

17.) Tesoro et al., vs. Metro Manila Retreaders Inc., et al.

G.R. No. 171482. March 12, 2014

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 petitioners 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 Bandags 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 employers 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 Bandags franchise branches in different parts of the country, they
knew that this substantially changed their former relationships. They were to cease working as
Bandags 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)
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 franchisors 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 employeremployee 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.

18.) 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 backwages, 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 jobis 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 contractThe 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 TestIn 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.

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 payslip 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.

19.) Fuji Television Network Inc. vs. Espiritu

G.R. No. 204944-45. December 3, 2014

Facts: In 2005, Arlene was engaged by Fuji Television Network, 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 backwages, 13th-month pay, mid-year and year-end bonuses, sick leave and vacation leave with
pay until reinstated, moral damages, exemplary damages, attorney's fees, and legal interest of 12% per
annum of the total monetary awards.

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
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:
1. Those "engaged to perform activities which are usually necessary or desirable in the usual business
or trade of the employer" (regular employees);
2. 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
her functions was controlled by Fuji. 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.

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
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.

20. 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 PCPPIs 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-ALUs
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
th
and PCPPI appealed to the CA. The CAs 18 division rendered a decision affirming the NLRC
decision.
In contrast, when Molon, et.al earlier questioned the consolidated decision of the NLRC, the
th
CAs 20 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
th
CA 18 Decision.
Issue: The issues raised by petitioner boil down to the legality of their dismissal pursuant to
PCPPIs 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. Pepsis management also
exerted conscious efforts to incorporate employee participation during the
implementation of its retrenchment program.
Following the ruling in the Molon, et.al petition, the Court applied the principle of stare decisis et
non quieta movere. The factual circumstances of this petition is substantially the same from the
Molon, et.al. petition, the only difference being the date of the retrenchment.

21. Begino et al., vs. 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 respondents TV Patrol Bicol
Program. The Talent contracts specifically provided that there is no employee-employer (ER-
EE) relationship between petitioners and respondents, but it additionally provided for:
1. Creation and performance of work according to ABS-CBNs standards, policies and
guidelines;
2. The petitioners should not work for ABS-CBNs competing companies or any of the same
that had an adverse interest to that of ABS-CBN;
3. The work they are doing is results oriented, which does not require them to have fixed or
normal hours of work;
4. Petitioners remunerations were denominated as talent fees.
Petitioners, claiming that they are employees of the respondent, filed a complaint against ABS-
CBN in the NLRC Sub-Regional Arbitration Brannch for regularization, underpayment of
th
overtime pay, holiday pay, 13 month pay, Service incentive leave pay, damages and attys fees,
contending that:

1. They performed functions necessary and desirable in ABS-CBN business; 2. They are
mandated to wear company IDs;
3. They are provided all the equipment needed;
4. They worked under the direct control and supervision of respondent Villafuerte; 5. They
were also bound on ABS-CBNs policy on attendance and punctuality;
6. That ABS-CBN due to the Contracts, they earn less than what respondents usually pay
their regular rank-and-file employees.

Respondents refuted the petitioners claim saying that:

 1. The petitioners are independent contractors, they employed them due to lack of
manpower to man the business;
2. They are known as talents and required to inform ABS-CBN of their availability through
Talent Information Forms to facilitate their appearance on designated project days;
3. They cannot afford employing regular workers due to unpredictable viewer preferences;
4. That through the talent contracts, petitioners were engaged because of their skills,
knowledge and expertise;
5. That the policies were general guidelines only and does not subject petitioners to control;
6. They were never subjected to control over the means and methods by which they do their
tasks.

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

Labor Arbiter resolved the first complaint in favor of petitioners, ordering ABS-CBN to pay a
th
total of P2, 440,908.36 representing salaries/wage differentials, holiday pay, SIL, 13 month pay
and attys 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:
1. Petitioners have worked for more than a year;
2. Petitioners are bound by exclusivity clause in the talent contracts; 3. There was substantial
control over them;

Respondents appealed to the NLRC which affirmed the LAs 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-terminous with specific projects where the employee is continuously re-hired
due to the demands of the employers business. Exclusivity clause and the provision on
equipments essential for their functions shows that petitioners were subject to control of the
respondents. Even if the performance is not continuous or merely intermittent, the law deems the
repeated or continuing performance as sufficient evidence of the necessity, if not indispensability
of that activity in the business.29 Indeed, an employment stops being co-terminous with specific
projects where the employee is continuously re-hired due to the demands of the employers
business. SC Reversed the CA decision and reinstated NLRC decision.

22. Social Security System vs. Ubana

G.R. No. 200114. 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 employe-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.

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 arbiters exclusive original
jurisdiction only over the following:
1. Unfair labor practices; 2. Termination disputes;
3. 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;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving
legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits,
all other claims, arising from employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five thousand pesos
(P5,000.00) regardless of whether accompanied with a claim for reinstatement.

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 CA AFFIRMED. The case is ordered remanded
with dispatch to the Regional Trial Court of Daet, Camarines Norte, Branch 39, for continuation
of proceeding.
23. Century Properties, Inc. v. Babiano
G.R. No. 220978. July 5, 2016.

FACTS:
Babiano was hired by CPI as Director of Sales, and was eventually appointed as Vice President for
Sales.

As CPI's Vice President for Sales, Babiano was remunerated with, inter alia, the following
benefits: (a) monthly salary of P70,000.00; (b) allowance of P50,000.00; and (c)0.5% override
commission for completed sales.

His employment contract also contained a "Confidentiality of Documents and Non-Compete

Clause" which, among others, barred him from disclosing confidential information, and from working
in any business enterprise that is in direct competition with CPI "while [he is] employed and for a
period of one year from date of resignation or termination from [CPI]."

Should Babiano breach any of the terms thereof, his "forms of compensation, including commissions
and incentives will be forfeited."

During the same period, Concepcion was initially hired as Sales Agent by CPI and was
eventually promoted as Project Director.
As such, she signed an employment agreement, denominated as "Contract of Agency for Project
Director" which provided, among others, that she would directly report to Babiano, and receive a
monthly subsidy of P60,000.00, 0.5% commission, and cash incentives.

Concepcion executed a similar contract anew with CPI in which she would receive a monthly subsidy
of P50,000.00, 0.5% commission, and cash incentives as per company policy.

Notably, it was stipulated in both contracts that no employer-employee relationship exists between
Concepcion and CPI.

After receiving reports that Babiano provided a competitor with information regarding CPI's marketing
strategies, spread false information regarding CPI and its projects, recruited CPI's personnel to join the
competitor, and for being absent without official leave (AWOL) for five (5) days, CPI, sent Babiano a
Notice to Explain.

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.

Babiano was served a Notice of Termination for: (a) incurring AWOL; (b) violating the
"Confidentiality of Documents and Non-Compete Clause" when he joined a competitor enterprise
while still working for CPI and provided such competitor enterprise information regarding CPI's
marketing strategies; and (c) recruiting CPI personnel to join a competitor.

Concepcion resigned as CPI's Project Director through a letter.

Respondents filed a complaint for non-payment of commissions and damages against CPI and Antonio
before the NLRC claiming that their repeated demands for the payment and release of their
commissions remained unheeded.

CPI maintained that Babiano is merely its agent tasked with selling its projects. Nonetheless, he was
afforded due process in the termination of his employment which was based on just causes.

It also claimed to have validly withheld Babiano's commissions, considering that they were deemed
forfeited for violating the "Confidentiality of Documents and Non-Compete Clause."

On Concepcion's money claims, CPI asserted that the NLRC had no jurisdiction to hear the same
because there was no employer-employee relations between them, and thus, she should have litigated
the same in an ordinary civil action.

The Labor Arbiter (LA) ruled in CPI's favor and, accordingly, dismissed the complaint for lack of
merit.

NLRC reversed and set aside the LA ruling, and entered a new one ordering CPI to pay Babiano and
Concepcion. While the NLRC initially concurred with the LA that Babiano's acts constituted just cause
which would warrant the termination of his employment from CPI, it, however, ruled that the forfeiture
of all earned commissions of Babiano under the "Confidentiality of Documents and Non-Compete
Clause" is confiscatory and unreasonable and hence, contrary to law and public policy.

CA affirmed the NLRC. Babiano properly instituted his claim for unpaid commissions before the labor
tribunals as it is a money claim arising from an employer-employee relationship with CPI.

CPI cannot withhold such unpaid commissions on the ground of Babiano's alleged breach of the
"Confidentiality of Documents and Non-Compete Clause" integrated in the latter's employment
contract, considering that such clause referred to acts done after the cessation of the employer-
employee relationship or to the "post-employment" relations of the parties.

Similarly, the CA echoed the NLRC's finding that there exists an employer-employee

ISSUE: Whether or not the CA erred in denying CPI's petition for certiorari, thereby holding it liable
for the unpaid commissions of respondents?

RULING:
1. The parties wanted to apply said clause during the pendency of Babiano's employment, and CPI
correctly invoked the same before the labor tribunals to resist the former's claim for unpaid
commissions on account of his breach of the said clause while the employer-employee relationship
between them still subsisted. Hence, there is now a need to determine whether or not Babiano
breached said clause while employed by CPI, which would then resolve the issue of his entitlement
to his unpaid commissions.

A judicious review of the records reveals that in his resignation letter, Babiano categorically
admitted to CPI Chairman Jose Antonio that on February 12, 2009, he sought employment from
First Global, and five (5) days later, was admitted thereto as vice president. From the foregoing, it is
evidently clear that when he sought and eventually accepted the said position with First Global, he
was still employed by CPI as he has not formally resigned at that time. Irrefragably, this is a glaring
violation of the "Confidentiality of Documents and Non-Compete Clause" in his employment
contract with CPI, thus, justifying the forfeiture of his unpaid commissions.

2. The presence of the following elements evince the existence of an employer-employee

relationship: (a) the power to hire, i.e., the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to control the
employee's conduct, or the so called "control test."

The control test is commonly regarded as the most important indicator of the presence or absence
of an employer-employee relationship.

Under this test, an employer-employee relationship exists where the person for whom the services
are performed reserves the right to control not only the end achieved, but also the manner and
means to be used in reaching that end.

3. Guided by these parameters, the Court finds that Concepcion was an employee of CPI considering
that: (a) CPI continuously hired and promoted Concepcion showing that CPI exercised the power
of selection and engagement over her person and that she performed functions that were necessary
and desirable to the business of CPI; (b) the monthly "subsidy" and cash incentives that
Concepcion was receiving from CPI are actually remuneration in the concept of wages as it was
regularly given to her on a monthly basis without any qualification, save for the "complete
submission of documents on what is a sale policy"; (c) CPI had the power to discipline or even
 dismiss Concepcion as her engagement contract with CPI expressly conferred upon the latter "the
right to discontinue [her] service anytime during the period of engagement should [she] fail to meet
the performance standards," among others, and that CPI actually exercised such power to dismiss
when it accepted and approved Concepcion's resignation letter; and most importantly, (d) as aptly
pointed out by the CA, CPI possessed the power of control over Concepcion because in the
performance of her duties as Project Director particularly in the conduct of recruitment
activities, training sessions, and skills development of Sales Directors she did not exercise
independent discretion thereon, but was still subject to the direct supervision of CPI, acting through
Babiano.

4. While the employment agreement of Concepcion was denominated as a "Contract of Agency for
Project Director," it should be stressed that the existence of employer-employee relations could not
be negated by the mere expedient of repudiating it in a contract.

Since there exists an employer-employee relationship between Concepcion and CPI, the labor tribunals
correctly assumed jurisdiction over her money claims.

24. Lu v. Enopia
G.R. No. 197899. March 6, 2017.

FACTS:
Respondents were hired from January 20, 1994 to March 20, 1996 as crew members of the
fishing mother boat F/B MG-28 owned by respondent Joaquin "Jake" Lu who is the sole
proprietor of Mommy Gina Tuna Resources [MGTR] based in General Santos City.
RESPONDENTS and Lu had an income-sharing arrangement wherein 55% goes to Lu, 45% to
the crew members, with an additional 4% as "backing incentive."
They also equally share the expenses for the maintenance and repair of the mother boat, and for
the purchase of nets, ropes and payaos.
Lu proposed the signing of a Joint Venture Fishing Agreement between them, but
RESPONDENTS refused to sign the same as they opposed the one-year term provided in the
agreement.
DURING THEIR DIALOGUE, Lu terminated their services right there and then because of
their refusal to sign the agreement.
Lu alleged that the master fisherman (piado) Ruben Salili informed him that petitioners still
refused to sign the agreement and have decided to return the vessel F/B MG-28.
RESPONDENTS filed their complaint for illegal dismissal, monetary claims and damages.
RESPONDENTS alleged that their refusal to sign
Lu denied having dismissed petitioners, claiming that their relationship was one of joint venture
where he provided the vessel and other fishing paraphernalia, while petitioners, as industrial
partners, provided labor by fishing in the high seas.
Lu alleged that there was no employer-employee relationship as its elements were not
present, viz.: it was the piado who hired petitioners; they were not paid wages but shares in the
catch, which they themselves determine; they were not subject to his discipline; and respondent
had no control over the day-to-day fishing operations, although they stayed in contact through
respondent's radio operator or checker.
Lu also claimed that petitioners should not be reimbursed for their share in the expenses since it
was their joint venture that shouldered these expenses.
LA rendered a Decision dismissing the case for lack of merit finding that there was no
employer-employee relationship existing between petitioner and the respondents but a joint
venture. CAIHTE
o (1) respondents were not hired by petitioner as the hiring was done by the piado or
master fisherman; (2) the earnings of the fishermen from the labor were in the form of
wages they earned based on their respective shares; (3) they were never disciplined nor
 sanctioned by the petitioner; and, (4) the income-sharing and expense-splitting was no
doubt a working set up in the nature of an industrial partnership.
o While petitioner issued memos, orders and directions, however, those who were related
more on the aspect of management and supervision of activities after the actual work
was already done for purposes of order in hauling and sorting of fishes, and thus, not in
the nature of control as to the means and method by which the actual fishing operations
were conducted as the same was left to the hands of the master fisherman.
o the checker and the use of radio were for the purpose of monitoring and supplying the
logistics requirements of the fishermen while in the sea; and that the checkers were also
tasked to monitor the recording of catches and ensure that the proper sharing system
was implemented; thus, all these did not mean supervision on how, when and where to
fish.
NLRC affirmed the decision of the Labor Arbiter
CA rendered its assailed Decision reversing the NLRC
o The CA found that petitioner exercised control over respondents based on the following:
(1) respondents were the fishermen crew members of petitioner's fishing vessel, thus,
their services to the latter were so indispensable and necessary that without them,
petitioner's deep-sea fishing industry would not have come to existence much less
fruition; (2) he had control over the entire fishing operations undertaken by the
respondents through the master fisherman (piado) and the assistant master fisherman
(assistant piado) employed by him; (3) respondents were paid based on a percentage
share of the fish catch did not in any way affect their regular employment status; and (4)
petitioner had already invested millions of pesos in its deep-sea fishing industry, hence,
it is highly improbable that he had no control over respondents' fishing
operations. DETACa
ISSUE:
Whether or not an employer-employee relationship existed between petitioner and
respondents

RULING:
In determining the existence of an employer-employee relationship, the following elements are
considered: (1) the selection and engagement of the workers; (2) the power to control the
worker's conduct; (3) the payment of wages by whatever means; and (4) the power of
dismissal.
o We find all these elements present in this case.
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.
We have gone over these printouts and found that the date of the SSS remitted contributions
coincided with the date of respondents' employment with petitioner. Petitioner failed to rebut
such evidence.
Thus, the fact that petitioner had registered the respondents with SSS is proof that they were
indeed his employees.
o The coverage of the Social Security Law is predicated on the existence of an employer-
employee relationship.
It was established that petitioner exercised control over respondents
o control test merely calls for the existence of the right to control, and not necessarily the
exercise thereof
o It is not essential that the employer actually supervises the performance of duties by the
employee. It is enough that the former has a right to wield the power.
 Petitioner admitted in his pleadings that he had contact with respondents at sea via the former's
radio operator and their checker.
He claimed that the use of the radio was only for the purpose of receiving requisitions for the
needs of the fishermen in the high seas and to receive reports of fish catch so that they can then
send service boats to haul the same.
o However, such communication would establish that he was constantly monitoring or
checking the progress of respondents' fishing operations throughout the duration
thereof, which showed their control and supervision over respondents' activities.
o The private respondent (petitioner) controls the entire fishing operations.
o For each mother fishing boat, private respondent assigned a master fisherman (piado)
and assistant master fisherman (assistant piado), who every now and then supervise the
fishing operations.
o Private respondent also assigned a checker and assistant checker based on the office to
monitor and contact every now and then the crew at sea through radio. The checker and
assistant checker advised then the private respondent of the condition.
The payment of respondents' wages based on the percentage share of the fish catch would not
be sufficient to negate the employer-employee relationship existing between them.
Petitioner wielded the power of dismissal over respondents when he dismissed them after they
refused to sign the joint fishing venture agreement.
The primary standard for determining regular employment is the reasonable connection
between the particular activity performed by the employee in relation to the usual trade or
business of the employer.
Respondents' jobs as fishermen-crew members of F/B MG 28 were directly related and
necessary to petitioner's deep-sea fishing business and they had been performing their job for
more than one year.
As respondents were petitioner's regular employees, they are entitled to security of tenure under
Section 3, Article XIII of the 1987 Constitution.
o It is also provided under Article 279 of the Labor Code, that the right to security of
tenure guarantees the right of employees to continue in their employment absent a just
or authorized cause for termination.
o Considering that respondents were petitioner's regular employees, the latter's act of
asking them to sign the joint fishing venture agreement which provides that the venture
shall be for a period of one year from the date of the agreement, subject to renewal upon
mutual agreement of the parties, and may be pre-terminated by any of the parties before
the expiration of the one-year period, is violative of the former's security of tenure.
o And respondents' termination based on their refusal to sign the same, not being shown
to be one of those just causes for termination under Article 282, is, therefore, illegal.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to the time of his actual reinstatement.

25.) 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 respondents 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 a 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 companys 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. The 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. Petitioners 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.
Respondents 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.

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.

Petitioners 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 petitioners policy
against legitimate marital bonds would encourage illicit or common-law relations and subvert the
sacrament of marriage.

26.) Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils.

G.R. No. 162994. September 17, 2004

Facts: Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome Philppines(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 employees 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 Tecsons district manager did not stop him from marrying.Tecson married Bettsy, an
Astras Branch Coordinatior 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 Glaxos 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 (12) 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 Glaxos policy on relationships between its employees and persons employed with
competitor companies, and affirming Glaxos 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 respondents contention that it is a valid exercise
of it s 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 Glaxos 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 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 Tecsons 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 companys 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.

27.) Star Paper Corp., vs. Simbol

G.R. No. 164774. April 12, 200

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.

1. 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.2. 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. e. 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 employees 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 employees right to be free from arbitrary discrimination based upon stereotypes of
married persons working together in one company.

28.) Del Monte Phils vs. Velasco,

G.R. No. 153477. March 6, 200

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.

29.) Yrasuegui vs. Phil Air Lines

G.R. No. 168081. October 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
[15]
standards of PAL are reasonable in view of the nature of the job of petitioner. However, the weight
standards need not be complied with under pain of dismissal since his weight did not hamper the
[16]
performance of his duties. 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 employees 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.

[44]
Ruling: I. The obesity of petitioner is a ground for dismissal under Article 282(e) 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
employees position.

By its nature, these qualifying standards are norms that apply prior to and after an employee is hired.
They applyprior 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.

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 overwieight 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.

30.) S.I.P. Food House et al., vs. Batolina

GR No. 192473. Oct 11, 2010.

Facts: The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the
Government Service Insurance System (GSIS). 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 SIPs 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 courts
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 canteens closure

Ruling: The employer-employee relationship issue. The CA ruled out SIPs 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 CAs findings.

The respondents 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 Mabeza v. National Labor Relations
Commissionthat the employer cannot simply deduct from the employees wages the value of the board
and lodging without satisfying the following requirements: (1) proof that such facilities are customarily
furnished by the trade; (2) voluntary acceptance in writing by the employees of the deductible
facilities; and (3) proof of the fair and reasonable value of the facilities charged. 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
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.

31.) SLL International Cables Specialist vs. NLRC

GR 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.

th
On May 21, 1999, private respondents for the 4 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 anymore 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
th
complaint for illegal dismissal, non-payment of wages, holiday pay, 13 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 payslips, 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 that
30% of the fair and reasonable value of such facilities. In such cases, the employer may deduct from
the 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 such facilities are customarily furnished
by the trade; 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.

32.) 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
Pias 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 SMIto all retired DSSs regardless of whether or not they qualify to the
same had ripened into company practice.

Ruling: Generally, employees have a vested right over existing benefits voluntarily granted to them by
their employer. Thus, any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued or eliminated by the employer. 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:

1. The grant or benefit is founded on a policy or has ripened into a practice over a long period of
time;
2. The practice is consistent and deliberate;
3. The practice is not due to error in the construction or application of a doubtful or difficult
question of law; and
4. The diminution or discontinuance is done unilaterally by the employer.

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

33.) Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant
G.R. No. 198783. April 15, 2013.

Facts: Under 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, petitioners 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.

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 & 1/2)-hour rotation period to a one-and-a-half (1 & 1/2)
hour rotation period; and b) an increase of the break period from 15 to 30 minutes between rotations.

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, CCBPIs 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 &
1/2) hours because studies show that sitting in workplaces for a long time is hazardous to ones 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 & 1/2) hours to just one and a half (1 & 1/2) 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 & 1/2) hours is a just and fair work schedule.

The operators chairs cannot be considered as one of the employee benefits covered in Article 100 of
the Labor Code. In the Courts 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.

34.) The National Wages & 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. However, Section 2 and Section 9 of
Wage Order No. NCR07 exempted certain sectors and industries from its coverage.

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 RTWPBs 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)

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTSExemption 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:
1. Distressed establishments;
2. New business enterprises (NBEs);
3. Retail/Service establishments employing not more than ten (10) workers;
4. 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
RTWPB NCR 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 informations 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.

35.) David/Yiels Hog Dealer vs. Macasio

GR No. 195466. July 2, 2014

Facts: In January 2009, Macasio filed before the LA a complaint against petitioner Ariel L. David,
doing business under the name and style "Yiels Hog Dealer," for non-payment of overtime pay, holiday
pay and 13th month pay. He also claimed payment for moral and exemplary damages and attorneys
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 Macasios 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.

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 workers 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.

36.) Our Haus Realty Development Corp., vs. Parian et al.

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
th
failure to pay their holiday, SIL, 13 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,
respondents 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:a. proof must be shown that such facilities are customarily
furnished by the trade;b. the provision of deductible facilities must be voluntarily accepted in writing
by the employee; and c. The facilities must be charged at 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 it was enjoyed by other employees thus negating its claimed
customary nature. Even if the benefit is customarily provided by the trade, it must still pass the purpose
test set by jurisprudence. Under 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.

37.) Milan et al., vs. NLRC

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 the benefits of Petitioners may be validly and legally withheld by Solid Mills
Inc.

Ruling: 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.

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."

38.) TOYOTA PASIG, INC. vs. VILMA S. DE PERALTA

G.R. No. 213488. November 7, 2016.

FACTS: The instant case stemmed from a complaint for illegal dismissal, illegal deduction, unpaid
commission, annual profit sharing, damages, and attorney's fees filed by respondent against petitioner
and/or Severino C. Lim, Jnalyn P. Lim, Jason Ian Yap, Jorge Tuason, Marissa Operaa, and Arturo P.
Lopez (Lim, et al.) before the NLRC, docketed as NLRC-NCR-CASE No. 03-03689-12. Essentially,
respondent alleged that petitioner a corporation engaged in the business of car dealership, including
service and sales of parts and accessories of Toyota motor vehicles initially hired her as a cashier in
March 1997. Eventually in 2004, 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,
including "Best Insurance Sales Executive" for the years 2007 and 2011. However, things turned sour
when her husband, Romulo "Romper" De Peralta, also petitioner's employee and the President of the
Toyota Shaw-Pasig Workers Union Automotive Industry Workers Allianceorganized 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, which resulted to the issuance of a Notice to Explain dated January 3, 2012 accusing her of
"having committed various acts" relative to the processing of insurance of three (3) units as "outside
transactions" and claiming commissions therefor, instead of considering the said transactions as "new
business accounts" under the dealership's marketing department. Accordingly, she was preventively
suspended because of such charge. On February 3, 2012, respondent 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. ADCc
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.

ISSUE: Whether or not petitioner is liable to respondent with regards to the latters unpaid
commissions, tax rebate for achieved monthly targets, salary deductions, salary for the month of
January 2012, and a success share/profit sharing?

HELD: 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 turn, 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.
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.

39.) Tiger Construction and Development Corp vs. Abay et al.

GR No. 164141. February 26, 2010.

Facts: On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others
before the Regional Office of the Department of Labor and Employment (DOLE), an inspection was
conducted by DOLE officials at the premises of petitioner TCDC. Several labor standard violations
were noted, such as deficiencies in record keeping, non-compliance with various wage orders, non-
th
payment of holiday pay, and underpayment of 13 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 Manalos endorsement, issued another inspection authority
on August 2, 2002 in the same case. Pursuant to such authority, DOLE officials conducted another
investigation of petitioners 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.aving the case in her office once
more, Director Manalo finally issued an Order dated January 29, 2003 denying petitioners 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 Manalos initial endorsement of the case to the NLRC, on the mistaken opinion that the claim
was within the latters 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.

We also cannot accept petitioners theory that Director Manalos 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 petitioners 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 petitioners contention that the
CA erred in dismissing its petition on the ground of its belated compliance with the requirement of
certification against forum-shopping.

40.) Peoples Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al.,
GR No. 179652. 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- employer 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 NLRCs 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 employers power to control the employees 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.

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.

41.) Superior Packaging Corp., vs. Balagsay et al.

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 petitioners 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 petitioners workplace, pursuant to its
visitorial and enforcement power; Whether or not Superior Package Corp. may be held solidarily liable
with Lancer Staffing for respondents unpaid money claims;

Held: Petition DENIED; DOLE may inspect the petitioners 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: 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.

42.) SHS Perforated Materials, Inc. et al., vs. Diaz

G.R. No. 185814. October 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 respondents employment, Hartmannshenn was often abroad and, because of business
exigencies, his instructions to respondent were either sent by electronic mail or relayed through
telephone or mobile phone. During meetings with the respondent, Hartmannshenn expressed his
dissatisfaction over respondents 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 respondents 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
backwages; exemplary damages, and attorneys fees, costs of suit, and legal interest.

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

Ruling: Withholding respondents 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 employees 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.

In this case, the withholding of respondents salary does not fall under any of the circumstances
provided under Article 113. Neither was it established with certainty that respondent did not work from
November 16 to November 30, 2005. Hence, the Court agrees with the LA and the CA that the
unlawful withholding of respondents salary amounts to constructive dismissal.

43.) 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 Nia Jewelry Manufacturing of
Metal Arts, Inc. There were incidents of theft involving goldsmiths in Nia Jewelry's employ:The
petitioner imposed a policy for goldsmiths, which were intended to answer for any loss or damage
which Nia 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:
1. Whether or not Nia 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 Nia 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.

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 Nia Jewelry's employ falls under the
exceptions specified in Articles 113 and 114 of the Labor Code.

2) 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.

44.) Locsin II vs. Mekeni Food Corp.

G.R. 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 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, totalling to the amount
of P112,500.00.

45. 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 attorneys fees,
against T&H Shopfitters Corporation (T&H Shopfitters) and Gin Queen Corporation before the
Labor Arbiter (LA).

st
1 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.

nd
2 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.

rd
3 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 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, 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;
xxxx
(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;
xxxx
(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.

46. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Association GR
No. 181806. March 12, 2014.

Facts: Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational

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

In 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 as 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 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.

47. Bluer Than Blue Joint Ventures Co., vs. Esteban

GR No. 192582. April 7, 2014. [citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs.
Montecillo]

Facts: The respondent was employed as a sales clerk and assigned at the petitioners
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 favour awarding her
backwages. The petitioner appealed the decision in the NLRC and the decision was reversed.
However, upon the respondents 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 respondents 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 Implementing the Labor Code, meanwhile,
provides:

SECTION 14. Deduction for loss or damage. Where the employer is engaged in
a trade, occupation or business where the practice of making deductions or
requiring deposits is recognized to answer for the reimbursement of loss or
damage to tools, materials, or equipment supplied by the employer to the
employee, the employer may make wage deductions or require the employees
to make deposits from which deductions shall be made, subject to the following
conditions:
1. That the employee concerned is clearly shown to be responsible for the
loss or damage;
2. That the employee is given reasonable opportunity to show cause why
deduction should not be made;
3. That the amount of such deduction is fair and reasonable and shall not
exceed the actual loss or damage; and
4. That the deduction from the wages of the employee does not exceed 20
percent of the employee's wages in a week.

In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the
negative variance it had in its sales for the year 2005 to 2006 and that Esteban was given the
opportunity to show cause the deduction from her last salary should not be made.

Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v. Montecillo, that:

[T]he petitioners should first establish that the making of deductions from the salaries is
authorized by law, or regulations issued by the Secretary of Labor. Further, the posting of cash
bonds should be proven as a recognized practice in the jewelry manufacturing business, or
alternatively, the petitioners should seek for the determination by the Secretary of Labor
through the issuance of appropriate rules and regulations that the policy the former seeks to
implement is necessary or desirable in the conduct of business. The petitioners failed in this
respect. It bears stressing that without proofs that requiring deposits and effecting deductions
are recognized practices, or without securing the Secretary of Labor's determination of the
necessity or desirability of the same, the imposition of new policies relative to deductions
and deposits can be made subject to abuse by the employers. This is not what the law
intends.

48. Netlink Computer Inc. vs. Delmo

G.R. No. 160827. June 18, 2014.

Facts: Since November 3, 1991, Mr. Eric Delmo was hired as an account manager for Netlink
Computer, Inc. Products and Services. His job requires him to canvass and source clients.
His performance is compensated by commissions of both Philippine Peso and U.S Dollars. Mr.
Delmo was able to generate sales which entitled him to those commissions. Mr. Delmos work
required him in the field most of the time and with his colleagues they are not required to
accomplish time cards. His request for his commissions was denied by Netlink. Instead,
they gave him partial cash advances chargeable to the commissions. Then, Netlink forced to
Mr. Delmo to resign by issuing several memoranda detailing his infractions of the companys
attendance policy.
 On November 28, 1996, Mr. Delmo was refused entry into the company premises. He
filed, then, a complaint for illegal dismissal. As a response, the company countered that Mr.
Delmo is required to have his attendance recorded per company policies. The company,
furthermore, stated that his performance is dismal and he is outperformed by other account
managers.

Issue: Whether or not the payment of commission by U.S Dollar as a company

practice/policy is protected by the non-diminution rule.

Ruling: As a general rule, all obligations shall be paid in Philippine currency. However, the
contracting parties may stipulate that foreign currencies may be used for settling obligations.
This is pursuant to Republic Act No. 8183,which provides as follows:
1. All monetary obligations shall be settled in the Philippine currency which is
legal tender in the Philippines. However, the parties may agree that the obligation
or transaction shall be settled in any other currency at the time of payment.

As established in Asia World Recruitment, Inc. v. NLRC, the real value of the foreign
exchange-incurred obligation up to the date of its payment should be preserved. Though there
was no written contract for the U.S Dollars commission, the payment of which is still mandated
because it is an established practice as a company policy which is protected by the non-
diminution rule. The principle of non-diminution of benefits, which has been incorporated in
Article 100of the Labor Code, forbade Netlink from unilaterally reducing, diminishing,
discontinuing or eliminating the practice. Verily, the phrase "supplements, or other employee
benefits" in Article 100 is construed to mean the compensation and privileges received by an
employee aside from regular salaries or wages.
With regard to the length of time the company practice should have been observed to
constitute a voluntary employer practice that cannot be unilaterally reduced, diminished,
discontinued or eliminated by the employer, we find that jurisprudence has not laid down any
rule requiring a specific minimum number of years. Several jurisprudence varies on the number
of required years for a practice to ripen.

With the payment of US dollar commissions having ripened into a company practice, there is no
way that the commissions due to Delmo were to be paid in US dollars or their equivalent in
Philippine currency determined at the time of the sales. To rule otherwise would be to cause
an unjust diminution of the commissions due and owing to Delmo.

49. PLDT vs. Estranero

G.R. No. 192518. October 15, 2014

Facts: On July 1, 1995, PLDT employed the respondent as an Auto-Mechanic/Electrician

Helper with a monthly salary of P15,000 at the time of his separation from the service in 2003.

In the year 1995, PLDT adopted a company-wide Manpower Reduction Program (MRP),
aimed at reducing its work force. To commence with its program, PLDT offered the
affected employees an attractive redundancy pay consisting of 100% of their basic monthly
salary for every year of service, in addition to their retirement benefits, if entitled. For those
who were not qualified to the retirement benefits, they were offered separation or redundancy
package of 200% of their basic monthly salary for every year of service. Among those gravely
affected by the MRP was the Fleet Management Division where the respondent was
assigned. Attracted by the separation pay offered by the company, the respondent expressed
his conformity to his inclusion in the MRP in April 25, 2003. He was then made to sign a deed
denominated as a Receipt, Release and Quitclaim for his severance from employment, thus
availed of the offered personnel reduction program. Thereafter, PLDT proceeded to
compute the respondent's redundancy/separation benefits.

Since his length of service was seven (7) years, eleven (11) months and fifteen (15) days,
which was rounded to 8 years, the respondent was entitled to 200% of his basic monthly salary
for every year of service by way of redundancy pay equivalent to P240,000.00 plus other
benefits and bonuses equivalent to P27,028.37 for a total of P267,028.37.

However, the respondent had outstanding liabilities arising from various loans he obtained from
different entities, namely: the Home Development Mutual Fund (HDMF), PLDT Employees
Credit Cooperative, Inc., PLDT Service Cooperative, Inc., Social Security System (SSS), and
the Manggagawa ng Komunikasyon sa Pilipinas, which summed to P267,028.37. Thus, PLDT
deducted the said amount from the payment that the respondent was supposed to receive as his
redundancy pay. As a result his take home pay was in the amount of zero pesos. This
prompted the respondent to retract his availment of the separation pay package offered to him
through a letter addressed to the company dated May 8, 2003. Despite said retraction, however,
the respondent was no longer allowed to report for work.

The respondent filed a complaint for illegal dismissal with reinstatement, as well as moral and
exemplary damages plus attorney's fees against PLDT and Ernani Tumimbang (petitioners),
the Division Head of the Fleet Management Division where the respondent was assigned.

The Labor Arbiter (LA) rendered a decision in favor of Estraero ordering PLDT to pay him
P267,038.37 as separation pay. The LA sustained the validity of PLDT's redundancy program
as an authorized cause to terminate the employment of the respondent, and his entitlement to
the redundancy/separation pay pursuant to the MRP, being more advantageous than the
benefits allowed under the law. The LA, however, ruled that the office lacks jurisdiction to
pass upon the issue of PLDT's act in deducting the total outstanding loans which the
respondent obtained from different entities since the same does not involve an employer-
employee relationship, and may only be enforced by PLDT through a separate civil action in the
regular courts. On appeal to the NLRC and eventually to the CA, the decision of the LA was also
affirmed.

Issue: Whether or not PLDT can validly deduct the respondent's outstanding loan obligation
from his redundancy pay.

Ruling: It is clear in Article 113 of the Labor Code that no employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his employees, except in
cases where the employer is authorized by law or regulations issued by the Secretary of Labor
and Employment, among others. The Omnibus Rules Implementing the Labor Code, meanwhile,
provides that deductions from the wages of the employees may be made by the employer when
such deductions are authorized by law, or when the deductions are with the written authorization
of the employees for payment to a third person. Thus, any withholding of an employee's wages
by an employer may only be allowed in the form of wage deductions under the circumstances
provided in Article 113 of the Labor Code, as well as the Omnibus Rules implementing it.
Further, Article 116 of the Labor Code clearly provides that it is unlawful for any person,
directly or indirectly, to withhold any amount from the wages of a worker without the worker's
consent.

In this case, the deductions made to the respondent's redundancy pay do not fall under any
of the circumstances provided under Article 113, nor was it established with certainty that the
respondent has consented to the said deductions or that the petitioners had authority to
make such deductions. Furthermore, the petitioners may not offset the outstanding loans of the
respondent against the latter's monetary benefits. The records expressly revealed that the
respondent has obtained various loans from different entities and not with PLDT.
Accordingly, set-off or legal compensation cannot take place between PLDT and the
respondent because they are not mutually creditor and debtor of each other. Thus, there can be
no valid set-off because the respondent's creditor is not PLDT.

The Court further agrees with the labor tribunals that the petitioners cannot offset the
outstanding balance of the respondent's loan obligation with his redundancy pay because the
balance on the loan does not come within the scope of jurisdiction of the LA. The demand for
payment of the said loans is not a labor, but a civil dispute. It involves debtor-creditor
relations, rather than employee-employer relations. Evidently, the respondent's unpaid
balance on his loans cannot be offset against the redundancy pay due to him.

The Court rules that PLDT has no legal right to withhold the respondent's redundancy pay
and other benefits to recompense for his outstanding loan obligations to different entities.
The respondent's entitlement to his redundancy pay is mandated by law which the petitioners
cannot unjustly deny.

50. Milan et al vs. NLRC

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 the benefits of Petitioners may be validly and legally withheld by Solid
Mills Inc.

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.

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."

51. Ernesto Galang & MA. Olga Jasmin Chan v. Boie Takeda Chemicals
G.R. No. 183934. July 20, 2016.

Facts:

Respondent Boie Takeda Chemicals, Inc. (BTCI) hired petitioners Ernesto Galang and Ma. Olga
Jasmin Chan in August 28, 1975 and July 20, 1983, respectively. Within the organizational hierarchy,
both reported to the National Sales Director. In 2002, when the National Sales Director position
became vacant (alter the retirement of Melchor Barretto), petitioners assumed and shared (with the
general manager) the functions and responsibilities of this higher position, and reported directly to the
General Manager. Petitioners were informed that BTCI promoted a certain Villanueva as National
Sales Director effective May 1, 2004. The promotion of Villanueva as the National Sales Director
caused ill-feelings on petitioners' part. They believed that Villanueva did not apply for the position; has
only three years of experience in sales; and was reportedly responsible for losses in the marketing
department. Petitioners argue that they were constructively dismissed because of the acts of BTCLs
General Manager Nomura. They claim that they were forced into resigning because instead of
promoting them to the position of National Sales Directors, BTCI hired Villanueva They allege that
Nomura threatened to dismiss them if they do not perform well under the newly-appointed National
Sales Director. Petitioners also argue that the retirement package given to them is lower compared to
others who were holding the similar position at the time of their retirement.
Issues: 1. Whether petitioners were constructively dismissed from service; and

2. Whether petitioners are entitled to a higher retirement package.

Ruling:
1. Petitioners voluntarily retired from the service, thus were not constructively dismissed.
Constructive dismissal has often been defined as a "dismissal in disguise" or "an act amounting
to dismissal but made to appear as if it were not." It exists where there is cessation of work
because continued employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank and a diminution in pay. In some cases, while no demotion in rank
or diminution in pay may be attendant, constructive dismissal may still exist when continued
employment has become so unbearable because of acts of clear discrimination, insensibility or
disdain by the employer, that the employee has no choice but to resign.
 Petitioners allege that Nomura appointed Villanueva in order to ease them out from the
company. Our labor laws respect the employer's inherent right to control and manage
effectively its enterprise and do not normally allow interference with the employer's judgment
in the conduct of his business. Management has exclusive prerogatives to determine the
qualifications and fitness of workers for hiring and firing, promotion or reassignment. It is only
in instances of unlawful discrimination, limitations imposed by law and collective bargaining
agreement can this prerogative of management be reviewed. It is true that in constructive
dismissal cases, the employer is charged with the burden of proving that its conduct and action
or the transfer of an employee are for valid and legitimate grounds such as genuine business
necessity. However, it is likewise true that in constructive dismissal cases, the employee has the
burden to prove first the fact of dismissal by substantial evidence. Only then when the dismissal
is established that the burden shifts to the employer to prove that the dismissal was for just
and/or authorized cause. The logic is simpleif there is no dismissal, there can be no question
as to its legality or illegality.

2. Petitioners were not discriminated against in terms of their retirement package.

The entitlement of employees to retirement benefits must specifically be granted under existing
laws, a collective bargaining agreement or employment contract, or an established employer
policy. Based on both parties' evidence, petitioners are not covered by any agreement. There is
also no dispute that petitioners received more than what is mandated by Article 287 of the
Labor Code.

52. Congson vs. NLRC

G.R. 114250. April 5, 1995.

Facts: Dominico C. Congson is the registered owner of Southern Fishing Industry. Respondents
were hired as piece-rate employees uniformly paid at a rate of P1.00 per tuna weighing thirty
(30) to eighty (80) kilos per movement. They work for 7 days a week. Due to alleged scarcity of
tuna, Congson notified his proposal to reduce the rate-per-tuna movement. When they reported
the following day, they found out that they were already replaced with new set of workers. They
wanted to have a dialogue with the management, but they waited in vain. Thus, they filed a case
before NLRC for underpayment of wages (violation of the minimum wage law) and non-payment
of overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day service incentive
leave pay; and for constructive dismissal.

Petitioner conceded that his payment of wages falls below the minimum wage law. He averred that
NLRC should have considered as forming a substantial part of private respondents' total wages the
cash value of the tuna liver and intestines private respondents were entitled to retrieve. He argued
that the combined value of the cash wage and monetary value of the tuna liver and intestines
clearly exceeded the minimum wage fixed by law.

Both the Labor Arbiter and the NLRC ruled in favor of the respondents.

Issue: Whether or not the form of payment by Congson is valid pursuant to Article 102 of the
Labor Code.

Ruling: Petitioner's practice of paying the private respondents the minimum wage by means
of legal tender combined with tuna liver and intestines runs counter to the above cited
provision of the Labor Code. The fact that said method of paying the minimum wage was not
only agreed upon by both parties in the employment agreement but even expressly requested
by private respondents, does not shield petitioner. Article 102 of the Labor Code is clear.
Wages shall be paid only by means of legal tender. The only instance when an employer is
permitted to pay wages informs other than legal tender, that is, by checks or money order, is
when the circumstances prescribed in the second paragraph of Article 102 are present.

53. North Davao Mining vs. NLRC

GR. No. 112546. March 13, 1996.
Facts: Due to financial losses, North Davao Mining Corporation laid off workers. Respondent
Wilfredo Guillema is one among several employees of North Davao who were separated by
reason of the companys closure on May 31, 1992. It appears that, during the life of the
petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had
been giving separation pay equivalent to thirty (30) days pay for every year of service. Moreover,
inasmuch as the region where North Davao operated was plagued by insurgency and other peace and
order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte,
some 58 kilometers from their workplace and about 2 hours travel time by public transportation;
this arrangement lasted from 1981 up to 1990.

Issue: Whether or not time spent in collecting wages in a place other than the place of
employment is compensable notwithstanding that the same is done during official time.

Ruling: SC, affirming the decision of the Labor Arbiter, finds that the hours spent by
complainants in collecting salaries at a bank in Tagum, Davao del Norte shall be considered
compensable hours worked. Considering further the distance between Amacan, Maco to Tagum
which is 2 hours by travel and the risks in commuting all the time in collecting
complainants salaries, would justify the granting of backwages equivalent to two (2) days in a
month as prayed for. Corollary, we likewise hold respondents liable for the transportation
expenses incurred by complainants at P40.00 round trip fare during pay days.

54. Heirs of Sara Lee vs. Rey

G.R. No. 149013, Aug. 31, 2006

Facts: The Heir of Sara Lee is engaged in the direct selling of a variety of product lines for
men and women, including cosmetics, intimate apparels, perfumes, ready to wear clothes and
other novelty items, through its various outlets nationwide. In the pursuit of its business, the
petitioner engages and contracts with dealers to sell the aforementioned merchandise. These
dealers, known either as Independent Business Managers (IBMs) or Independent Group
Supervisors (IGSs), depending on whether they sell individually or through their own group,
would obtain at discounted rates the merchandise from the petitioner on credit or then sell the
same products to their own customers at fixed prices also determined by the petitioner.

In turn, the dealers are paid Services Fees, or sales commissions, the amount of which depends
on the volume and value of their sales. Under existing company policy, the dealers must remit to
the petitioner the proceeds of their sales within a designated credit period, which would either
be 38 days for IGSs or 52 days for IBMs, counted from the day the said dealers acquired the
merchandise from the petitioner. To discourage late remittances, the petitioner imposes a
Credit Administration Charge, or simply, a penalty charge, on the value of the unremitted
payment.

The dealers under this system earn income through a profit margin between the discounted
purchase price they pay on credit to the petitioner and the fixed selling price their customers will
have to pay. On top of this margin, the dealer is given the Service Fee, a sales commission,
based on the volume of sales generated by him or her. Due to the sheer volume of sales
generated by all of its outlets, the petitioner has found the need to strictly monitor the 38- or 52-
day rolling due date of each of its IBMs and IGSs through the employment of Credit
Administration Supervisors (CAS) for each branch. The primary duty of the CAS is to strictly
monitor each of these deadlines, to supervise the credit and collection of payments and
outstanding accounts due to the petitioner from its independent dealers and various customers,
and to screen prospective IBMs. To discharge these responsibilities, the CAS is provided
with a computer equipped with control systems through which data is readily generated. Under
this organizational setup, the CAS is under the direct and immediate supervision of the Branch
Operations Manager (BOM).

Cynthia Rey at the time of her dismissal from employment, held the position of Credit
Administration Supervisor or CAS at the Cagayan de Oro City branch of the petitioner. She
was first employed by the petitioner as an Accounts Receivable Clerk at its Caloocan City
branch. In November 1993, respondent was transferred to the Cagayan de Oro City branch
retaining the same position. In January 1994, respondent was elevated to the position of
CAS. At that time, the Branch Operations Manager or BOM of the Cagayan de Oro City
branch was a certain Mr. Jeremiah Villagracia. In March 1995, respondent was temporarily
assigned to the Butuan City branch.

Sometime in June 1995, while respondent was still working in Butuan City, she allegedly
instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet to change the credit term
of one of the IBMs of the petitioner who happens to be respondents sister-in-law, from the 52-
day limit to an unauthorized term of 60 days. The respondent made the instruction just before
the computer data for the computation of the Service Fee accruing to Ms. Rey-Petilla was about
to be generated. Ms. Mendoza then reported this allegedly unauthorized act of respondent to
her Branch Operations Manager, Mr. Villagracia. Acting on the report, as the petitioner
alleges, BOM Villagracia discreetly verified the records and discovered that it was not only the
52-day credit term of IBM Rey-Petilla that had been extended by the respondent, but there were
several other IBMs whose credit terms had been similarly extended beyond the periods allowed
by company policy. BOM Villagracia then summoned the respondent and required her to
explain the unauthorized credit extensions.

Issue: WON the respondent is entitled to 13th month pay.

Ruling: The award of 13th month pay must be deleted. Respondent is not a rank-and-file
employee and is, therefore, not entitled to thirteenth-month pay. However, the NLRC and the
CA are correct in refusing to award 14th and 15th month pay as well as the monthly salary
increase of 10 percent per year for two years based on her latest salary rate. The respondent
must show that these benefits are due to her as a matter of right. Mere allegations by the
respondent do not suffice in the absence of proof supporting the same. With respect to salary
increases in particular, the respondent must likewise show that she has a vested right to the
same, such that her salary increases can be made a component in the computation of back
wages. What is evident is that salary increases are a mere expectancy. They are by nature
volatile and dependent on numerous variables, including the companys fiscal situation, the
employees future performance on the job, or the employees continued stay in a position. In
short, absent any proof, there is no vested right to salary increases.

55. San Juan De Dios Hospital vs. NLRC

G.R. No. 126383. November 28, 1997.

Facts: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios
Hospital Employees Association, sent a letter requesting for the expeditious implementation
and payment by respondent, San Juan De Dios Hospital, of the '40-hours/5-day workweek' with
compensable weekly two (2) days off provided for by Policy Instruction No. 54 issued by
the Secretary of Labor. Said policy instruction purports to implement R.A. No. 5901,
otherwise known as An Act Prescribing Forty Hours A Week of Labor For Government and
Private Hospitals Or Clinic Personnel. Respondent hospital failed to give a favorable response;
thus, petitioners filed a complaint regarding their claims for statutory benefits under the above-
cited law and policy issuance. However, the Labor Arbiter and, subsequently, NLRC
dismissed the complaint. Hence, this petition ascribing grave abuse of discretion on the part of
NLRC in concluding that Policy Instructions No. 54 proceeds from a wrong interpretation of
R.A. 5901 and Article 83 of the Labor Code.

Issue: Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days upon
completion of 40-hour/5-day workweek, is valid based on existing labor laws.

Ruling: Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the
provision of Article 83 of the Labor Code, as well as to R.A. No. 5901.
A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for health
personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of
House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the
bill's sole purpose is to shorten the working hours of health personnel and not to dole out a two
days off with pay. Petitioners' position is also negated by the very rules and regulations
promulgated by the Bureau of Labor Standards which implement Republic Act No. 5901.
Section 15 of aforementioned implementing rules grants specific rate of additional
compensation for work performed on Sunday or for work performed in excess of forty hours a
week. Policy Instruction No. 54 unduly extended the statute.

Article 83 merely provides: (1) the regular office hour of eight hours a day, five days per week
for health personnel, and (2) where the exigencies of service require that health personnel
work for six days or forty-eight hours then such health personnel shall be entitled to an
additional compensation of at least thirty percent of their regular wage for work on the sixth
day. There is nothing in the law that supports then Secretary of Labor and petitioners
assertion. The Secretary of Labor exceeded his authority by including a two days off with
pay in contravention of the clear mandate of the statute. Administrative interpretation of the
law is at best merely advisory, and the Court will not hesitate to strike down an
administrative interpretation that deviates from the provision of the statute.

56. Simedarby vs. NLRC

289 SCRA 86, 1998

Facts: Prior to the present controversy, the factory employees of Sime Darby Pilipinas, Inc.
enjoyed a 30-minute paid on call lunch break in their daily work schedule of 7:45 am to 3:45 pm.
The petitioner company passed a memorandum dated Aug 12 1992 advising all factory-based
workers, except those in the Warehouse and Quality Assurance Department, of a change in work
schedule that discontinued the 30-minute paid on call lunch break and set an uninterrupted
1 hour lunch break in lieu thereof.

Private respondents then filed a complaint for unfair labor practice, discrimination, and evasion of
liability with the Labor Arbiter who dismissed the complaint, ruling that the elimination of the
30-minute lunch break was a valid exercise of management prerogative. Appeal was made to
respondent NLRC who reversed the decision of the Labor Arbiter, declaring that the new work
schedule deprived the employees of the benefits of a time-honored company practice and that such
change also resulted in an unjust diminution of employee benefits.

The OSG recommended the present petition to be granted, alleging that the new memorandum
containing the work schedule was not discriminatory not did it constitute unfair labor practice.

Issue: Whether or not the memorandum dated Aug 14 1992 discontinuing the 30-minute paid on
call lunch break constituted unfair labor practice and diminution of benefits

Ruling: The Supreme Court sustained petitioner, holding that it is clearly a management
prerogative to fix the work schedules of company employees. Under the old schedule, the
employees are compensated during their 30-minute lunch break, but in essence it is still
working time since the workers could be called upon to work. Whereas in the new schedule, the
employees are given a longer break of 1 hour, though uncompensated, it is uninterrupted as
workers on their break are no longer on call. The change in schedule would improve
company productivity as well as enhance the comfort of workers who could enjoy an
uninterrupted break.

The Supreme Court also reiterated the policy that while social justice and the protection of the
working class is ensured by the Constitution, the same fundamental law also protects the right of
the management to regulate all aspects of employment as well as to retain the prerogative of
changing work schedules according to the exigencies of the enterprise. So long as this
prerogative is exercised in good faith, the Court upholds such exercise.
57. Phil. Airlines vs. NLRC
302 SCRA 582, 1999

Facts: Private respondent (Dr. Herminio A. Fabros) was employed as flight surgeon at petitioner
company (PAL). He was assigned at (PAL Medical Clinic at Nichols) and was on duty from 4:00
in the afternoon until 12:00 midnight.

On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his
dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic
received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel
Acosta, had suffered a heart attack. Upon receiving the call the nurse on duty, Mr. Merlino
Eusebio, called private respondent at home to inform him of the emergency. The patient
arrived at the clinic at 7:50 in the evening and was rushed by Mr. Eusebio to the hospital.
When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had
already left with the patient. Mr. Acosta died the following day.

Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the
Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required
private respondent to explain why no disciplinary sanction should be taken against him.

In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break;
that he immediately left his residence upon being informed by Mr. Eusebio about the emergency
and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the
patient to the hospital without waiting for him.

Finding private respondents explanation unacceptable, the management charged private

respondent with abandonment of post while on duty.

Petitioner argues that being a full-time employee, private respondent is obliged to stay in the
company premises for not less than eight (8) hours. Hence, he may not leave the company
premises during such time, even to take his meals.

Issue: WON being a full-time employee, private respondent is obliged to stay in the company
premises for not less than eight (8) hours.

Ruling: NO. Employees are not prohibited from going out of the premises as long as they return to
their post on time.

Articles 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work.The normal hours of work of any employee shall not
exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100)
shall hold regular office hours for eight (8) hours a day, for five (5) days a week,
exclusive of time for meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which case they shall be
entitled to an additional compensation of at least thirty per cent (30%) of their regular wage
for work on the sixth day. For purposes of this Article, health personnel shall include:
resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers,
laboratory technicians, paramedical technicians, psychologists, midwives, attendants and
all other hospital or clinic personnel. (emphasis supplied)
Art. 85. Meal periods.Subject to such regulations as the Secretary of Labor may
prescribe, it shall be the duty of every employer to give his employees not less than sixty (60)
minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods.Every employer shall give his employees, regardless
of sex, not less than one (1) hour time-off for regular meals, except in the following
cases when a meal period of not less than twenty (20) minutes may be given by the
employer provided that such shorter meal period is credited as compensable hours
worked of the employee;
(a) Where the work is non-manual work in nature or does not involve
strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to
be performed on machineries, equipment or installations to avoid serious loss
which the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall
be considered as compensable working time.

Thus, the eight-hour work period does not include the meal break. Nowhere in the law may
it be inferred that employees must take their meals within the company premises.
Employees are not prohibited from going out of the premises as long as they return to their
posts on time. Private respondents act, therefore, of going home to take his dinner does
not constitute abandonment.
58. Linton Commercial Co., Inc., vs. Hellera et al.
G.R. No. 163147, October 10, 2007.

Facts: On 17 December 1997, Linton issued a memorandum addressed to its employees

informing them of the company's decision to suspend its operations from December 18,
1997 to January 5, 1998 due to the currency crisis that affected its business operations.
Linton submitted an establishment termination report to the Department of Labor and
Employment (DOLE) regarding the temporary closure of the establishment covering the
said period. The company's operation was to resume on January 6, 1998. On January 7,
1997, Linton issued another memorandum informing them that effective January 12,
1998, it would implement a new compressed workweek of three (3) days on a rotation
basis. In other words, each worker would be working on a rotation basis for three working
days only instead for six days a week. On the same day, Linton submitted an establishment
termination report concerning the rotation of its workers. Linton proceeded with the
implementation of the new policy without waiting for its approval by DOLE.
Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of
workdays.

Issue: WON there was an illegal reduction of work when Linton implemented a
compressed workweek by reducing from six to three the number of working days with
the employees working on a rotation basis.

Ruling: The compressed workweek arrangement was unjustified and illegal.

The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing
for in determining when an employer can validly reduce the regular number of working
days. The said bulletin states that a reduction of the number of regular working days is
valid where the arrangement is resorted to by the employer to prevent serious losses due to
causes beyond his control, such as when there is a substantial slump in the demand for his
goods or services or when there is lack of raw materials. Although the bulletin stands
more as a set of directory guidelines than a binding set of implementing rules, it has one
main consideration, consistent with the ruling in Philippine Graphic Arts Inc., in
determining the validity of reduction of working hours that the company was suffering
from losses.

Certainly, management has the prerogative to come up with measures to ensure

profitability or loss minimization. However, such privilege is not absolute. Management
prerogative must be exercised in good faith and with due regard to the rights of labor. As
previously stated, financial losses must be shown before a company can validly opt to
reduce the work hours of its employees. However, to date, no definite guidelines have
yet been set to determine whether the alleged losses are sufficient to justify the reduction
of work hours. If the standards set in determining the justifiability of financial losses
under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the
Labor Code were to be considered, petitioners would end up failing to meet the standards.
On the one hand, Article 286 applies only when there is a bona fide suspension of the
employer's operation of a business or undertaking for a period not exceeding six (6)
months.

Records show that Linton continued its business operations during the effectivity of the
compressed workweek, which spanned more than the maximum period. On the other
hand, for retrenchment to be justified, any claim of actual or potential business losses
must satisfy the following standards: (1) the losses incurred are substantial and not de
minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is
reasonably necessary and is likely to be effective in preventing the expected losses; and (4)
the alleged losses, if already incurred, or the expected imminent losses sought to be
forestalled, are proven by sufficient and convincing evidence. Linton failed to comply with
these standards.

59. Bisig Manggagawa sa Tryco vs. NLRC

G.R. No. 151309. October 15, 2008.

Facts: Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and

its principal office is located in Caloocan City. Petitioners are its regular employees,
occupying the positions of helper, shipment helper and factory workers, assigned to the
Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the
exclusive bargaining representative of the rank-and-file employees.
Tryco and the petitioners signed a Memorandum of Agreement (MOA), providing for a
compressed workweek schedule to be implemented in the company effective May 20, 1996.
As provided, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the
regular working hours, and no overtime pay shall be due and payable to the employee for
work rendered during those hours. The MOA specifically stated that the employee waives
the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from
Monday to Friday considering that the compressed workweek schedule is adopted in lieu of
the regular workweek schedule which also consists of 46 hours. However, should an
employee be permitted or required to work beyond 6:12 p.m., such employee shall be
entitled to overtime pay.

On a letter dated March 26, 1997, the Bureau of Animal Industry of the Department of
Agriculture reminded Tryco that its production should be conducted in San Rafael, Bulacan,
not in Caloocan City.

Accordingly, Tryco issued a Memorandum dated April 7, 1997 which directed petitioner
Aya-ay to report to the companys plant site in Bulacan. When petitioner Aya-ay refused
to obey, Tryco reiterated the order on April 18, 1997. Subsequently, through a
Memorandum dated May 9, 1997, Tryco also directed the other petitioners Egera, Lario
and Barte to report to the companys plant site in Bulacan.

BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it
constitutes unfair labor practice. In protest, BMT declared a strike on May 26, 1997.

In August 1997, petitioners filed their separate complaints for illegal dismissal,
underpayment of wages, nonpayment of overtime pay and service incentive leave, and
refusal to bargain against Tryco and its President, Wilfredo C. Rivera. Petitioners alleged
that the company acted in bad faith during the CBA negotiations because it sent
representatives without authority to bind the company, and this was the reason why the
negotiations failed. Also, the management transferred petitioners from Caloocan to San
Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their
salaries from May 26 to 31, 1997, service incentive leave, and overtime pay, and to
implement Wage Order No. 4.

Issue: Whether or not the company committed Unfair Labor Practices

Ruling: NO.Petitioners mainly contend that the transfer orders amount to a constructive
dismissal. They maintain that the letter of the Bureau of Animal Industry is not credible
because it is not authenticated; it is only a ploy, solicited by respondents to give them
an excuse to effect a massive transfer of employees. There is not proof to support this
claim. Absent any evidence, the allegation is not only highly irresponsible but is grossly
unfair to the government agency concerned.
Also, Trycos decision to transfer its production activities to San Rafael, Bulacan,
regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry,
was within the scope of its inherent right to control and manage its enterprise effectively.

When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and
it does not involve a demotion in rank or diminution of salaries, benefits, and other
privileges, the employee may not complain that it amounts to a constructive dismissal. In
this case, the transfer orders do not entail a demotion in rank or diminution of salaries,
benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection
solely on the ground that it would cause them great inconvenience since they are all residents
of Metro Manila and they would incur additional expenses to travel daily from Manila to
Bulacan. Such contention is untenable because the Court has previously declared that mere
incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. The
distance from Caloocan to San Rafael, Bulacan is not considerably great so as to
compel petitioners to seek living accommodations in the area and prevent them from
commuting to Metro Manila daily to be with their families.

Finally, MOA is enforceable and binding against the petitioners. Where it is shown that the
person making the waiver did so voluntarily, with full understanding of what he was doing,
and the consideration for the quitclaim is credible and reasonable, the transaction must
be recognized as a valid and binding undertaking. In addition, D.O. No. 21 sanctions the
waiver of overtime pay in consideration of the benefits that the employees will derive from
the adoption of a compressed workweek scheme. Moreover, the adoption of a compressed
workweek scheme in the company will help temper any inconvenience that will be caused
the petitioners by their transfer to a farther workplace. Notably, the MOA complied with
the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the
employees in the implementation of a compressed workweek scheme

Considering that the MOA clearly states that the employee waives the payment of
overtime pay in exchange of a five-day workweek, there is no room for interpretation
and its terms should be implemented as they are written.

60. Dasco et al., vs. Phiktranco Service Enterprise

GR No. 211141. June 29, 2016

Facts: This case is a complaint for regularization, underpayment of wages, non-payment of

service incentive leave (SIL) pay, and attorney's fees, led by the petitioners against Philtranco
Service Enterprises, Inc., (PSEI), a domestic corporation engaged in providing public utility
transportation, and its Manager, Centurion Solano (respondents).

On various dates from 2006 to 2010, the petitioners were employed by the respondents as bus
drivers and/or conductors with travel routes of Manila (Pasay) to Bicol, Visayas and Mindanao,
and vice versa.
On July 4, 2011, the petitioners led a case against the respondents alleging that:
(1) they were already qualied for regular employment status since they have been working with
the respondents for several years;
(2) they were paid only P404.00 per round trip, which lasts from two to ve days, without
overtime pay and below the minimum wage rate;
(3) they cannot be considered as eld personnel because their working hours are controlled by the
respondents from dispatching to end point and their travel time is monitored and measured by the
distance because they are in the business of servicing passengers where time is of the essence;
and
(4) they had not been given their yearly ve-day SIL since the time they were hired by the
respondents. Respondents asserted that:
(1) the petitioners were paid on a xed salary rate of P0.49 centavos per kilometer run, or
minimum wage, whichever is higher;
(2) the petitioners are seasonal employees since their contracts are for a xed period and their
employment was dependent on the exigency of the extraordinary public demand for more buses
during peak months of the year; and
(3) the petitioners are not entitled to overtime pay and SIL pay because they are eld personnel
whose time outside the company premises cannot be determined with reasonable certainty since
they ply provincial routes and are left alone in the eld unsupervised

Labor Arbiter: On October 17, 2011, the LA rendered a Decision in favor of the respondents but
declared the petitioners as regular employees of the respondents. The LA held that the
respondents were able to prove that the petitioners were paid on a xed salary of P0.49 per
kilometer run, or minimum wage, whichever is higher. The LA also found that the petitioners are
not entitled to holiday pay and SIL pay because they are considered as eld personnel.
NLRC: Held that the petitioners are not eld personnel considering that they ply specic routes
with xed time schedules determined by the respondents; thus, they are entitled to minimum
wage, SIL pay, and overtime benets. With regard to the respondents' claim that the petitioners
have a xed term contract, the NLRC concurred with the ndings of the LA that the respondents
failed to show any document, such as employment contracts and employment records, that would
show the dates of hiring, as well as the xed period agreed upon.

CA: Reversed and set aside the NLRC rulings and reinstated the LA's decision. Consequently,
the writ of execution, levy, auction sale and certicate of sale of PSEI's properties were declared
null and void. The petitioners and the NLRC Sheriff were directed to return the subject
properties or turn over the monetary value thereof to the respondents.

Issues: WON the petitioners as bus drivers and/or conductors are eld personnel, and thus
entitled to overtime pay and SIL pay

Ruling: Court reiterates that as a rule, it is not a trier of facts and this applies with greater force
in labor cases. Hence, factual ndings of quasi-judicial bodies like the NLRC, particularly when
they coincide with those of the LA and if supported by substantial evidence, are accorded respect
and even nality by this Court. But where the ndings of the NLRC and the LA are
contradictory, as in the present case, this Court may delve into the records and examine for itself
the questioned ndings.
The NLRC properly concluded that the petitioners are not eld personnel but regular employees
who perform tasks usually necessary and desirable to the respondents' business. Evidently, the
petitioners are not eld personnel as dened above and the NLRC's nding in this regard is
supported by the established facts of this case: (1) the petitioners, as bus drivers and/or
conductors, are directed to transport their passengers at a specied time and place; (2) they are
not given the discretion to select and contract with prospective passengers; (3) their actual work
hours could be determined with reasonable certainty, as well as their average trips per month;
and (4) the respondents supervised their time and performance of duties.
In order to monitor their drivers and/or conductors, as well as the passengers and the bus itself,
the bus companies put checkers, who are assigned at tactical places along the travel routes that
are plied by their buses. The drivers and/or conductors are required to be at the specic bus
terminals at a specied time. In addition, there are always dispatchers in each and every bus
terminal, who supervise and ensure prompt departure at specied times and arrival at the
estimated proper time. Obviously, these drivers and/ or conductors cannot be considered as eld
personnel because they are under the control and constant supervision of the bus companies
while in the performance of their work.

As correctly observed by the NLRC:

It is undisputed that [the petitioners] as bus drivers/conductors ply specic routes of
[PSEI],...averaging 2 to 5 days per round trip. They follow xed time schedules of travel and
follow the designated route of[PSEI].Thus, in carrying out their functions as bus
drivers/conductors, they are not at liberty to deviate from the xed time schedules for departure
or arrival or change the routes other than those specically designated for [PSEI],in accordance
with the franchise granted to the [PSEI] as a public utility provider. In other words, [the
petitioners] are clearly under the strict supervision and control of [PSEI] in the performance of
their functions otherwise the latter will not be able to carry out its business as public utility
service provider in accordance with its franchise.

The Court agrees with the above-quoted ndings of the NLRC. Clearly, the petitioners, as bus
drivers and/or conductors, are left alone in the eld with the duty to comply with the conditions of
the respondents' franchise, as well as to take proper care and custody of the bus they are using.
Since the respondents are engaged in the public utility business, the petitioners, as bus drivers
and/or conductors, should be considered as regular employees of the respondents because they
perform tasks which are directly and necessarily connected with the respondents' business. Thus,
they are consequently entitled to the benets accorded to regular employees of the respondents,
including overtime pay and SIL pay.

WHEREFORE, the petition is GRANTED. The Decision dated August 30,2013 and Resolution
dated January 28,2014 of the Court of Appeals in CA-G.R.SP No.126210 are REVERSED and
SET ASIDE. The Decision dated February 22, 2012 and Resolution dated May 30, 2012 of the
National Labor Relations Commission in NLRCNCR Case No. 07-10173-11 are REINSTATED.
61. HSY Marketing Ltd., Villatique
GR No. 219569. August 17, 2016

Facts: On January 3, 2003, petitioner hired respondent as a eld driver for Fabulous Jeans & Shirt
& General Merchandise (Fabulous Jeans), tasked to deliver ready-to- wear items and/or general
merchandise for a daily compensation of P370.00. On January 10, 2011, respondent gured in an
accident when the service vehicle (a 2010- model Mitsubishi Strada pick up) he was driving in
Iligan City bumped a pedestrian, Ryan Dorataryo (Dorataryo). Fabulous Jeans shouldered the
hospitalization and medical expenses of Dorataryo in the amount of P64,157.15, which
respondent was asked to reimburse, but to no avail. On February 24, 2011, respondent was
allegedly required to sign a resignation letter, which he refused to do. A couple of days later, he
tried to collect his salary for that week but was told that it was withheld because of his refusal to
resign. Convinced that he was already terminated on February 26, 2011, he lost no time in ling a
complaint for illegal dismissal with money claims against petitioner, Fabulous Jeans, and its
owner, Alexander G. Arqueza (Arqueza; collectively, petitioner, et al.) before the NLRC,
docketed as RAB-X- 04-00179-2011. In their defense, petitioner, et al. contended that respondent
had committed several violations in the course of his employment, and had been found by his
superior and fellow employees to be a negligent and reckless driver, which resulted in the
vehicular mishap involving Dorataryo. After they paid for Dorataryo's hospitalization and
medical expenses, respondent went on absence without leave, presumably to evade liability for
his recklessness. Since respondent was the one who refused to report for work, he should be
considered as having voluntarily severed his own employment. Thus, his money claims cannot
prosper as he was not terminated.

Labor Arbiter: Dismissed the charge of illegal dismissal, finding no evidence to substantiate
respondent's claim that he was dismissed from his job on February 26, 2011. Declared that
neither was there a notice of termination issued to him, nor was he prevented from showing up in
petitioner's place of business. There was likewise no evidence submitted by petitioner
thatrespondent had indeed voluntarily resigned. Mere absence or failure to report for work, even
after a notice to return, is not tantamount to abandonment. However, it was not even shown that
respondent was notified in writing to report for work, or warned that his continued failure to
report would be construed as abandonment or resignation. Thus, the LA ruled that the employer-
employee relationship between the parties should be maintained. Nonetheless, since the LA
pronounced that there were strained relations between the parties, petitioner was not ordered to
reinstate respondent, and instead, was directed to pay the latter the amount of P86,580.00 as
separation pay. LA dismissed the complaint against Fabulous Jeans and Arqueza for lack of
factual and evidentiary basis, finding petitioner to be respondent's employer.

NLRC: Affirmed the finding of the LA that there was no illegal dismissal to speak of, stressing
the failure of respondent to discharge the burden of proof, which shifted to him when his
employer denied having dismissed him. Similarly, the NLRC found no evidence of deliberate or
unjustified refusal on the part of respondent to resume his employment, or of overt acts
unerringly pointing to the fact that respondent did not want to work anymore.

CA: CA found no grave abuse of discretion on the part of the NLRC in sustaining the award of
separation pay, which respondent had expressly prayed for from the very start of the proceedings,
thereby foreclosing, by implication, reinstatement as a relief. In addition, the CA held that
reinstatement was no longer feasible considering the resentment and enmity between the parties.
CA declared that respondent was not a eld personnel but a regular employee whose task was
necessary and desirable to the usual trade and business of his employer, which, thus, entitled him
to the benefit in question.

Finally, the CA debunked petitioner's contention that it is a total stranger to the case, not having
shown that it has a personality separate and distinct from that of Fabulous Jeans.

Issues: Whether or not the CA correctly: (a) found that an employment relationship existed
between the parties in this case; (b) affirmed the findings of the NLRC that respondent did not
voluntarily resign from work and petitioner did not dismiss him from employment, and
consequently, awarded respondent separation pay; and (c) declared respondent to be a regular
employee and thus, awarded him service incentive leave pay.

Ruling:

a) Respondent claimed in his Position Paper before the LA that he was hired by petitioner and
was required to report for work at its store in Cagayan de Oro City. This was confirmed by
petitioner in its own Position Paper, declaring respondent to be "an eld driver for the Cagayan de
Oro Branch of (petitioner) HSY MARKETING LTD., CO., (NOVO JEANS & SHIRT)." Clearly,
petitioner should be bound by such admission and must not be allowed to continue to deny any
employer-employee relationship with respondent.

To add, the Court had already exposed the practice of setting up "distributors" or "dealers" which
are, in reality, dummy companies that allow the mother company to avoid employer-employee
relations and, consequently, shield the latter from liability from employee claims in case of
illegal dismissal, closure, unfair labor practices, and the like.

Respondent had categorically alleged the commission of such pernicious practice in his
Affidavit:
2. That for the many years that I have been employed with NOVO, I have observed that
although they used the business name NOVO Jeans and Shirts, the ownership of each and
every branch in the entire Mindanao was put under different corporate names like a)
Asian Distributor in Bayugan; b) Novotel (with Hotel) in Ozamis City; c) HSY
Marketing Limited Corporation as their mother corporation; d) Fabulous Jeans and Shirts
in Iligan City and Cagayan de Oro City;

3. That the different ownership used by Respondent NOVO in its different branches was
to minimize business tax; Despite these statements, petitioner failed to present evidence
to rebut the same. Therefore, it cannot be allowed to evade liability as the employer of
respondent.

b) SC upholds the unanimous conclusion of the lower tribunals that respondent had not been
dismissed at all. No substantial evidence was presented to show that he was indeed dismissed or
was prevented from returning to his work. absence of any showing of an overt or positive act
proving that petitioner had dismissed respondent, the latter's claim of illegal dismissal cannot be
sustained, as such supposition would be self-serving, conjectural, and of no probative value since
there is no dismissal or abandonment to speak of, the appropriate course of action is to reinstate
the employee (in this case, herein respondent) without, however, the payment of back wages.

Notably, the reinstatement ordered here should not be construed as a relief proceeding from
illegal dismissal; instead, it should be considered as a declaration or affirmation that the
employee may return to work because he was not dismissed in the first place. 65 For this reason,
the Court agrees with petitioner that the LA, the NLRC, and the CA erred in awarding separation
pay in spite of the finding that respondent had not been dismissed. Properly speaking, liability
for the payment of separation pay is but a legal consequence of illegal dismissal where
reinstatement is no longer viable or feasible. As a relief granted in lieu of reinstatement, it goes
without saying that an award of separation pay is inconsistent with finding that there was no
illegal dismissal. This is because an employee who had not been dismissed, much less illegally
dismissed, cannot be reinstated. Moreover, as there is not reinstatement to speak of, respondent
cannot invoke the doctrine of strained relations

c) Court has already held that company drivers who are under the control and supervision of
management officers like respondent herein are regular employees entitled to benefits
including service incentive leave pay.

Petitioner, as employer of respondent, and having complete control over the records of the
company, could have easily rebutted the said monetary claim against it by presenting the
vouchers or payrolls showing payment of the same. However, since petitioner opted not to lift a
finger in providing the required documentary evidence, the ineluctable conclusion that may be
derived therefrom is that it never paid said benefit and must, perforce, be ordered to settle its
obligation to respondent.

62. A. Nate Casket Maker et al., vs Arango et al.,

G.R. No. 192282. October 5, 2016

Facts: Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket Maker.
They employed respondents on various dates as carpenters, mascilladors and painters in their
casket-making business from 1998 until their alleged termination in March 2007. Petitioners
alleged in their Position Paper that respondents are pakyaw workers who are paid per job
order. Respondents are "stay-in" workers with free board and lodging, but they would "always"
drink, quarrel with each other on petty things such that they could not accomplish the job orders
on time. Hence, petitioners would then be compelled to "contract out" to other workers for the
job to be finished. On February 3, 2007, they met with respondents in order to present a proposed
employment agreement which would change the existing pakyaw system to "contractual basis"
and would provide for vacation leave and sick leave pay and other benefits given to regular
employees. Petitioners alleged that the proposed employment agreement would be more
beneficial to respondents.

On the other hand, respondents alleged in their Position Paper, that they worked from
Monday to Saturday, from 7:00 a.m. to 10:00 p.m.,with no overtime pay and any monetary
 benefits despite having claimed for such. On March 15, 2007, they were called by petitioners
and were made to sign a Contract of Employment with the following terms and conditions: (1)
they shall be working on contractual basis for a period of five months; (2) renewal of
employment contract after such period shall be on a case-to-case basis or subject to
respondents' efficiency and performance; (3) petitioners shall reserve the right to terminate
their employment should their performance fall below expectations or if the conditions under
which they were employed no longer exist; (4) their wages shall be on a piece-rate basis; (5) in
the performance of their tasks, they shall be obliged to strictly follow their work schedules; (6)
they shall not be eligible to avail of sick leave or vacation leave, nor receive 13th month pay
and/or bonuses, or any other benefits given to a regular employee. Respondents then alleged
that when they were adamant and eventually refused to sign the contract, petitioners told them
to go home because their employment has been terminated.

On February 8, 2007, respondents filed a Complaint for illegal dismissal and non-
payment of separation pay against petitioners. On March 15, 2007, they amended the
complaint to include claims for underpayment of wages, non-payment of overtime pay, holiday
pay, 5-day service incentive leave pay and 13th month pay.

Labor Arbiter (LA) Eduardo J. Carpio, issued a Decision dismissing the complaint for
lack of merit. NLRC affirmed the Decision of the LA and held that no substantial evidence was
presented to show that petitioners terminated the employment of respondents. It stated
that pakyaw workers are not entitled to money claims because their work depends on the
availability of job orders from petitioners' clients. Also, there was no proof that overtime work
was rendered by respondents.|||

Issues: whether respondents who are pakyaw workers and considered regular workers are
entitled to separation pay, overtime pay, holiday pay, service incentive leave pay and 13th month
pay.

Ruling: The power of control of petitioners over respondents is clearly present in this case.
Respondents follow the steps in making a casket, as instructed by the petitioners, like
carpentry, mascilla, rubbing and painting. They had their own notebooks where they listed the
work completed with their signature and the date finished. The same would be checked by
petitioners as basis for the compensation for the day. Thus, petitioners wielded control over the
respondents in the discharge of their work.|||

It should be remembered that the control test merely calls for the existence of the right to control,
and not necessarily the exercise thereof. It is not essential that the employer actually supervises
the performance of duties by the employee. It is enough that the former has a right to wield the
power. 29 Hence, pakyaw workers are considered regular employees for as long as their
employers exercise control over them. Thus, while respondents' mode of compensation was on a
per-piece basis, the status and nature of their employment was that of regular employees.|||

As regular employees, respondents were entitled to security of tenure and could be dismissed
only for just or authorized causes and after the observance of due process.
 Under Article 279 of the Labor Code as aforestated, an employee unjustly dismissed from
work is entitled to reinstatement and backwages, among others. On reinstatement, the CA
ordered payment of separation pay in lieu of reinstatement. The accepted doctrine is that
separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the
best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded if the
employee decides not to be reinstated. Respondents filed their complaint in 2007. Nine (9) years
are a substantial period to bar reinstatement. The dispositive portion of the CA Decision is
consistent with the premise that the respondents were entitled to reinstatement by reason of their
illegal dismissal, but they could receive instead separation pay in lieu of reinstatement if
reinstatement is no longer practicable.

In lieu of reinstatement then, separation pay at the rate of one month for every year of
service, with a fraction of at least six (6) months of service considered as one (1) year, is in
order.|

As to the other benefits, namely, holiday pay, service incentive leave pay and overtime
pay which respondents prayed for in their complaint, We affirm the ruling of the CA that
respondents are so entitled to these benefits except for 13th month pay for under PD No. 851,
Section 3(e),"employers of those who are paid on ...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.|||

WHEREFORE, the Petition is PARTIALLY GRANTED in so far as the payment of 13th month
pay to respondents is concerned. In all other aspects, the Court AFFIRMS the Decision dated
January 6, 2010 and the Resolution dated May 13, 2010 of the Court of Appeals in CA-G.R. SP
No. 106965.

63. San Miguel Corp., vs. CA

G.R. No. 146775, Jan. 30, 2002

Facts: On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan
District Office, conducted a routine inspection in the premises of San Miguel Corporation
(SMC) in Sta. Filomena, Iligan City. It was discovered that there was underpayment by
SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of the inspection
result to SMC and it was received by and explained to its personnel officer Elena dela Puerta.
SMC contested the findings and DOLE conducted summary hearings on 19 November 1992,
28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit proof that it was
paying regular Muslim holiday pay to its employees. Hence, Alan M. Macaraya, Director IV
of DOLE Iligan District Office issued a compliance order, dated 17 December 1993,
directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim
and non-Muslim employees holiday pay within thirty (30) days from the receipt of the
order.

SMC appealed to the DOLE main office in Manila. However, the appeal was dismissed for
lack of merit and the order of Director Macaraya was affirmed. SMC went to SC for relief
via a petition for certiorari, which the Court referred to the Court of Appeals. The appellate
court modified the order with regards the payment of Muslim holiday pay from 200% to
150% of the employee's basic salary. Its motion for reconsideration having been denied for
lack of merit, SMC filed a petition for certiorari before the SC

Issues:
1. Whether or not public respondents seriously erred and committed grave abuse of
discretion when they granted Muslim Holiday Pay to non-Muslim employees of
SMC.
2. Whether or not SMC was not accorded with due process of law in the issuance of the
compliance order.
3. Whether or not regional director Macaraya, undersecretary Trajano and
undersecretary Espanol have jurisdiction in issuing the assailed compliance orders.

Ruling: The court ruled the issues in negative. Muslim holidays are provided under Articles
169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise known as the Code
of Muslim Personal Laws, which states:

Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim
holidays: a) Amun Jadd (New Year), which falls on the first day of the first lunar
month of Muharram;
b) Maulid-un-Nab (Birthday of the Prophet Muhammad), which falls on the
twelfth day of the third lunar month of Rabi-ul-Awwal;
c) Lailatul Isr Wal Mirj (Nocturnal Journey and Ascension of the Prophet
Muhammad), which falls on the twenty-seventh day of the seventh lunar month
of Rajab;
d) d-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month
of Shawwal, commemorating the end of the fasting season; and
e) d-l-Adh (Hari Raya Haji),which falls on the tenth day of the twelfth lunar
month of Dhl-Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be
officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur,
Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other
Muslim provinces and cities as may hereafter be created;

(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be
officially observed in other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the Labor Code,
which provides:

Art. 94. Right to holiday pay.

a) Every worker shall be paid his regular daily wage during regular holidays, except
in retail and service establishments regularly employing less than ten (10) workers;
 b) The employer may require an employee to work on any holiday but such employee
shall be paid a compensation equivalent to twice his regular rate.

Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "the
provisions of this Code shall be applicable only to Muslims." However, there should be no
distinction between Muslims and non-Muslims as regards payment of benefits for Muslim
holidays. Wages and other emoluments granted by law to the working man are determined
on the basis of the criteria laid down by laws and certainly not on the basis of the workers
faith or religion. In addition, the 1999 Handbook on Workers Statutory Benefits,
categorically stated: Considering that all private corporations, offices, agencies, and entities
or establishments operating within the designated Muslim provinces and cities are
required to observe Muslim holidays, both Muslim and Christians working within the
Muslim areas may not report for work on the days designated by law as Muslim holidays.

On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya,
Article 128, Section B of the Labor Code, as amended by Republic Act No. 7730,
provides: Article 128. Visitorial and enforcement power. -

(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary,
and in cases where the relationship of employer-employee still exists, the Secretary of
Labor and Employment or his duly authorized representatives shall have the power to
issue compliance orders to give effect to the labor standards provisions of this Code and
other labor legislation based on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course of the inspection. The Secretary or
his duly authorized representative shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the employer contests
the findings of the labor employment and enforcement officer and raises issues supported
by documentary proofs which were not considered in the course of inspection.

In the case before us, Regional Director Macaraya acted as the duly authorized
representative of the Secretary of Labor and Employment and it was within his power to
issue the compliance order to SMC. In addition, the Court agrees with the Solicitor General
that the petitioner did not deny that it was not paying Muslim holiday pay to its non-Muslim
employees. Indeed, petitioner merely contends that its non-Muslim employees are not
entitled to Muslim holiday pay. Hence, the issue could be resolved even without
documentary proofs. In any case, there was no indication that Regional Director
Macaraya failed to consider any documentary proof presented by SMC in the course of the
inspection.
Anent the allegation that petitioner was not accorded due process, the court finds that SMC
was furnished a copy of the inspection order and it was received by and explained to its
Personnel Officer. Further, a series of summary hearings were conducted by DOLE on 19
November 1992, 28 May 1993 and 4 and 5 October 1993. Thus, SMC could not claim that it
was not given an opportunity to defend itself.
64. Tan vs. Lagrama
G.R. No. 151228, August 15, 2002

Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the
general manager of Crown and Empire Theaters in Butuan City. Private respondent
Leovigildo Lagrama is a painter, making ad billboards and murals for the motion pictures
shown at the Empress, Supreme, and Crown Theaters for more than 10 years, from
September 1, 1988 to October 17, 1998.

On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided:
"Nangihi na naman ka sulod sa imong drawinganan." ("You again urinated inside your
work area.") When Lagrama asked what Tan was saying, Tan told him, "Ayaw daghang
estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas."
("Don't say anything further. I don't want you to draw anymore. From now on, no
more drawing. Get out.")

Lagrama denied the charge against him. He claimed that he was not the only one who
entered the drawing area and that, even if the charge was true, it was a minor infraction
to warrant his dismissal. However, everytime he spoke, Tan shouted "Gawas" ("Get
out"), leaving him with no other choice but to leave the premises. Lagrama filed a
complaint with the National Labor Relations Commission (NLRC) in Butuan City. He
alleged that he had been illegally dismissed and sought reinvestigation and payment of
13th month pay, service incentive leave pay, salary differential, and damages.

As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the
parties to file their position papers. It declared that the dismissal illegal and order the
payment of monetary benefits. Tan appealed to the NLRC and reversing the decision of
the Labor Arbiter.

Issue: Whether or not the respondent was illegally dismissed and thus entitled to payment
of benefits provided by law.

Ruling: The respondent was illegally dismissed and entitled to benefits. The
Implementing Rules of the Labor Code provide that no worker shall be dismissed except
for a just or authorized cause provided by law and after due process. This provision has
two aspects: (1) the legality of the act of dismissal, that is, dismissal under the grounds
provided for under Article 282 of the Labor Code and (2) the legality in the manner of
dismissal. The illegality of the act of dismissal constitutes discharge without just cause,
while illegality in the manner of dismissal is dismissal without due process.

In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out
of his sight as the latter tried to explain his side, petitioner made it plain that Lagrama
was dismissed. Urinating in a work place other than the one designated for the purpose
by the employer constitutes violation of reasonable regulations intended to promote a
healthy environment under Art. 282(1) of the Labor Code for purposes of terminating
employment, but the same must be shown by evidence. Here there is no evidence that
Lagrama did urinate in a place other than a rest room in the premises of his work.

Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor
Arbiter found that the relationship between the employer and employee has been so
strained that the latter's reinstatement would no longer serve any purpose. The parties
do not dispute this finding. Hence, the grant of separation pay in lieu of reinstatement is
appropriate.
This is of course in addition to the payment of bac kwages which, in accordance with
the ruling in Bustamante v. NLRC should be computed from the time of Lagrama's
dismissal up to the time of the finality of this decision, without any deduction or
qualification.

The Bureau of Working Conditions 32 classifies workers paid by results into two groups,
namely; (1) those whose time and performance is supervised by the employer, and (2)
those whose time and performance is unsupervised by the employer. The first involves an
element of control and supervision over the manner the work is to be performed, while the
second does not. If a piece worker is supervised, there is an employer-employee relationship,
as in this case. However, such an employee is not entitled to service incentive leave pay
since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark Roche International v.
NLRC, 34 he is paid a fixed amount for work done, regardless of the time he spent in
accomplishing such work.

65. Lambo vs. NLRC

G.R. No. 111042. October 26, 1999.

Facts: Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private
respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985,
respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and
holidays. As in the case of the other 100 employees of private respondents, petitioners
were paid on a piece-work basis, according to the style of suits they made. Regardless of the
number of pieces they finished in a day, they were each given a daily pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and
rest day, service incentive leave pay, separation pay, 13th month pay, and attorneys fees.
After hearing, Labor Arbiter found private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners claims. On appeal, the NLRC reversed the
decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of work
and accordingly dismissed their claims except that for 13th month pay.

Petitioners allege that they were dismissed by private respondents as they were about to file
a petition with the Department of Labor and Employment (DOLE) for the payment of
benefits such as Social Security System (SSS) coverage, sick leave and vacation leave.
They deny that they abandoned their work.

Issue: Whether or not the petitioners are entitled to the minimum benefits provided by law.

Ruling: The petitioners are entitled to the minimum benefits provided by law. There is no
dispute that petitioners were employees of private respondents although they were paid
not on the basis of time spent on the job but according to the quantity and the quality of
work produced by them. There are two categories of employees paid by results: (1) those
whose time and performance are supervised by the employer. (Here, there is an element of
control and supervision over the manner as to how the work is to be performed. A piece-
rate worker belongs to this category especially if he performs his work in the company
premises.); and (2) those whose time and performance are unsupervised. (Here, the
employers control is over the result of the work. Workers on pakyao and takay basis
belong to this group.) Both classes of workers are paid per unit accomplished.

Piece-rate payment is generally practiced in garment factories where work is done in

the company premises, while payment on pakyao and takay basis is commonly observed in
the agricultural industry, such as in sugar plantations where the work is performed in bulk
or in volumes difficult to quantify. 4 Petitioners belong to the first category, i.e., supervised
employees.

In this case, private respondents exercised control over the work of petitioners. As tailors,
petitioners worked in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including
Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not
negate their status as regular employees of private respondents. The term "wage" is broadly
defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed
in terms of money whether fixed or ascertained on a time, task, piece or commission basis.
Payment by the piece is just a method of compensation and does not define the essence of
the relations. Nor does the fact that petitioners are not covered by the SSS affect the
employer-employee relationship.

As petitioners were illegally dismissed, they are entitled to reinstatement with back wages.
The Arbiter applied the rule in the Mercury Drug case, according to which the recovery of
back wages should be limited to three years without qualifications or deductions. Any award
in excess of three years is null and void as to the excess. The Labor Arbiter correctly
ordered private respondents to give separation pay.

Considerable time has elapsed since petitioners dismissal, so that reinstatement

would now be impractical and hardly in the best interest of the parties. In lieu of
reinstatement, separation pay should be awarded to petitioners at the rate of one month
salary for every year of service, with a fraction of at least six (6) months of service being
considered as one (1) year. The awards for overtime pay, holiday pay and 13th month pay
are in accordance with our finding that petitioners are regular employees, although paid
on a piece-rate basis.
66. R&E Transport vs. Latag
G.R. No. 155214. February 13, 2004.

Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961.
However, he was transferred to the petitioner R & E Transport, Inc. upon cessation of La
Mallorcas business operations. In January 1995, he got sick and was forced to apply for
partial disability with the SSS, which was then granted. Upon recovery, he reported back to
work in September 1998 but was no longer allowed on account of his old age. Latag
asked the petitioner, through its administrative officer for his retirement pay pursuant to
Republic Act 7641 but he was ignored. Latag filed a case for payment of his retirement pay
before the NLRC.

Upon Pedro Latags death on April 30, 1999, he was substituted by his wife, the
respondent Avelina Latag. Labor Arbiter rendered a decision in favour of Latag. Petitioner
filed the quitclaim and motion to dismiss where the Labor Arbiter issued an order for Writ
of Execution. Petitioners interposed an appeal before NLRC. Appeal was dismissed for
failure to post a cash or surety bond, as mandated by law.

Issue: Whether or not Latag is entitled to retirement benefits considering she signed a
waiver of quitclaim.

Ruling: The Supreme Court ruled that the respondent is entitled to retirement benefits
despite of the waiver of quitclaims. This is not to say that all quitclaims are invalid per se.
Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look
with disfavor upon quitclaims and waivers that bargain these away.

Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport,
Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641, 30 provides:
Retirement. In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in said establishment,
may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months being
considered as one whole year. Unless the parties provide for broader inclusions, the term one
half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month
pay and the cash equivalent of not more than five (5) days of service incentive leaves.

The rules implementing the New Retirement Law similarly provide the above-mentioned
formula for computing the one-half month salary. Since Pedro was paid according to the
"boundary" system, he is not entitled to the 13th month 32 and the service incentive pay;
hence, his retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in
excess of the "boundary" or fee they pay to the owners or operators of their vehicles. Thus,
the basis for computing their benefits should be the average daily income. In this case, the
CA found that Pedro was earning an average of five hundred pesos (P500) per day. We thus
compute his retirement pay as follows: P500 x 15 days x 14 years of service equals
P105,000. Hence, it is clear that the late Pedro M. Latag is entitled to retirement benefits.

67. Asian Transmission vs. CA

G.R. No. 144664. March 15, 2004.

Facts: The Department of Labor and Employment (DOLE), through Undersecretary

Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein
it clarified, inter alia, that employees are entitled to 200% of their basic wage on April 9,
1993, whether unworked, which[,] apart from being Good Friday [and, therefore, a legal
holiday], is also Araw ng Kagitingan [which is also a legal holiday].

Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy
Thursday and Araw ng Kagitingan.

Despite the explanatory bulletin, petitioner, Asian Transmission Corporation, opted to pay
its daily paid employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng
Asian Transmission Labor Union (BATLU) protested.

The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union
(BATLU), and held that Article 94 of the Labor Code provides for holiday pay for every
regular holiday, the computation of which is determined by a legal formula which is not
changed by the fact that there are two holidays falling on one day, like on April 9, 1998
when it was Araw ng Kagitingan and at the same time was Maundy Thursday.

In the assailed decision, the Court of Appeals upheld the findings of the Voluntary
Arbitrator.

Issue: Whether or not daily-paid employees are entitled to be paid for two regular holidays
which fall on the same day.

Ruling: The Court dismissed the petition and ruled that petitioners should pay its employees
200% and not just 100% of their regular daily wages for the unworked April 9, 1998
which covers two regular holidays, namely, Araw ng Kagitingan and Maundy Thursday.

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the
State shall afford protection to labor. Its purpose is not merely "to prevent diminution of the
monthly income of the workers on account of work interruptions. In other words, although
the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay."
The provision is mandatory, regardless of whether an employee is paid on a monthly or daily
basis. Unlike a bonus, which is a management prerogative, holiday pay is a statutory
benefit demandable under the law.

68. Autobus Transport System vs. Bautista

G.R. No. 156364. May 16, 2005.

Facts: Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc., since May 1995, as driver-conductor with travel routes Manila-
Tuguegarao via Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via Baguio.
Respondent was paid on commission basis, seven percent (7%) of the total gross income per
travel, on a twice a month basis.

On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva
Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124,
as the latter vehicle suddenly stopped at a sharp curve without giving any warning.
Respondent averred that the accident happened because he was compelled by the
management to go back to Roxas, Isabela, although he had not slept for almost twenty-four
(24) hours, as he had just arrived in Manila from Roxas, Isabela.

Respondent further alleged that he was not allowed to work until he fully paid the amount of
P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged
buses and that despite respondent's pleas for reconsideration, the same was ignored
by management. After a month, management sent him a letter of termination. Thus, on
02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money
Claims for nonpayment of 13th month pay and service incentive leave pay against
Autobus.

On 29 September 2000, based on the pleadings and supporting evidence presented by the
parties, Labor Arbiter decided that the complaint be dismissed where the respondent must
pay to the complainant

Issue:Whether or not respondent is entitled to service incentive leave.

Ruling:The respondent is entitled to service incentive leave.

The disposition of the issue revolves around the proper interpretation of Article 95 of the
Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code which provides: RIGHT TO SERVICE INCENTIVE
LEAVE, (a) Every employee who has rendered at least one year of service shall be entitled
to a yearly service incentive leave of five days with pay.

Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule
shall apply to all employees except: (d) Field personnel and other employees whose
performance is unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid in a fixed amount for
performing work irrespective of the time consumed in the performance thereof;

A careful examination of said provisions of law will result in the conclusion that the
grant of service incentive leave has been delimited by the Implementing Rules and
Regulations of the Labor Code to apply only to those employees not explicitly
excluded by Section 1 of Rule V. According to the Implementing Rules, Service
Incentive Leave shall not apply to employees classified as "field personnel."

The phrase "other employees whose performance is unsupervised by the employer"

must not be understood as a separate classification of employees to which service incentive
leave shall not be granted. Rather, it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those "whose actual hours of work
in the field cannot be determined with reasonable certainty."

The same is true with respect to the phrase "those who are engaged on task or contract
basis, purely commission basis." Said phrase should be related with "field personnel,"
applying the rule on ejusdem generis that the general and unlimited terms are restrained and
limited by the particular terms that they follow. Hence, employees engaged on task or
contract basis or paid on purely commission basis are not automatically exempted from the
grant of service incentive leave, unless, they fall under the classification of field personnel.

What must be ascertained in order to resolve the issue of propriety of the grant of service
incentive leave to respondent is whether or not he is field personnel?

According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural
employees who regularly perform their duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty. This definition is further elaborated in the Bureau of
Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial
Employees Association 10 which states that:

As a general rule, field personnel are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the
principal office and whose hours and days of work cannot be determined with reasonable
certainty; hence, they are paid specific amount for rendering specific service or performing
specific work. If required to be at specific places at specific times, employees including
drivers cannot be said to be field personnel despite the fact that they are performing work
away from the principal office of the employee.

At this point, it is necessary to stress that the definition of a "field personnel" is not merely
concerned with the location where the employee regularly performs his duties but also
with the fact that the employee's performance is unsupervised by the employer. As
discussed above, field personnel are those who regularly perform their duties away from the
principal place of business of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. Thus, in order to conclude whether an
employee is a field employee, it is also necessary to ascertain if actual hours of work in
the field can be determined with reasonable certainty by the employer. In so doing, an
inquiry must be made as to whether or not the employee's time and performance are
constantly supervised by the employer. Respondent is not a field personnel but a regular
employee who performs tasks usually necessary and desirable to the usual trade of
petitioner's business. Accordingly, respondent is entitled to the grant of service incentive
leave.

The clear policy of the Labor Code is to grant service incentive leave pay to workers in all
establishments, subject to a few exceptions. Section 2, Rule V, Book III of the
Implementing Rules and Regulations provides that "every employee who has rendered at
least one year of service shall be entitled to a yearly service incentive leave of five days with
pay."

Service incentive leave is a right which accrues to every employee who has served "within
12 months, whether continuous or broken reckoned from the date the employee
started working, including authorized absences and paid regular holidays unless the
working days in the establishment as a matter of practice or policy, or that provided in the
employment contracts, is less than 12 months, in which case said period shall be considered
as one year." It is also "commutable to its money equivalent if not used or exhausted at the
end of the year." In other words, an employee who has served for one year is entitled to it. He
may use it as leave days or he may collect its monetary value. To limit the award to three
years, as the solicitor general recommends, is to unduly restrict such right.

69. San Miguel Corp., vs. Del Rosario

G.R. No. 168194. December 13, 2005.

Facts: On April 17, 2000, respondent was employed by petitioner as key account specialist.
On March 9, 2001, petitioner informed respondent that her probationary employment will
be severed at the close of the business hours of March 12, 2001. On March 13, 2001,
respondent was refused entry to petitioners premises. On June 24, 2002, respondent filed a
complaint against petitioner for illegal dismissal and underpayment/non-payment of
monetary benefits.

Issue: Whether or not respondent is a regular employee of petitioner.

Ruling: Affirmative. In termination cases, like the present controversy, the burden of
proving the circumstances that would justify the employees dismissal rests with the
employer. The best proof that petitioner should have presented to prove the probationary
status of respondent is her employment contract. None, having been presented, the
continuous employment of respondent as an account specialist for almost 11 months,
from April 17, 2000 to March 12, 2001, means that she was a regular employee and not a
temporary reliever or a probationary employee.
And while it is true that by way of exception, the period of probationary employment may
exceed six months when the parties so agree, such as when the same is established by
company policy, or when it is required by the nature of the work, none of these exceptional
circumstance were proven in the present case. Hence, respondent whose employment
exceeded six months is undoubtedly a regular employee of petitioner.

Moreover, even assuming that the employment of respondent from April 7, 2000 to
September 3, 2000, is only temporary, and that the reckoning period of her probationary
employment is September 4, 2000, she should still be declared a regular employee because
by the time she was dismissed on March 12, 2001, her alleged probationary employment
already exceeded six months, i.e., six months and eight days to be precise. A worker was
found to be a regular employee notwithstanding the presentation by the employer of a
Payroll Authority indicating that said employee was hired on probation, since it was shown
that he was terminated four days after the 6th month of his purported probationary
employment.

Neither will petitioners belated claim that respondent became a probationary employee
starting October 1, 2000 work against respondent. As earlier stated, the payroll authorities
indicating that respondents probationary status became effective as of such date are of
scant evidentiary value since it does not show the conformity of respondent. At any rate, in
the interpretation of employment contracts, whether oral or written, all doubts must be
resolved in favor of labor.

Hence, the contract of employment in the instant case, which appears to be an oral
agreement since no written form was presented by petitioner, should be construed as one
vesting respondent with a regular status and security of tenure.

Regarding the argument of redundancy, Redundancy, for purposes of the Labor Code, exists
where the services of an employee are in excess of what is reasonably demanded by the
actual requirements of the enterprise. Succinctly put, a position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number of
factors, such as overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the
enterprise.

The determination that the employees services are no longer necessary or sustainable and,
therefore, properly terminable, is an exercise of business judgment of the employer. The
wisdom or soundness of this judgment is not subject to discretionary review of the Labor
Arbiter and the NLRC, provided there is no violation of law and no showing that it was
prompted by an arbitrary or malicious act. In other words, it is not enough for a company
to merely declare that it has become overmanned. It must produce adequate proof of such
redundancy to justify the dismissal of the affected employees.
The following evidence may be proffered to substantiate redundancy: the new staffing
pattern, feasibility studies/proposal, on the viability of the newly created positions, job
description and the approval by the management of the restructuring.

In the case at bar, petitioner presented an affidavit of its Sales Manager and a
memorandum of the company both to the effect that there is a need to redeploy its regular
employees and terminate the employment of temporary employees, in view of an excess in
manpower. These documents, however, do not satisfy the requirement of substantial
evidence that a reasonable mind might accept as adequate to support a conclusion.

Moreover, the lingering doubt as to the existence of redundancy or of petitioners so called

restructuring, realignment or reorganization which resulted in the dismissal of not only
probationary employees but also of regular employees, is highlighted by the non-
presentation by petitioner of the required notice to the DOLE and to the separated
employees. If there was indeed a valid redundancy effected by petitioner, these notices and
the proof of payment of separation pay to the dismissed regular employees should have
been offered to establish that there was excess manpower in petitioners GMA-KAG
caused by a decline in the sales volume.
In balancing the interest between labor and capital, the prudent recourse in termination
cases is to safeguard the prized security of tenure of employees and to require
employers to present the best evidence obtainable, especially so because in most cases, the
documents or proof needed to resolve the validity of the termination, are in the possession
of employers. A contrary ruling would encourage employers to prevent the regularization
of an employee by simply invoking a feigned or unsubstantiated redundancy program.

Granting that petitioner was able to substantiate the validity of its reorganization or
restructuring, it nevertheless, failed to effect a fair and reasonable criterion in dismissing
respondent. The criteria in implementing a redundancy are: (a) less preferred status, e.g.
temporary employee; (b) efficiency; and (c) seniority.

It is evident from the foregoing that the criterion allegedly used by petitioner in
reorganizing its sales unit was the employment status of the employee. However, in the
implementation thereof, petitioner erroneously classified respondent as a probationary
employee, resulting in the dismissal of the latter. Verily, the absence of criteria and the
erroneous implementation of the criterion selected, both render invalid the redundancy
because both have the ultimate effect of illegally dismissing an employee.

Considering that respondent was illegally dismissed, she is entitled not only to reinstatement
but also to payment of full back wages, computed from the time her compensation was
actually withheld from her on March 13, 2001, up to her actual reinstatement. As a regular
employee of petitioner from the date of her employment on April 17, 2000, she is likewise
entitled to other benefits, i.e., service incentive leave pay and 13th month pay computed
from such date also up to her actual reinstatement.
Respondent is not, however, entitled to holiday pay because the records reveal that she is
a monthly paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus Rules
Implementing the Labor Code, employees who are uniformly paid by the month,
irrespective of the number of working days therein, shall be presumed to be paid for all the
days in the month whether worked or not.

Anent attorneys fees, in actions for recovery of wages or where an employee was forced to
litigate and thus incurred expenses to protect his rights and interests, a maximum of 10%
of the total monetary award by way of attorneys fees is justifiable under Article 111 of the
Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules, and paragraph 7,
Article 2208 of the Civil Code. The award of attorneys fees is proper and there need not
be any showing that the employer acted maliciously or in bad faith when it withheld the
wages. There need only be a showing that the lawful wages were not paid accordingly, as
in the instant controversy.

70. Penaranda vs. Baganga Plywood Corp.

G.R. No. 159577. May 3, 2006.

Facts: Sometime in June 1999, Petitioner Charlito Pearanda was hired as an employee
of Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance
of its steam plant boiler. In May 2001, Pearanda filed a Complaint for illegal dismissal
with money claims against BPC and its general manager, Hudson Chua, before the NLRC.

After the parties failed to settle amicably, the labor arbiter directed the parties to file their
position papers and submit supporting documents.

Pearanda alleges that he was employed by respondent Banganga on March 15, 1999 with
a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally
terminated on December 19, 2000. he alleges that his services were terminated without
the benefit of due process and valid grounds in accordance with law. Furthermore, he was
not paid his overtime pay, premium pay for working during holidays/rest days, night shift
differentials and finally claimed for payment of damages and attorney's fees having been
forced to litigate the present complaint.

Respondent BPC is a domestic corporation duly organized and existing under Philippine
laws and is represented herein by its General Manager HUDSON CHUA, the individual
respondent. Respondents allege that complainant's separation from service was done
pursuant to Art. 283 of the Labor Code. The respondent BPC was on temporary closure
due to repair and general maintenance and it applied for clearance with the Department of
Labor and Employment, Regional Office No. XI, to shut down and to dismiss employees.
And due to the insistence of herein complainant he was paid his separation benefits.

Consequently, when respondent BPC partially reopened in January 2001, Pearanda failed
to reapply.
The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was
premature because he was still employed by BPC. Petitioners money claims for illegal
dismissal was also weakened by his quitclaim and admission during the clarificatory
conference that he accepted separation benefits, sick and vacation leave conversions and
thirteenth month pay.

Issue: Whether or not Pearanda is a regular, common employee entitled to monetary

benefits under Art. 82 of the Labor Code and is entitled to the payment of overtime pay and
other monetary benefits.

Ruling: The petitioner is not entitled to overtime pay and other monetary benefits.

The Court disagrees with the NLRC's finding that petitioner was a managerial
employee. However, petitioner was a member of the managerial staff, which also takes
him out of the coverage of labor standards. Like managerial employees, officers and
member of the managerial staff are not entitled to the provisions of law on labor standards.

The Implementing Rules of the Labor Code define members of a managerial staff as
those with the following duties and responsibilities:
1. The primary duty consists of the performance of work directly related to management
policies of the employer;
2. Customarily and regularly exercise discretion and independent judgment;
3. Regularly and directly assist a proprietor or a managerial employee whose primary duty
consists of the management of the establishment in which he is employed or subdivision
thereof; or (ii) execute under general supervision work along specialized or technical
lines requiring special training, experience, or knowledge; or (iii) execute under general
supervision special assignments and tasks; and
4. Who do not devote more than 20 percent of their hours worked in a workweek to
activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above."

The petitioners work involves:

1. To supply the required and continuous steam to all consuming units at minimum cost.
2. To supervise, check and monitor manpower workmanship as well as operation of
boiler and accessories.
3. To evaluate performance of machinery and manpower. 4. To follow-up supply of
waste and other materials for fuel.
5. To train new employees for effective and safety white working. 6. Recommend parts
and suppliers purchases.
7. To recommend personnel actions such as: promotion, or disciplinary action.
8. To check water from the boiler, feedwater and softener, regenerate softener if beyond
hardness limit.
9. Implement Chemical Dosing.
10. Perform other task as required by the superior from time to time.
The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was
a member of the managerial staff. His duties and responsibilities conform to the
definition of a member of a managerial staff under the Implementing Rules.

Petitioner supervised the engineering section of the steam plant boiler. His work involved
overseeing the operation of the machines and the performance of the workers in the
engineering section. This work necessarily required the use of discretion and independent
judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner
is deemed a member of the managerial staff.

Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he
stated that he was the foreman responsible for the operation of the boiler. The term foreman
implies that he was the representative of management over the workers and the operation
of the department. Petitioner's evidence also showed that he was the supervisor of the
steam plant. His classification as supervisors is further evident from the manner his salary
was paid. He belonged to the 10% of respondent's 354 employees who were paid on a
monthly basis; the others were paid only on a daily basis.

71. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU

G.R. No. 1577745. October 19, 2007. citing Wellington Investment vs. Trajano, 245 SCRA
561 [1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV
Employees Union-ALU (respondent) entered into a Collective Bargaining Agreement (CBA)
covering petitioner rank-and-file employees, for a period of five (5) years effective January
1, 1998. On June 7, 2000, respondent, through its Regional Vice-President, Vicente P.
Casilan, sent a letter to petitioner demanding holiday pay for all employees, as provided
for in the CBA.Petitioner, on the other hand, in its Position Paper, insisted payment of
the holiday pay in compliance with the CBA provisions, stating that payment was presumed
since the formula used in determining the daily rate of pay of the covered employees is
Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided
by 360 days, thus with said formula, the employees are already paid their regular and
special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-
worked Saturdays.

Issue: Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday
pay.

Held: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal
interpretation of the CBA provisions that the holiday pay be reflected in the payroll slips.
Such literal interpretation ignores the admission of respondent in its Position Paper that
the employees were paid all the days of the month even if not worked.
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano,
43 Producers Bank of the Philippines v. National Labor Relations Commission. In this
case, the monthly salary was fixed by Wellington to provide for compensation for every
working day of the year including the holidays specified by law and excluding only
Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is, it
simply deducted 51 Sundays from the 365 days normally comprising a year and used the
difference, 314, as basis for determining the monthly salary. The monthly salary thus
fixed actually covered payment for 314 days of the year, including regular and special
holidays, as well as days when no work was done by reason of fortuitous cause, such as
transportation strike, riot, or typhoon or other natural calamity, or cause not attributable to
the employees.

It was also applied in Odango v. National Labor Relations Commission, where Court ruled
that the use of a divisor that was less than 365 days cannot make the employer automatically
liable for underpayment of holiday pay. Thus, the minimum allowable divisor is 287,
which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half
Saturdays). Any divisor below 287 days meant that the employees were deprived of their
holiday pay for some or all of the ten legal holidays. The 304-day divisor used by the
employer was clearly above the minimum of 287 days.

In this case, the employees are required to work only from Monday to Friday. Thus,
the minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked
Sundays and 51 un-worked Saturdays from 365 days. Considering that petitioner used the
360-day divisor, which is clearly above the minimum, indubitably, petitioner's employees
are being given their holiday pay. Thus, the Voluntary Arbitrator should not have simply
brushed aside petitioner's divisor formula. In granting respondent's claim of non-payment
of holiday pay, a "double burden" was imposed upon petitioner because it was being made
to pay twice for its employees' holiday pay when payment thereof had already been included
in the computation of their monthly salaries.

72. Bahia Shipping Services vs. Chua

G.R. No. 162195. April 8, 2008. citing Cagampan vs. NLRC, 195 SCRA 533 [1998]

Facts: Reynaldo Chua, herein respondent, was under the employ of Bahia Shipping Services,
Inc., herein petitioner, as a restaurant waiter on board the M/S Black Watch , a luxury
cruise ship liner. His employment is pursuant to a Philippine Overseas Employment
Administration (POEA) approved employment contract dated October 9, 1996 for a
period of nine (9) months from October 18, 1996 to July 17, 1997.

On October 18, 1996, respondent, on board the cruise ship, left Manila for Heathrow,
England. About four months into his employment, or on February 15, 1997, responded
reported to work an hour and a half (1 ) late. Due to the incident, respondent was issued a
warning-termination form by the master of the cruise ship, Thor Fleten on February 17,
1997, who likewise conducted an inquisitorial hearing to investigate the incident on March
8, 1997.
Thereafter, on March 9, 1997, respondent was dismissed from service on the strength of an
unsigned and undated notice of dismissal. Attached to the dismissal notice is the alleged
minutes or records of the investigation and hearing.

On March 24, 1997, respondent filed a complaint for illegal dismissal and other monetary
claims. He claims that he was underpaid in the amount of US$110.00 per month for a
period of five (5) months, since he was only paid US$300.00 per month, instead of
US$410.00 per month, which was stipulated in his contract. Aside from underpayment, he
alleged that US$20.00 per month was also deducted from his salary by petitioner for union
dues.

Issue: In the computation of the award, should the guaranteed overtime pay per month be
included as part of his salary?

Ruling: There is no factual or legal basis in the inclusion of his "guaranteed overtime"
pay into his monthly salary computation for the entire unexpired period of his contract.

The Court ruled in Cagampan v. National Labor Relations Commission, that although
an overseas employment contract may guarantee the right to overtime pay, entitlement to
such benefit must first be established, otherwise the same cannot be allowed.

Petitioners contention that there is no factual or legal basis for the inclusion of said
amount since respondents repatriation is well-taken.

73. PNCC Skyway Traffic Management and Security Division Workers Organization G.R.
No. 171231. February 17, 2010

Facts: Petitioner PNCC Skyway Corporation Traffic Management and Security

Division Workers' Organization (PSTMSDWO) is a labor union duly registered with
the Department of Labor and Employment (DOLE). Respondent PNCC Skyway
Corporation is a corporation duly organized and operating under and by virtue of the
laws of the Philippines. On November 15, 2002, petitioner and respondent entered into a
Collective Bargaining Agreement (CBA) incorporating the terms and conditions of their
agreement which included vacation leave and expenses for security license provisions.

A memorandum was passed by the respondents scheduling the leaves of the laborers.
Petitioner objected to the implementation of this memorandum and contended that their
union members have the preference in scheduling their vacation leave. On the other hand,
respondent argued that Article VIII, Section 1 (b) gives the management the final say
regarding the vacation leave schedule of its employees. Respondent may take into
consideration the employees' preferred schedule, but the same is not controlling.

Issue: Whether or not it is the prerogative of PNCC to schedule leaves of its employees.
Ruling: Yes. The rule is that where the language of a contract is plain and unambiguous,
its meaning should be determined without reference to extrinsic facts or aids. The intention
of the parties must be gathered from that language, and from that language alone. Stated
differently, where the language of a written contract is clear and unambiguous, the contract
must be taken to mean that which, on its face, it purports to mean, unless some good reason
can be assigned to show that the words used should be understood in a different sense.

In the case at bar, the contested provision of the CBA is clear and unequivocal. Article
VIII, Section 1 (b) of the CBA categorically provides that the scheduling of vacation leave
shall be under the option of the employer. The preference requested by the employees is not
controlling because respondent retains its power and prerogative to consider or to ignore said
request. Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall prevail. In fine, the CBA must
be strictly adhered to and respected if its ends have to be achieved, being the law between
the parties.

74. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr.

G.R. No. 198662. September 12, 2012.

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June
15, 1977 and June 1, 1983, respectively, by RMN. They eventually became account
managers, soliciting advertisements and servicing various clients of RMN.

The respondents services were terminated as a result of RMNs

reorganization/restructuring; they were given their separation pay P 631,250.00 for
Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002, they executed
release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints (which
were later consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal
with several money claims, including attorneys fees. They indicated that their monthly
salary rates were P 60,000.00 for Ybarola and P 40,000.00 for Rivera.

The respondents argued that the release/quitclaim they executed should not be a bar to the
recovery of the full benefits due them; while they admitted that they signed release
documents, they did so due to dire necessity.

The petitioners denied liability, contending that the amounts the respondents received
represented a fair and reasonable settlement of their claims, as attested to by the
release/quitclaim affidavits which they executed freely and voluntarily. They belied the
respondents claimed salary rates, alleging that they each received a monthly salary of P
9,177.00, as shown by the payrolls.
The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered
the payment of additional separation pay to the respondents P 490,066.00 for Ybarola and
P 429,517.55 for Rivera.

On appeal by the petitioners to the National Labor Relations Commission (NLRC), the
NLRC set aside the labor arbiters decision and dismissed the complaint for lack of merit.
It ruled that the withholding tax certificate cannot be the basis of the computation of the
respondents separation pay as the tax document included the respondents cost-of-living
allowance and commissions; as a general rule, commissions cannot be included in the base
figure for the computation of the separation pay because they have to be earned by actual
market transactions attributable to the respondents From the NLRC, the respondents sought
relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court.

The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated the
labor arbiters separation pay award, rejecting the NLRCs ruling that the respondents
commissions are not included in the computation of their separation pay. It pointed out that
in the present case, the respondents earned their commissions through actual market
transactions attributable to them; these commissions, therefore, were part of their salary.

The appellate court declared the release/quitclaim affidavits executed by the respondents
invalid for being against public policy, citing two reasons: (1) the terms of the settlement
are unconscionable; the separation pay the respondents received was deficient by at least P
400,000.00 for each of them; and (2) the absence of voluntariness when the
respondents signed the document, it was their dire circumstances and inability to
support their families that finally drove them to accept the amount the petitioners offered.
Significantly, they dallied and it took them three months to sign the release/quitclaim
affidavits.

Issue: Whether or not the release/quitclaim affidavits are invalid for being against public
policy.

Ruling: Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for
being against public policy for two reasons: (1) the terms of the settlement are
unconscionable; the separation pay for termination due to reorganization/restructuring was
deficient by Php400,000.00 for each employee; they were given only half of the amount
they were legally entitled to; and (2) the absence of voluntariness when the employees
signed the document, it was their dire circumstances and inability to support their families
that finally drove them to accept the amount offered. Without jobs and with families to
support, they dallied in executing the quitclaim instrument, but were eventually forced
to sign given their circumstances. To be sure, a settlement under these terms is not and
cannot be a reasonable one, given especially the respondents length of service 25 years
for Ybarola and 19 years for Rivera. Radio Mindanao Network, Inc. and Eric S. Canoy
vs. Domingo Z. Ybarola, et al. G.R. No. 198662. September 12, 2012.

75. Robina Farms Cebu vs. Villa

G.R. No. 175869. April 18, 2016.

Facts: Employer Robina Farms is appealing the decision of the NLRC making it liable for
illegal dismissal of Elizabeth Villa.

Respondent Villa brought an action against petitioner Robina Farms for illegal
suspension, illegal dismissal, nonpayment of overtime benefits and nonpayment of service
incentive leave.
Respondent was a sales clerk with the company since August 1981. In the later part of 2001,
petitioner enticed her to avail of the companys special retirement program. On March 2,
2002 she received a memorandum from Lily Ngochua requiring her to explain her failure to
issue invoices for unhatched eggs for the months of January and February of that year.
She explained that the delivery receipts were delayed and overlooked; despite her
explanation she was suspended for 10 days of March 8, 2002 to March 19, 2002.

When she returned, she was advised to cease working because her application for retirement
had been approved; and then subsequently disapproved; and she was then advised to tender
her resignation with a request for financial assistance. She manifested her intention to return
to work, but petitioner company had replaced her with another employee, confiscated her
gate pass and prevented her from entering the premises ever again.

The petitioner asserts that she violated the company rule on timely issuance of the
invoices. She was suspended because the delay resulted in a delay of payment by the
buyers, which depended on the receipt of the invoices. Her application for retirement was
denied because management did not approve the benefits equivalent to 86% of her salary
rate she applied for, but only 1/2 month for every year of service.

Hence the original action.

Issue: Whether Villa was (1) illegally dismissed, (2) entitled to overtime, and (3) entitled
to service incentive leave.

Ruling:
(1) Illegal Dismissal: YES
The advice of Ngochua and De Guzman for Villa to resign and instead to request for
financial assistance was a strong and unequivocal indication of the petitioners desire to
sever the employer-employee relationship.
The desire of Villa to retire does not evidence of her intention to sever the relationship as it
was enticed to her as a promo. In that she believed she receive a greater benefit from
petitioner companys offer. Hence, her consent cannot be deemed to have been knowingly
and freely given.

(2) Overtime Pay: NO

Entitlement to overtime pay must be established by proof that overtime work was actually
performed. The burden of proving rests on the employee. Daily Time Records (DTR) does
not substantially prove actual performance beyond eight (8) hours. There must be
prior authorization, without which invalidates the claim to the benefit
Section 4 (c) Omnibus Rules Implementing the Labor Code; If the work performed was
necessary, or if benefitted the employer, or the employee could not abandon his work at
the end of normal working hours because he had no replacement, all the time spent for
such work shall be considered as hours worked, if work was with the knowledge of
the employer or his immediate supervisor.

(3) Service Incentive Leave: YES

Grant of vacation or sick leave with pay of at least five days could be credited as
compliance with the duty to pay service incentive leave. However, the employer must
still prove it fully paid the accrued service incentive leave pay.

Evidence of the pay should have been presented at before the decision of the Labor Arbiter,
not after it of during appeal. Such practice is not tolerated. Costs against the petitioner.

76. Dela Salle Araneta University vs Bernardo

G.R. No. 190809. February 13, 2017

Facts: On February 26, 2004, Bernardo led a complaint against DLS-AU and its owner/manager,
Dr. Oscar Bautista (Dr. Bautista), for the payment of retirement benefits. Bernardo alleged that
he started working as a part-time professional lecturer at DLS-AU on June 1, 1974. Bernardo
then took a leave of absence from June 1, 1975 to October 31, 1977. When Bernardo came back
in 1977, he resumed teaching at DLS-AU until October 12, 2003, the end of the first semester for
school year 2003-2004. Bernardo's teaching contract was renewed at the start of every semester
and summer. However, on November 8, 2003, DLS-AU informed Bernardo through a telephone
call that he could not teach at the school anymore as the school was implementing the retirement
age limit for its faculty members. As he was already 75 years old, Bernardo had no choice but to
retire.

Bernardo immediately sought advice from the Department of Labor and Employment (DOLE)
regarding his entitlement to retirement benefits. DOLE opined that Bernardo was entitled to
receive benefits under Republic Act No. 7641, otherwise known as the "New Retirement Law,"
and its Implementing Rules and Regulations. Yet, Dr. Bautista insisted that Bernardo was not
entitled to any kind of separation pay or benefits. The latter explained to Bernardo that as
mandated by the DLS-AU's policy and Collective Bargaining Agreement (CBA), only full-time
permanent faculty of DLS-AU for at least five years immediately preceding the termination of
their employment could avail themselves of the post-employment benefits. As part-time faculty
member, Bernardo did not acquire permanent employment under the Manual of Regulations for
Private Schools, in relation to the Labor Code, regardless of his length of service.

Aggrieved by the repeated denials of his claim for retirement benefits, Bernardo led before the
NLRC a complaint for non-payment of retirement benefits and damages against DLS-AU and
Dr.Bautista. DLS-AU and Dr. Bautista maintained that Bernardo, as a part-time employee, was
not entitled to retirement benefits. The contract between DLS-AU and Bernardo was for a fixed
term. That the extension of service is addressed to the sound discretion of the employer and it is a
privilege only the employer can grant. They further claimed that Bernardo should have claimed
the same upon reaching the age of 65 years old. Under Article 291 of the Labor Code, as
amended, all money claims arising from employer-employee relations shall be filed within three
years from the time the cause of action accrues. Still according to DLS-AU and Dr. Bautista,
Bernardo had no cause of action against Dr. Bautista because the latter was only acting on behalf
of DLS-AU as its Executive Vice-President.

On December 13, 2004, the Labor Arbiter rendered its Decision dismissing Bernardo's complaint
on the ground of prescription. It ruled that upon reaching the compulsory retirement age of 65
years old, Bernardo was effectively separated from the service. Clearly, such was the time when
his cause of action accrued.

Bernardo appealed the foregoing Labor Arbiter's Decision to the NLRC, arguing that since he
continuously worked for DLS-AU and Dr. Bautista until October 12, 2003, he was considered
retired and the cause of action for his retirement benefits accrued only on said date. In addition,
under Republic Act No. 7641, part-time workers are entitled to retirement pay of one-half month
salary for every years of service.

The NLRC, in its Decision dated June 30, 2008, reversed the Labor Arbiter's ruling and found
that Bernardo timely led his complaint for retirement benefits. Thus, Bernardo's cause of action
for payment of his retirement benefits accrued only on November 8, 2003, when he was
informed by DLS-AU that his contract would no longer be renewed and he was deemed
separated from employment. The principle of estoppel was also applicable against DLS-AU and
Dr. Bautista could not validly claim prescription when they were the ones who permitted
Bernardo to work beyond retirement age. NLRC also ruled that Bernardo it entitled to retirement
benefits under Republic Act No. 7641.

DLS-AU led before the Court of Appeals a Petition for Certiorari and Prohibition. However, the
Court of Appeals affirmed the decision of NLRC. The Court of Appeals ruled that the coverage
of, as well as the exclusion from, Republic Act No. 7641 are clearly delineated under Sections 1
and 2 of the Implementing Rules of Book VI, Rule II of the Labor Code, as well as the Labor
Advisory on Retirement Pay Law; and part-time employees are not among those excluded from
enjoying retirement benefits. Labor and social laws, being remedial in character, should be
liberally construed in order to further their purpose. The Court of Appeals additionally
determined that Bernardo's cause of action accrued only upon his separation from employment
and the subsequent denial of his demand for retirement benefits.

Issues: (1) Whether or not part-time employees are excluded from the coverage of those entitled
to retirement benefits under Republic Act No. 7641.
(2) Whether or not a claim for retirement benefits filed beyond the period provided for under
Article 291 of the Labor Code has prescribed.

Ruling: The Supreme Court find the petition bereft of merit.

As part-time employee with fixed term employment, Bernardo is entitled to retirement benefits.
Republic Act No. 7641 is a curative social legislation. It precisely intends to give the minimum
retirement benefits to employees not entitled to the same under collective bargaining and other
agreements. It also applies to establishments with existing collective bargaining or other
agreements or voluntary retirement plans whose benefits are less than those prescribed in said
law. The Implementing Rules provide that Republic Act No. 7641 applies to "all employees in
the private sector, regardless of their position, designation or status and irrespective of the
method by which their wages are paid, except to those specifically exempted x x x." And
Secretary Quisumbing's Labor Advisory further clarifies that the employees covered by Republic
Act No. 7641 shall "include part-time employees, employees of service and other job contractors
and domestic helpers or persons in the personal service of another."

The only exemptions specifically identified by Republic Act No. 7641 and its Implementing
Rules are: (1) employees of the National Government and its political subdivisions, including
government-owned and/or controlled corporations, if they are covered by the Civil Service Law
and its regulations; and (2) employees of retail, service and agricultural establishments or
operations regularly employing not more than 10 employees.

In ruling that Bernardo, as part-time employee, is entitled to retirement benefits, the Supreme
Court do no less and no more than apply Republic Act No. 7641 and its Implementing Rules
issued by the DOLE under the authority given to it by the Congress. Needless to stress, the
Implementing Rules partake the nature of a statute and are binding as if written in the law itself.
They have the force and effect of law and enjoy the presumption of constitutionality and legality
until they are set aside with finality in an appropriate case by a competent court

Bernardos employment was extended beyond the compulsory retirement age and the cause of
action for his retirement benefits accrued only upon termination of his extended employment
with DLS-AU.

Article 306 [291] of the Labor Code mandates:

Money claims. All money claims arising from employer-employee relations accruing during
the effectivity of this Code shall be led within three years from the time the cause of action
accrued; otherwise they shall be forever barred.

A cause of action has three elements, to wit, (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of
the named defendant to respect or not to violate such right; and (3) an act or omission on the part
of such defendant violative of the right of the plaintiff or constituting a breach of the obligation
of the defendant to the plaintiff.

Therefore, the cause of action for Bernardo's retirement benefits only accrued after the
refusal of DLS-AU to pay him the same, clearly expressed in Dr. Bautista's letter dated February
12, 2004. Hence, Bernardo's complaint, led with the NLRC on February 26, 2004, was led within
the three-year prescriptive period provided under Article 291 of the Labor Code.
77. Reyes vs. NLRC et al.
G.R. No. 160233. August 8, 2007. citing Boie Takeda Chemicals vs. Dela Serna, 228 SCRA
329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380 [1995]

FACTS: Petitioner was employed as a salesman at private respondent's Grocery Division

in Davao City on August 12, 1977. He was eventually appointed as unit manager of Sales
Department-South Mindanao District, a position he held until his retirement on November
30, 1997. Thereafter, he received a letter regarding the computation of his separation pay.
Insisting that his retirement benefits and 13th month pay must be based on the average
monthly salary of P42,766.19, which consists of P10,919.22 basic salary and P31,846.97
average monthly commission, petitioner refused to accept the check issued by private
respondent in the amount of P200,322.21. Instead, he filed a complaint before the
arbitration branch of the NLRC for retirement benefits, 13th month pay, tax refund, earned
sick and vacation leaves, financial assistance, service incentive leave pay, damages and
attorney's fees.

Petitioner contends that the commissions form part of the basic salary, citing the case of
Philippine Duplicators, Inc. v. National Labor Relations Commission, wherein the Court
held that commissions earned by salesmen form part of their basic salary. Private respondent
counters that petitioner knew that the overriding commission is not included in the basic
salary because it had not been considered as such for a long time in the computation of the
13th month pay, leave commissions, absences and tardiness.

ISSUE: Whether or not the average monthly sales commission of thirty one thousand
eight hundred forty six and 97/100 (Php31,846.97) should be included in the computation
of his retirement benefits and 13th month pay.

RULING: This Court has held, in Philippine Duplicators that, the salesmen's commissions,
comprising a pre-determined percentage of the selling price of the goods sold by each
salesman, were properly included in the term basic salary for purposes of computing
the 13th month pay. The salesmen's commission are not overtime payments, nor profit-
sharing payments nor any other fringe benefit but a portion of the salary structure which
represents an automatic increment to the monetary value initially assigned to each unit of
work rendered by a salesman.

Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical

representatives of Boie-Takeda Chemicals or by the rank and file employees of Philippine
Fuji Xerox Co., were excluded from the term basic salary because these were paid to the
medical representatives and rank-and-file employees as productivity bonuses, which are
generally tied to the productivity, or capacity for revenue production, of a corporation and
such bonuses closely resemble profit-sharing payments and have no clear direct or
necessary relation to the amount of work actually done by each individual employee.
Further, commissions paid by the Boie-Takeda Company to its medical representatives
could not have been sales commissions in the same sense that Philippine Duplicators
paid the salesmen their sales commissions. Medical representatives are not salesmen; they
do not effect any sale of any article at all.

In fine, whether or not a commission forms part of the basic salary depends upon the
circumstances or conditions for its payment, which indubitably are factual in nature for they
will require a re-examination and calibration of the evidence on record.

As to the main issue whether petitioner's commissions be considered in the computation of

his retirement benefits and 13th month pay, we rule in the negative. Article 287 of the
Labor Code, as amended by Republic Act No. 7641, otherwise known as The New
Retirement Law, 22 provides: Retirement. Any employee may be retired upon reaching
the retirement age established in the collective bargaining agreement or other applicable
employment contract In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in the said establishment,
may retire and shall be entitled to retirement pay equivalent to at least one half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as
one whole year. Unless the parties provide for broader inclusions, the term one half (1/2)
month salary shall mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and
the cash equivalent of not more than five (5) days of service incentive leaves.
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in
computing his retirement benefits is his latest salary rate of P10,919.22 as the commissions
he received are in the form of profit-sharing payments specifically excluded by the foregoing
rules. Case law has it that when these earnings and remuneration are closely akin to fringe
benefits, overtime pay or profit-sharing statements, they are properly excluded in
computing retirement pay. However, sales commissions which are effectively an
integral portion of the basic salary structure of an employee, shall be included in
determining the retirement pay.

At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary
corresponding to his position as Unit Manager. Thus, as correctly ruled by public
respondent NLRC, the "overriding commissions" paid to him by Universal Robina Corp.
could not have been 'sales commissions' in the same sense that Philippine Duplicators paid
its salesmen sales commissions. Unit Managers are not salesmen; they do not effect any sale
of article at all. Therefore, any commission which they receive is certainly not the basic
salary which measures the standard or amount of work of complainant as Unit
Manager. Accordingly, the additional payments made to petitioner were not in fact sales
commissions but rather partook of the nature of profit-sharing business. Certainly, from
the foregoing, the doctrine in Boie-Takeda Chemicals and Philippine Fuji Xerox
Corporation, which pronounced that commissions are additional pay that does not form
part of the basic salary, applies to the present case. Aside from the fact that as unit manager
petitioner did not enter into actual sale transactions, but merely supervised the salesmen
under his control, the disputed commissions were not regularly received by him. Only
when the salesmen were able to collect from the sale transactions can petitioner receive
the commissions. Conversely, if no collections were made by the salesmen, then petitioner
would receive no commissions at all. In fine, the commissions which petitioner received
were not part of his salary structure but were profit-sharing payments and had no clear,
direct or necessary relation to the amount of work he actually performed. The collection
made by the salesmen from the sale transactions was the profit of private respondent from
which petitioner had a share in the form of a commission. Hence, petition is denied.
78. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco
Metal-NAFLU
G.R. No. 170734. May 14, 2008.

FACTS: Petitioner is a company engaged in the manufacture of metal products, whereas

respondent is the labor union of petitioners rank and file employees. Sometime in December
2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union
members in amounts proportional to the service they actually rendered in a year, which is
less than a full twelve (12) months. Respondent protested the prorated scheme, claiming
that on several occasions petitioner did not prorate the payment of the same benefits to
seven (7) employees who had not served for the full 12 months. According to respondent,
the prorated payment violates the rule against diminution of benefits under Article 100 of
the Labor Code. Thus, they filed a complaint before the National Conciliation and
Mediation Board (NCMB).

ISSUE: Whether or not the grant of 13th month pay, bonus, and leave encashment in full
regardless of actual service rendered constitutes voluntary employer practice and,
consequently, whether or not the prorated payment of the said benefits constitute
diminution of benefits under Article 100 of the Labor Code.

RULING: Any benefit and supplement being enjoyed by employees cannot be reduced,
diminished, discontinued or eliminated by the employer. The principle of non-diminution
of benefits is founded on the Constitutional mandate to "protect the rights of workers and
promote their welfare and to afford labor full protection. Said mandate in turn is the basis of
Article 4 of the Labor Code which states that all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations shall be
rendered in favor of labor.

Jurisprudence is replete with cases which recognize the right of employees to benefits
which were voluntarily given by the employer and which ripened into company
practice. Thus in DavaoFruits Corporation v. Associated Labor Unions, et al. where an
employer had freely and continuously included in the computation of the 13th month pay
those items that were expressly excluded by the law, we held that the act which was
favorable to the employees though not conforming to law had thus ripened into a practice
and could not be withdrawn, reduced, diminished, discontinued or eliminated. In Sevilla
Trading Company v. Semana, we ruled that the employers act of including non-basic
benefits in the computation of the 13th month pay was a voluntary act and had ripened into
a company practice which cannot be peremptorily withdrawn.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of
freely, voluntarily and consistently granting full benefits to its employees regardless of the
length of service rendered. True, there were only a total of seven employees who benefited
from such a practice, but it was an established practice nonetheless. Jurisprudence has not
laid down any rule specifying a minimum number of years within which a company
practice must be exercised in order to constitute voluntary company practice. Thus, it can
be six (6) years, three (3) years, or even as short as two (2) years. Petitioner cannot shirk
away from its responsibility by merely claiming that it was a mistake or an error, supported
only by an affidavit of its manufacturing group head. Hence, petition was denied.

79. Universal Robina Sugar Milling Corp. vs. Caballeda

G.R. No. 156644. July 28, 2008.

FACTS: Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a

domestic corporation engaged in the sugar milling business and petitioner Renato Cabati is
URSUMCO's manager. Respondent Agripino Caballeda (Agripino) worked as welder for
URSUMCO from March 1989 until June 23, 1997 with a salary of P124.00 per day, while
respondent Alejandro Cadalin (Alejandro) worked for URSUMCO as crane operator from
1976 up to June 15, 1997 with a salary of P209.30 per day.

On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a Memorandum
establishing the company policy on Compulsory Retirement (Memorandum) of its
employees. The memorandum provides that all employees corporate-wide who attain 60
years of age on or before April 30, 1991 shall be considered retired on May 31, 1991.

On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a legitimate
labor organization and the recognized sole and exclusive bargaining representative of all
the monthly and daily paid employees of URSUMCO, of which Alejandro was a
member, entered into a Collective Bargaining Agreement (CBA). Article XV of the said
CBA particularly provided that the retirement benefits of the members of the collective
bargaining unit shall be in accordance with law.

Agripino and Alejandro (respondents), having reached the age of 60, were allegedly forced
to retire by URSUMCO. Agripino averred that URSUMCO illegally dismissed him from
employment on June 24, 1997 when he was forced to retire upon reaching the age of sixty
(60) years old. Upon the termination of his employment, he accepted his separation pay and
applied for retirement benefits with the Social Security System (SSS). Earlier, on April 15,
1997, Alejandro turned 60 years old. On May 28, 1997, he filed his application for
retirement with URSUMCO, attaching his birth and baptismal certificates. On July 23, 1997,
he accepted his retirement benefits and executed a quitclaim in favor of URSUMCO.
Thereafter, on August 6, 1997, Agripino filed a Complaint for illegal dismissal, damages
and attorneys fees before the Labor Arbiter (LA) of Dumaguete City. He alleged that his
compulsory retirement was in violation of the provisions of Republic Act (R.A.) 7641 and,
was in effect, a form of illegal dismissal.

On August 26, 1997, Alejandro likewise filed a Complaint for illegal dismissal,
underpayment of retirement benefits, damages and attorneys fees before the LA, alleging
that he was given only 15 days per year of service by way of retirement benefits and
further assails that his compulsory retirement was discriminatory considering that there
were other workers over sixty (60) years of age who were allowed to continuously report for
work.

ISSUES: Whether respondents were illegally terminated on account of compulsory

retirement or the same voluntarily retired.

RULING: SC ruled in favor of the respondents.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age, agrees to sever
his or her employment with the former. The age of retirement is primarily determined by
the existing agreement between the employer and the employees. However, in the absence
of such agreement, the retirement age shall be fixed by law. Under Art. 287 of the Labor
Code as amended, the legally mandated age for compulsory retirement is 65 years, while
the set minimum age for optional retirement is 60 years.

In this case, it may be stressed that the CBA does not per se specifically provide for the
compulsory retirement age nor does it provide for an optional retirement plan. It merely
provides that the retirement benefits accorded to an employee shall be in accordance with
law. Thus, we must apply Art. 287 of the Labor Code which provides for two types of
retirement: (a) compulsory and (b) optional. The first takes place at age 65, while the second
is primarily determined by the collective bargaining agreement or other employment
contract or employer's retirement plan. In the absence of any provision on optional
retirement in a collective bargaining agreement, other employment contract, or employer's
retirement plan, an employee may optionally retire upon reaching the age of 60 years or
more, but not beyond 65 years, provided he has served at least five years in the
establishment concerned. That prerogative is exclusively lodged in the employee.

Indubitably, the voluntariness of the respondents' retirement is the meat of the instant
controversy. Petitioners postulate that respondents voluntarily retired particularly when
Alejandro filed his application for retirement, submitted all the documentary
requirements, accepted the retirement benefits and executed a quitclaim in favor of
URSUMCO. Respondents claim otherwise, contending that they were merely forced to
comply as they were no longer given any work assignment and considering that the
severance of their employment with URSUMCO is a condition precedent for them to
receive their retirement benefits.

Generally, the law looks with disfavor on quitclaims and releases by employees who have
been inveigled or pressured into signing them by unscrupulous employers seeking to evade
their legal responsibilities and frustrate just claims of employees. They are frowned upon as
contrary to public policy. A quitclaim is ineffective in barring recovery of the full measure
of a worker's rights, and the acceptance of benefits therefrom does not amount to estoppels.

To be precise, only Alejandro was able to claim a partial amount of his retirement benefit.
Thus, it is clear from the decisions of the LA, NLRC and CA that petitioners are still
liable to pay Alejandro the differential on his retirement benefits. On the other hand,
Agripino was actually and totally deprived of his retirement benefit.

Moreover, the petitioners, not the respondents, have the burden of proving that the
quitclaim was voluntarily entered into. In previous cases, we have considered, among
others, the educational attainment of the employees concerned in upholding the validity
of the quitclaims which they have executed in favor of their employers.

80. Cercado vs. Uniprom, Inc.

G.R. No. 188154. October 13, 2010.

FACTS: Petitioner Lourdes cerdaco was an employee of UNIPROM Inc. for 22 years since
December 15, 1978. When respondent came up with a retirement plan, sometime in 1980
and then amended in 2001, which provides that any employee with a minimum of 20 years
of service, regardless of age, may be retired at the option of the employer. In December
2000, UNIPROM implemented a company-wide retirement program, including herein
petitioner. She was offered an early retirement package amounting to P171, 982.90 but
Cercado rejected the offer. UNIPROM exercised its option under the retirement plan and
decided to retire petitioner effective February 15, 2001 so she was no longer given any
work assignment after the said date. This prompted the petitioner to file a complaint for
illegal dismissal before the Labor Arbiter, alleging that UNIPROM did not have abona fide
retirement plan, and even if there was, she didnt consent thereto. Respondent averred
that Cercado was automatically covered by the retirement plan when she agreed to the
companys rules and regulations, and that her retirement was an exercise of management
prerogative.
ISSUES: Whether or not UNIPROM has a bona fide retirement plan; Whether or not
petitioner was validly retired pursuant thereto

HELD: Petition is meritorious.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the
employer and the employee whereby the latter, after reaching a certain age, agrees to sever
his or her employment with the former.

Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor Code, as amended
by R.A 7641, pegs the age for compulsory retirement at 65 years old, while the minimum
age for optional retirement is set at 60 years. However, an employer is free to impose a
retirement age earlier than the foregoing mandates. This has been upheld in numerous cases
as a valid exercise of management prerogative.

In this case, petitioner was retired by UNIPROM at the age of 47, after having served the
company for 22 years, pursuant to the companys retirement plan, which provides that
employees who have rendered at least 20 years of service can be retired at the option of the
company. Respondents retirement plan can be expediently stamped with validity and
justified under the all-encompassing phrase management prerogative.

No, petitioner was not validly retired. Jurisprudence has upheld that it is axiomatic that a
retirement plan giving the employer the option to retire its employees below the ages
provided by law must be assented to and accepted by the latter, otherwise its adhesive
imposition will amount to a deprivation of property without due process. In decided cases,
the retirement plans were either embodied in the CBA, or established after consultations
and negotiations with the employees bargaining representative. The consent of the
employees to be retired even before the statutory retirement age of 65 years was thus clear
and unequivocal. Acceptance by the employees of an early retirement age must be
explicit, voluntary, free and uncompelled.

81. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al.
G.R. No. 198662. September 12, 2012.

FACTS: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on
June 15, 1977 and June 1, 1983, respectively, by Radio Mindanao Network (RMN). They
eventually became account managers, soliciting advertisements and servicing various clients
of RMN.

On September 15, 2002, the respondents' services were terminated as a result

of RMN's reorganization/restructuring; they were given their separation pay
P631,250.00 for Ybarola, and P481,250.00 for Rivera. Sometime in December 2002, they
executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints (which
were later consolidated) against RMN and its President, Eric S. Canoy, for
illegal dismissal with several money claims, including attorney's fees. They indicated that
their monthly salary rates were P60,000.00 for Ybarola and P40,000.00 for Rivera.

ISSUE: Whether the amounts the respondents received represented a fair and reasonable
settlement of their claims

RULING: The petitioners insist that the respondents' commissions were not part of
their salaries, because they failed to present proof that they earned the commission due to
actual market transactions attributable to them. They submit that the commissions are profit-
sharing payments which do not form part of their salaries. We are not convinced. If these
commissions had been really profit-sharing bonuses to the respondents, they should have
received the same amounts. Yet, as the NLRC itself noted, Ybarola and Rivera received
P372,173.11 and P586,998.50 commissions, respectively, in 2002. The variance in amounts
the respondents received as commissions supports the CA's finding that the salary structure
of the respondents was such that they only received a minimal amount as guaranteed wage; a
greater part of their income was derived from the commissions they get from soliciting
advertisements; these advertisements are the "products" they sell. As the CA aptly noted,
this kind of salary structure does not detract from the character of the commissions being
part of the salary or wage paid to the employees for services rendered to the company, as
the Court held in Philippine Duplicators, Inc. v. NLRC.

The petitioners' reliance on our ruling in Talam v. National Labor Relations Commission,
regarding the "proper appreciation of quitclaims," as they put it, is misplaced. While
Talam, in the cited case, and Ybarola and Rivera, in this case, are not unlettered employees,
their situations differ in all other respects.

In Talam, the employee received a valuable consideration for his less than two years of
service with the company; he was not shortchanged and no essential unfairness took place. In
this case, as the CA noted, the separation pay the respondents each received was deficient by
at least P400,000.00; thus, they were given only half of the amount they were legally
entitled to. To be sure, a settlement under these terms is not and cannot be a reasonable
one, given especially the respondents' length of service 25 years for Ybarola and 19
years for Rivera. The CA was correct when it opined that the respondents were in dire
straits when they executed the release/quitclaim affidavits. Without jobs and with families to
support, they dallied in executing the quitclaim instrument, but were eventually forced
to sign given their circumstances.
82. Padillo vs. Rural bank of Nabunturan Inc.
G.R. No. 199338. Jan. 21, 2013.

FACTS: Petitioner, the late Eleazar Padillo (Padillo), was an employee of respondent
Rural Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems
in 2003, the Bank took out retirement/insurance plans with Philippine American Life and
General Insurance Company (Philam Life) for all its employees in anticipation of its possible
closure and the concomitant severance of its personnel. Respondent Mark Oropeza is the
president and major stockholder of the bank.

Padillo suffered a mild stroke due to hypertension which consequently impaired his ability
to effectively pursue his work. He wrote a letter addressed to Oropeza expressing his
intention to avail of an early retirement package. Despite several follow-ups, his request
remained unheeded. Not having received his claimed retirement benefits, Padillo filed with
the NLRC a complaint for the recovery of unpaid retirement benefits.

The Labor Arbiter dismissed Padillos complaint on the ground that the latter did not
qualify to receive any benefits under Article 300 of the Labor Code as he was only fifty-five
(45) years old when he resigned, while the law specifically provides for an optional
retirement age of sixty (60) and compulsory retirement age of sixty-five (65).

Padillo elevated the matter to the NLRC. The NLRC reversed the Labor Arbiters
ruling. Aggrieved, Oropeza and the Bank filed a petition for certiorari with the CA. The
CA reversed the NLRCs ruling but with modification. It directed the respondents to pay
Padillo the amount of P50,000.00 as financial assistance exclusive of the P100,000.00
Philam Life Plan benefit.

Displeased with the CAs ruling, Padillo (now substituted by his legal heirs due to his
death) filed the instant petition before the Supreme Court.

ISSUE: W/N Padillo is entitled to claim for separation and retirement benefits under the
Labor Code?

RULING: The petition is partly meritorious.

LABOR LAW: disease as ground for termination; retirement benefits

At the outset, it must be maintained that the Labor Code provision on termination on the
ground of disease under Article 297 does not apply in this case, considering that it was
Padillo and not the Bank who severed the employment relations. A plain reading of the
Article 297 of the Labor Code clearly presupposes that it is the employer who terminates
the services of the employee found to be suffering from any disease and whose continued
employment is prohibited by law or is prejudicial to his health as well as to the health of his
co-employees. It does not contemplate a situation where it is the employee who severs his
or her employment ties.
What remains applicable, however, is the Labor Code provision on retirement. In the
absence of any applicable agreement, an employee must (1) retire when he is at least sixty
(60) years of age and (2) serve at least (5) years in the company to entitle him/her to a
retirement benefit of at least one-half (1/2) month salary for every year of service, with a
fraction of at least six (6) months being considered
as one whole year. Notably, these age and tenure requirements are cumulative and non-
compliance with one negates the employees entitlement to the retirement benefits under
Article 300 of the Labor Code altogether.

In this case, it is undisputed that there exists no retirement plan, collective bargaining
agreement or any other equivalent contract between the parties which set out the terms and
condition for the retirement of employees, with the sole exception of the Philam Life Plan
which premiums had already been paid by the Bank.

Unfortunately, while Padillo was able to comply with the five (5) year tenure requirement
as he served for twenty-nine (29) years he, however, fell short with respect to the sixty
(60) year age requirement given that he was only fifty-five (55) years old when he
retired. Therefore, without prejudice to the proceeds due under the Philam Life Plan,
petitioners claim for retirement benefits must be denied.

Nevertheless, the Court concurs with the CA that financial assistance should be awarded
but at an increased amount. With a veritable understanding that the award of financial
assistance is usually the final refuge of the laborer, considering as well the supervening
length of time which had sadly overtaken the point of Padillos death an employee who had
devoted twenty-nine (29) years of dedicated service to the Bank the Court, in light of the
dictates of social justice, holds that the CAs financial assistance award should be increased
from P50,000.00 to P75,000.00, still exclusive of the P100,000.00 benefit receivable by
the petitioners under the Philam Life Plan which remains undisputed.

83. Grace Christian High School vs. Lavandera

G.R No. 177845, August 20, 2014

FACTS: Lavandera was a teacher at the school since June 1977 with a monthly salary of
PhP18,662.00 as of May 31, 2001. She alleged that on May 11, 2001, she was informed
that her services were to be terminated effective May 31, 2001, pursuant to GCHSs
retirement plan which gives the school the option to retire a teacher who has rendered at
least 20 years of service, regardless of age, with a retirement pay of one-half month for
every year of service.

The Labor Arbiter dismissed the illegal dismissal complaint for lack of merit. It found out
that GCHS has a retirement plan for its faculty and non-faculty members. GCHS appealed to
NLRC. The NLRC set aside the LAs award and ruled that Lavanderas retirement pay
should be computed based on her monthly salary at the time of her retirement on May 31,
th
1997. Further, the retirement package consists of 15 days salary plus, 13 month pay and
SIL pay pro-rated to their 1/12 equivalent. Aggrieved, Lavandera filed a petition for
certiorari before the CA. The CA affirmed with modification the NLRC Decision. It held that
the multiplier is 22.5 days.

ISSUE: Whether or not the CA committed reversible error in using the multiplier 22.5
days in computing the retirement pay differentials of Filipinas.

RULING: The CA is correct.

In the present case, GCHS has a retirement plan for its faculty and non-faculty members,
which gives ti the option to retire a teacer who has rendered at least 20 years of service,
regardless of age, with a retirement pay of month for evry year of service.
Considering, however, that GCHS computed Lavanderas retirement pay without
th
including1/12 of her 13 month pay and the cash equivalent of her 5 days SIL.

Legal interest is also imposed on GCHS reckoned from the LAs Decision in 2002.

88. Goodyear Philippines, Inc. vs Angus

G.R. No. 185449. November 12, 2015

89. Banco De Oro Unibank vs. Sagaysay

G.R. No. 214961. September 16, 2015.

FACTS: On May 16, 2006, respondent Guillermo Sagaysay (Sagaysay) was hired by
petitioner Banco De Oro Unibank, Inc., (BDO) as Senior Accounting Assistant in its San
Jose, Nueva Ecija, branch as a result of a merger with United Overseas Bank (UOB), with
BDO as the surviving bank. Sagaysay was previously employed in UOB from 2004 to
2006 or for two (2) years. Prior thereto, he worked for Metropolit an Bank and Trust Co.
(Metrobank) from 1976 to 2004 for a period of twenty-eight (28) years.

In a letter, 6 dated January 8 2010, BDO informed Sagaysay that, pursuant to the
retirement policy of the bank which mandated its retirement age to be sixty (60), he
would be formally retired effective September 1, 2010, a few days after his 60th birthday.
The normal or compulsory retirement age of the bank was based on its retirement plan 7
which was implemented on July 1, 1994, Section 1, Article V.
In an e-mail, 9 dated July 27, 2010, Sagaysay wrote that, although the time had come that
the BDO Retirement Program would be implemented to those reaching the age of sixty
(60), he requested that his services be extended because he had an outstanding loan and his
children were still in college. He assured BDO that he was healthy and could still perform
his duties in the branch. BDO denied Sagaysay' s request.

In another e-mail, dated August 19, 2010, Sagaysay appealed to BDO to extend his
service for 8.5 months or up to May 16, 2011 so that he could render at least ve (5) years of
employment which would entitle him to 50% of his basic pay for every year of service upon
his retirement. BDO denied Sagaysay's appeal and retired him on September 1, 2010. As
of his last day of work, he was earning a monthly salary of P28,048.00.

Sagaysay then signed the Release, Waiver and Quitclaim (quitclaim), dated October 22,
2010, for and in consideration of P98,376.14. The quitclaim stated, among others, that in
consideration of the foregoing payment, Sagaysay released and discharged the bank, its af
liates and its subsidiaries from any action, suit, claim or demand in connection with his
employment.

On January 10, 2011, Sagaysay led a complaint 12 for illegal dismissal with prayer for
reinstatement and payment of backwages, moral damages, exemplary damages, and
attorney's fee against BDO before the Labor Arbiter (LA). He claimed that despite his
appeal, BDO compulsory retired him on September 1, 2010. As a result, he and his family
suffered damages in the amount of P2,225,403.00 which he would have received if he was
made to retire at the age of sixty-five (65).

LA: Ruled that Sagaysay was illegally dismissed because he was forced to avail of an
optional retirement at the age of sixty (60) which was contrary to the provisions of Article
287 of the Labor Code. he was terminated on the basis of a provision in a retirement plan
to which he did not freely assent. BDO took advantage of his predicament and made him
sign a quitclaim in exchange for a small consideration.

NLRC: Reversed and set aside the ruling of the LA. BDO's retirement plan, which mandated
a normal or compulsory retirement date at the age of sixty (60), was effective as early as
June 1, 1994. The plan was renamed Banco de Oro Multiemployer Retirement Plan on
July 1, 2004, but the compulsory retirement age of sixty (60) was preserved. When
Sagaysay was employed on May 16, 2006, the retirement plan was already in full force
and effect. Thus, the NLRC concluded that when he accepted his employment with BDO,
he assented to the provisions of the retirement plan.

CA: Reversed the NLRC ruling. Ruled that a retirement plan with no voluntary
acquiescence on the part of the employee was ineffective.
ISSUE: W/N a retirement plan adopted before the employment of an employee is deemed
binding on the latter.

RULING: Sagaysay was sufficiently informed of the retirement plan and had consented to
the retirement plan of BDO before his compulsory retirement because the retirement plan
was established 12 years before Sagaysay was employed and no employee had earnestly
questioned the retirement plan.

By accepting the employment offer of BDO, Sagaysay was deemed to have assented to all
existing rules, regulations and policy of the bank, including the retirement plan.

BDO issued a memorandum regarding the implementation of its retirement program,

reiterating that the normal retirement date was the first of the month following the
employees sixtieth birthday addressed to all employees and officers. By this time Sagaysay
was already an employee and he did not deny being informed of such memorandum.

For four years, from the time he was employed until his retirement, yet he did not express
his dissent.

Sagaysay earlier acknowledged the retirement program of BDO and even requested for an
extension of service. Moreover, he signed a quitclaim for and in consideration of
P98,376.14 which discharged the bank, its affiliates and its subsidiaries from any action,
suit, claim or demand in connection with his employment. When it is shown that the
person executing the waiver did so voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim was credible and reasonable, the transaction
must be recognized as a valid and binding undertaking. Court is of the view that the
quitclaim was validly executed.

WHEREFORE, the petition is GRANTED.

86. Perez vs Camparts Industries Inc.,

G.R. No. 197557. October 5, 2016.
Facts: Perez (herein petitioner) worked as a Marketing Manager for the years 1988 up to
January 10, 2009, the date when she resigned from work, for respondent. The company
Comparts Industries Inc. (herein respondent) provides a Retirement Plan for their employees. On
November 2007 and January 2008 Perez manifested to CII her intention to avail of the optional
retirement program claiming as a qualified beneficiary. However, on both times she was denied
by the company.
Hence, this petition.
Issue: Whether or not Perez is entitled to retirement pay under the Retirement Plan of CII
Ruling: A Retirement Plan in a company partakes the nature of a contract, with the employer
and the employee as the contracting parties. It creates a contractual obligation in which the
promise to pay retirement benefits is made in consideration of the continued faithful service of
the employee for the requisite period. Being a contract, the employer and employee may
establish such stipulations, clauses, terms and conditions as they may deem convenient.
The Retirement Plan, subject matter of the controversy, provides in pertinent part:
COMPARTS INDUSTRIES, INC.
EMPLOYEES RETIREMENT PLAN
RULES AND REGULATIONS
xxx xxx xxx
ARTICLE III
MEMBERSHIP

Section 1. Membership. Membership in the Plan shall be automatic for all officers and
employees of the Company who are considered having Regular Employment Status. . . . .

xxx xxx xxx

ARTICLE V
RETIREMENT DATES AND BENEFITS

Section 1. NORMAL RETIREMENT. The Normal Retirement Date of a member shall be the
rest day of the month coincident with or next following his (60th) birthday provided he was
served the Company for at least five (5) years of Credited Service. The Member's Normal
Retirement Benefit shall be sum equal to 22.5 days pay for every year of Credited Service in
accordance with the Collective Bargaining Agreement, whichever is greater.

Section 2. OPTIONAL/EARLY RETIREMENT. With the consent of the Company, a member

may elect to retire prior to his Normal Retirement Date provided he has completed at least
fifteen (15) years of Credit Service. The Member's Early Retirement Bene t shall be an amount
equivalent to a Number of days Pay for every year of Credited Service in accordance with
the schedule below or with the Collective Bargaining Agreement whichever is greater:
(Effective January 25, 2001)

Observably provision in the herein subject Retirement Plan contained a condition for the
allowance and grant of optional retirement benefits consent of the Company. It follows then
that it is not enough that an employee of CII who wants to optionally retire meets the conditions
for optional retirement. It is necessary that CII has to give its consent for the optional retirement
to operate. Perez cannot just disregard this stipulated condition. In this case, the application for
optional retirement was denied several times as CII still needs her services. Absence the consent
it becomes a voluntary resignation, therefore, CII is not liable to give the optional retirement
benefits provided therein.

Petition is Denied.

87. Catotocan vs Lourdes School of Quezon City

G.R. No. 213486. April 26, 2017.
Facts: In 1971, Editha Catotocan(Catotocan) started her employment in Lourdes School of
Quezon City(LSQC). By the school year 2005- 2006, she had already served for thirty-five (35)
years.

LSQC has a retirement plan providing for retirement at sixty (60) years old, or separation pay
depending on the number of years of service. On November 25, 2003, LSQC issued an
Administrative Order on Normal Retirement which reads, as follows: An employee may apply
for retirement or be retired by the school when he/she reaches the age of sixty (60) years or when
he/she completes thirty (30) years of service, whichever comes first;

In 2004, Catotocan and seven (7) other co-employees wrote to the Provincial Minister, for the
deferment of the implementation of the November 25, 2003 Addendum particularly the provision
that normal retirement will commence after completing "30 years of service" to the school. They,
likewise, requested the priest of the Capuchin Order who were running the school to allow them
to retire when they have reached 60 years of age instead so that they can "fully enjoy the fruits"
of their labor.

However, in a Letter dated January 27, 2005, LSQC Rector Fr. Cesar Acuin (Fr. Acuin) notified
Catotocan that she will be retired by the end of the school year for having served at least thirty
(30) years with accompanying computation of her retirement pay in the total amount of
Php1,052,835.00. At the time the said letter was served on Catotocan, she was 56 years old.

LSQC retired Catotocan sometime in June 2006 after completing 35 years of service. Full
retirement benefits were given to her computed based on the latest salary multiplied by the total
years of service

Catotocan was thus credited with 35 years of service and her total retirement benefit amounted to
Php1,052,835.00. 60%of that amount, or Php571,701.00 was credited to her savings account,
which she opened in accordance with the school's retirement policy. The remaining 40% in the
amount of Php421,134.00 was divided into 36 equal monthly installments of Php11,698.17 each
and credited to Catotocan's savings account until June 2009.

In a letter, Catotocan was told that if she desires, she may signify in writing her intent to continue
serving the school on a contractual basis. She responded by submitting a "Letter of Intent" on
February 14, 2006.

On May 11, 2006, LSQC appointed Catotocan as a Grade School Guidance Counselor for the
school year 2006-2007 under a contractual status. Catotocan re-applied 2 more times for the
school years 2007-2008 and 2008-2009. On her third re-application, LSQC no longer considered
her application.

Catotocan filed a complaint for illegal dismissal and monetary claims such as claim for step
increment, moral and exemplary damages and attorney's fees.

The Labor Arbiter, NLRC, and CA denied all her petitions for lack of merit.
Issue: Whether Catotocan was illegaly dismissed; and whether she is considered a retired
employee considering that she objected to the schools retirement policy.

Ruling: The CA and the NLRC did not gravely abuse its discretion in finding that LSQC did not
illegally dismiss Catotocan from service.

While it may be true that Catotocan was initially opposed to the idea of her retirement at an age
below 60 years, it must be stressed that Catotocan's subsequent actions after her "retirement" are
actually tantamount to her consent to the addendum to the LSQC's retirement policy of retiring
her from service upon serving the school for at least thirty (30) continuous years, to wit: (1) after
being notified that she was being retired from service by LSQC, she opened a savings account
with BDO, the trustee bank; (2) she accepted all the proceeds of her retirement package: the
lump sum and all the monthly payments credited to her account until June 2009; (3) upon
acceptance of the retirement benefits, there was no notation that she is accepting the retirement
benefits under protest or without prejudice to the filing of an illegal dismissal case. We also did
not find an iota of evidence showing that LSQC exerted undue influence against Catotocan to
acquire her consent on the school's retirement policy. Suffice it to say that from the foregoing,
Catotocan performed all the acts to ratify her retirement in accordance with LSQC's retirement
policy.

Indeed, the most telling detail indicative of Catotocan's voluntary assent to LSQC's retirement
policy was her correspondence with the latter following her "retirement." In particular, in her
Letter dated January 27, 2005, Catotocan availed of the privilege of being re-hired after
retirement by virtue of the "Contractual Employment of Retired Employees" provision of
LSQC's retirement policy. since Catotocan has availed of this contractual employment which is
exclusively offered only to LSQC's quali ed retirees for three (3) consecutive years following her
retirement, she can no longer dispute that she has indeed legitimately retired from employment,
and was not illegally dismissed.

88. Philippine Airlines vs Hassaram

G.R. No. 217730. June 5, 2017

Facts: Respondent filed a complaint against PAL for illegal dismissal and the payment of
retirement benefits, damages and attorneys fees. Respondent contention that he applied for
retirement from PAL in August 2000 after rendering 24 years of service as a pilot, but his
application was denied because PAL informed him that he had lost his employment in the
Company as of June 9, 1998, in view of his failure to comply with the Return to Work Order
issued by the Secretary of Labor. Before the Labor Arbiter (LA) Respondent argued that he us
not covered by the Secretarys Return to Work Order. Therefore, PAL has no valid grounds for
dismissal. The PALs arguments is that Respondent only entitled only to retirement benefits of
5,000 for every year of service pursuant to the Collective Bargaining Agreement (CBA) between
PAL and ALPAP. But Respondent have a favourable judgement from the LA in which the LA
ordered PAL to pay Respondent for his retirement pay pursuant to Article 287 of the Labor Code.
PAL appealed the LAs Decision to NLRC, but NLRC initially affirmed the LAs Decision to
award under Article 287 of the Labor Code. This affirmation prompted PAL to seek
reconsideration of the ruling, citing that Respondent purported receipt of the retirement benefits
in the amount of 4,456,817.75 pursuant to the Plan. Upon the motion reconsideration, the NLRC
grant the motion and reversing its earlier Decision, and set aside the ruling of the LA on the
account of receipt of retirement benefits of the Respondent under the Plan. Respondent elevated
the case to Court of Appeals (CA) in which the CA reversed the Decision of the NLRC and
reinstating the ruling of the LA. In which the petitioner prompted to elevate the case to Supreme
Court.
Issues: 1. Whether the amount received by Respondent under the Plan should be deemed part of
his retirement pay?
2. Whether Respondent is entitled to receive retirement benefits under Article 287of the Labor
Code?

Ruling: The Supreme Court (SC) ruled to grant the petition. On the first issue, the SC ruled that
the amount received by the Respondent under the PAL pilots Retirement Benefit Plan must be
considered part of his retirement pay because it is clear from the provision of the Plan that it is
the company that contributes to retirement fund for the account of the pilots. These
contributions comprise the benefits by the pilots upon retirement, separation from service, or
disability. On the second issue, the SC ruled that Article 287 of the Labor Code shall not apply in
the instant case because Article 287 of the Labor Code only applicable only in a situation where
(1) there is no CBA of other employment contract providing for retirement benefits for an
employee, or (2) there is a CBA or other applicable employment contract providing for
retirement benefits for an employee, but it is below the requirement set by law. In which it come
to a conclusion that Respondent is entitled from both the retirement plans under the 1967 PAL-
ALPAP CBA and the Plan because Respondent is a member of ALPAP. In which case
Respondent is bound to CBA and the Plan and not under Article 287 of the Labor Code in
pursuant to reasons enumerated above. Therefore, SC ruled to pay Respondent a sum of 120,000
representing the balance of his retirement pay, computed based on the 1967 PAL-ALPAP.