(U) Labor (S) Digests (C)

UNIVERSITY OF SAN CARLOS
School of Law and Governance
P. Del Rosario St. Cebu City
Case Digests
In Partial Fulfillment
of the Requirements for the course
LABOR STANDARDS
Submitted to:
Atty. Jefferson M. Marquez
Submitted by:
JD – II
EH 402
CARMEL JO ANGELI HO 2
Table of Contents
BASIC PRINCIPLES .................................................................................................................................................... 9

SONZA VS. ABS-CBN .....................................................................................................................................................10
GR No. 138051, June 10, 2004, ......................................................................................................................10
LAZARO VS. SOCIAL SECURITY COMMISSION ....................................................................................................................12
G.R. No. 138254, July 30, 2004, .....................................................................................................................12
PHIL. GLOBAL COMM. VS. DE VERA ................................................................................................................................13
G.R. No. 157214; June 7, 2005 .......................................................................................................................13
ABS-CBN VS NAZARENO (2006) ...................................................................................................................................15
G.R. 164156. Sept 26, 2006 .............................................................................................................................15
FRANCISCO VS. NLRC ....................................................................................................................................................17
500 SCRA 690 [2006] .......................................................................................................................................17
NOGALES ET. AL. VS. CAPITOL MEDICAL CENTER ..............................................................................................................19
G.R. No. 142625, December 19, 2006 ..........................................................................................................19
COCA COLA BOTTLERS VS. DR. CLIMACO .......................................................................................................................21
GR No. 146881 February 5, 2007 ...................................................................................................................21
CALAMBA MEDICAL CENTER VS. NLRC, ET. AL. ..............................................................................................................23
GR No. 176484, Nov. 28, 2008 .......................................................................................................................23
ESCASIÑAS, ET. AL. VS. SHANGRILA-LAS MACTAN ISLAND RESORT, ET. AL ...........................................................................25
G.R. No. 178827, March 4, 2009 ....................................................................................................................25
TONGKO VS. THE MANUFACTURER’S LIFE INSURANCE CO., INC. ........................................................................................27
G.R. 167622 En Banc, January 25, 2011 .......................................................................................................27
SEMBLANTE ET AL., VS. COURT OF APPEALS, ET AL., ...........................................................................................................30
G.R. No. 196426, August 15, 2011 .................................................................................................................30
BERNARTE VS. PHIL. BASKETBALL ASSOCIATION ET AL., .......................................................................................................32
G.R. No. 192084, September 14, 2011 ..........................................................................................................32
LIRIO VS. GENOVIA .........................................................................................................................................................35
G.R. No. 169757; November 23, 2011 ...........................................................................................................35
CHARLIE JAO VS BCC PRODUCTS SALES, INC. ..................................................................................................................37
GR No. 163700, April 18, 2012 ........................................................................................................................37
LEGEND HOTEL VS REALUYO ............................................................................................................................................39
GR 153511, July 18, 2012 ................................................................................................................................39
THE NEW PHILIPPINE SKYLANDERS, INC., VS. DAKILA ..........................................................................................................41
G.R. No. 199547, Sept. 24, 2012 .....................................................................................................................41
TESORO ET AL., VS. METRO MANILA RETREADERS INC., ET AL., ...........................................................................................43
GR No. 171482, March 12, 2014 ....................................................................................................................43
ROYALE HOMES MARKETING CORPORATION VS ...............................................................................................................45
G.R. No. 195190, July 28, 2014 .......................................................................................................................45
FUJI TELEVISION NETWORK INC. VS ESPIRITU,......................................................................................................................47
GR No. 204944-45, December 3, 2014 .........................................................................................................47
CABAOBAS ET. AL., V. PEPSI COLA, .................................................................................................................................49
GR No. 176908, March 25, 2015 ....................................................................................................................49
BEGINO ET AL., VS. ABS-CBN CORP., .............................................................................................................................52
GR No. 199166, April 20, 2015 ........................................................................................................................52
SOCIAL SECURITY SYSTEM V. UBANA .................................................................................................................................55
GR No. 200114, August 25, 2015 ...................................................................................................................55
CENTURY PROPERTIES INC. V BABIANO .............................................................................................................................58
GR no. 220978. July 5, 2016 ...........................................................................................................................58
JOAQUIN LU VS TIRSO ENOPIA, ET AL. ...............................................................................................................................60
G.R. No. 197899. March 6, 2017 ....................................................................................................................60
HIRING OF EMPLOYEES .......................................................................................................................................... 62
PT &T VS. NLRC............................................................................................................................................................63
G.R. No. 118978; May 23, 1997 ......................................................................................................................63
DUNCAN ASSO. OF DETAILMAN-PTGWO VS. GLAXO WELLCOME PHILS. ........................................................................65
G.R. No. 162994, Sept. 17, 2004 .....................................................................................................................65
STAR PAPER CORP., VS SIMBOL (2006) ...........................................................................................................................67
G.R. 164774. April 12, 2006 .............................................................................................................................67
DEL MONTE PHILS. V. VELASCO ......................................................................................................................................69
G.R. No. 153477; March 6, 2007 ....................................................................................................................69
YRASUEGUI V. PHIL. AIRLINE .....................................................................................................................................71
GR NO. 168081; Oct. 17, 2008 .......................................................................................................................71
VIOLATION OF WAGE ORDER .............................................................................................................................. 73
SIP FOOD HOUSE ET AL VS. BATOLINA, .............................................................................................................................74
GR No. 192473. Oct 11, 2010 .........................................................................................................................74
SLL INTERNATIONAL CABLES SPECIALIST VS. NLRC .................................................................................................76
G.R. 172161; March 2, 2011 ...........................................................................................................................76
VERGARA, JR. VS. COCA-COLA BOTTLERS PHILS INC. ......................................................................................................78
ROYAL PLANT WORKERS UNION VS. COCA-COLA BOTTLERS PHILIPPINES INC. ...................................................................80
GR No. 198783, April 15, 2013 ........................................................................................................................80
NATIONAL WAGES AND PRODUCTIVITY COMMISSION ET AL., VS THE ALLIANCE OF PROGRESSIVE LABOR ET AL. ....................83
G.R. No. 150326, March 12, 2014 ..................................................................................................................83
DAVID/YIELS HOG DEALER VS MACASIO .........................................................................................................................87
GR No. 195466, July 2, 2014 ...........................................................................................................................87
OUR HAUS REALTY DEVELOPMENT CORP., VS. PARIAN ET AL. ............................................................................................90
GR. No. 204651, August 6, 2014 ....................................................................................................................90
MILAN ET AL., VS NLRC ..................................................................................................................................................93
GR No. 202961, February 4, 2015 ..................................................................................................................93
TOYOTA PASIG INC VS. DE PERALTA.................................................................................................................................96
GR No. 213488, Nov 7, 2016 ..........................................................................................................................96
JAIME N. SORIANO, MICHAEL VERNON M. GUERRERO, MARY ANN L. REYES, MARAH SHARYN M. DE
CASTRO AND CRIS P. TENORIO VS. SECRETARY OF FINANCE AND THE COMMISSIONER OF INTERNAL REVENUE
......................................................................................................................................................................................99
G.R. No. 184450. January 24, 2017 ...............................................................................................................99
WAGE ENFORCEMENT & RECOVERY .................................................................................................................. 104
TIGER CONSTRUCTION AND DEVELOPMENT CORP. VS. ABAY ET AL. ................................................................................ 105
G.R. 164141; Feb 26, 2010 ........................................................................................................................... 105
PEOPLE’S BROADCASTING (BOMBO RADYO PHILS) VS. SEC OF DOLE ET AL. .................................................................. 107
March 6, 2012 Resolution on the main Decision of May 8, 2009 ........................................................... 107
SUPERIOR PACKAGING CORP. VS. BALAGSAY ET AL., .................................................................................................... 109
G.R. 178909; October 10, 2012 .................................................................................................................. 109
WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES ....................................................... 112
SHS PERFORATED MATERIALS, INC. ET AL., VS. DIAZ, ...................................................................................................... 113
GR No. 185814, Oct. 13, 2010 ..................................................................................................................... 113
NINA JEWELRY MANUFACTURING OF METAL ARTS INC. VS. MONTECILLO,....................................................................... 115
G.R. No. 188169, November 28, 2011 ........................................................................................................ 115
LOCSIN II VS. MEKENI FOOD CORP., ............................................................................................................................. 117
GR No. 192105, December 9, 2013 ........................................................................................................... 117
TH SHOPFITTERS CORP., ET AL., VS. T&H SHOPFITTERS CORP., UNION, ............................................................................ 119
GR No. 191714, Feb 26, 2014 ...................................................................................................................... 119
WESLEYAN UNIVERSITY-PHILS., VS. WESLEYAN UNIVERSITY-PHILS., FACULTY & STAFF ASSO., ............................................. 122
GR No. 181806, March 12, 2014 ................................................................................................................. 122
BLUER THAN BLUE JOINT VENTURES CO., VS. ESTEBAN, ................................................................................................... 124
GR No. 192582, April 7, 2014, ...................................................................................................................... 124
NETLINK COMPUTER INC. VS DELMO ............................................................................................................................. 126
GR No. 160827, June 18, 2014 .................................................................................................................... 126
PLDT VS ESTRANERO, ................................................................................................................................................... 128
GR No. 192513, October 15, 2014 ............................................................................................................. 128
MILAN ET AL VS. NLRC ................................................................................................................................................ 130
GR No. 202961 Feb. 4, 2015 ........................................................................................................................ 130
PAYMENT OF WAGES ........................................................................................................................................... 133
CONGSON VS. NLRC .................................................................................................................................................. 134
G.R. No. 114250; April 5, 1995 ..................................................................................................................... 134
NORTH DAVAO MINING VS. NLRC .............................................................................................................................. 135
G.R. No. 112546; March 13, 1996 ............................................................................................................... 135
HEIRS OF SARA LEE VS. REY, .......................................................................................................................................... 136
G.R. No. 149013, Aug. 31, 2006 .................................................................................................................. 136
CONDITIONS OF EMPLOYMENT .......................................................................................................................... 138
SAN JUAN DE DIOS HOSPITAL VS. NLRC, ..................................................................................................................... 139
282 SCRA 316 [1997] .................................................................................................................................... 139
SIMEDARBY VS. NLRC, ................................................................................................................................................. 140
289 SCRA 86 [1998] ...................................................................................................................................... 140
PHIL. AIRLINES VS. NLRC.............................................................................................................................................. 141
302 SCRA 582 [1999] .................................................................................................................................... 141
LINTON COMMERCIAL CO., INC., VS. HELLERA ET AL. .................................................................................................... 143
G.R. No. 163147, October 10, 2007 ........................................................................................................... 143
BISIG MANGGAGAWA SA TRYCO VS. NLRC ................................................................................................................. 145
G.R. No. 151309, Oct. 15, 2008 ................................................................................................................... 145
DASCO V. PHILTRANCO SERVICE ENTERPRISES, INC., ...................................................................................................... 147
G.R. No. 211141, June 29, 2016 .................................................................................................................. 147
HSY MARKETING LTD VS. VIRGILIO O. VILLASTIQUE ....................................................................................................... 149
G.R no. 219569. August 27, 2016 ................................................................................................................ 149
NATE CASKET MAKER ET AL., VS. ARANGO, ET AL., ........................................................................................................ 151
GR No. 192282, October 5, 2016 ............................................................................................................... 151
MINIMUM LABOR STANDARD & BENEFITS ........................................................................................................... 154
SAN MIGUEL CORP., VS. CA ....................................................................................................................................... 155
G.R. No. 146775, Jan. 30, 2002 ................................................................................................................... 155
TAN VS. LAGRAMA ....................................................................................................................................................... 158
G.R. No. 151228; August 15, 2002 .............................................................................................................. 158
LAMBO VS. NLRC ....................................................................................................................................................... 160
G.R. No. 111042; October 26, 1999 ........................................................................................................... 160
R&E TRANSPORT VS. LATAG ......................................................................................................................................... 162
G.R. No. 155214, Feb. 13, 2004 ................................................................................................................... 162
ASIAN TRANSMISSION VS. CA ....................................................................................................................................... 164
425 SCRA 478 [2004] .................................................................................................................................... 164
AUTOBUS TRANSPORT SYSTEM VS. BAUTISTA.................................................................................................................... 165
G.R. No. 156364, May 16, 2005 ................................................................................................................... 165
SAN MIGUEL CORP., VS. DEL ROSARIO......................................................................................................................... 168
G.R. No. 168194, Dec. 13, 2005 .................................................................................................................. 168
PENARANDA VS. BAGANGA PLYWOOD CORP. ............................................................................................................. 171
G.R. No. 159577, May 3, 2006 ..................................................................................................................... 171
LEYTE IV ELECTRIC COOPERATIVE INC VS. LEYECO IV EMPLOYEES UNION-ALU, ........................................................... 174
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 ......................................................................... 174
BAHIA SHIPPING SERVICES VS. CHUA, ............................................................................................................ 176
G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA 533 [1998] .............................. 176
PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS ORGANIZATION, ......................................... 177
GR No. 171231, Feb. 17, 2010 ..................................................................................................................... 177
RADIO MINDANAO NETWORK, INC. VS. YBAROLA ......................................................................................................... 178
G.R. 198662; Sept. 12, 2012 ......................................................................................................................... 178
ROBINA FARMS CEBU VS. VILLA .................................................................................................................................... 180
GR No. 175869, April 18, 2016 ..................................................................................................................... 180
DASCO V. PHILTRANCO SERVICE ENTERPRISES, INC., ...................................................................................................... 183
G.R. No. 211141, [June 29, 2016]) .............................................................................................................. 183
HSY MARKETING LTD VS. VIRGILIO O. VILLASTIQUE ....................................................................................................... 185
G.R no. 219569. August 27, 2016 ................................................................................................................ 185
DE LA SALLE ARANETA UNIVERSITY (DLS-AU) V. JUANITO C. BERNARDO........................................................ 187
G.R. No. 190809, February 13, 2017 ........................................................................................................... 187
OTHER SPECIAL BENEFITS ..................................................................................................................................... 190
REYES V. NLRC ET AL. .................................................................................................................................................. 191
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]................................................................................... 191
ARCO METAL PRODUCTS CO., INC., ET AL., VS. SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL-NAFLU ........... 194
G.R. No. 170734, May 14, 2008 ................................................................................................................... 194
UNIVERSAL ROBINA SUGAR MILLING CORP. VS. CABALLEDA ......................................................................................... 197
G.R. No. 156644, July 28, 2008 .................................................................................................................... 197
LOURDES CERCADO VS. UNIPROM, INC. ....................................................................................................................... 200
G.R. No. 188154; October 13, 2010 ........................................................................................................... 200
RADIO MINDANAO NETWORK INC, ET AL., VS. YBAROLA, JR. ET AL., ............................................................................... 203
G.R. No. 198662; September 12, 2012 ....................................................................................................... 203
PADILLO VS. RURAL BANK OF NABUNTURAN INC. ........................................................................................................... 205
G.R. No. 199338; Jan. 21, 2013 ................................................................................................................... 205
GRACE CHRISTIAN HIGH SCHOOL VS. LAVANDERA ....................................................................................................... 207
GR No. 177845, August 20, 2014 ................................................................................................................ 207
GOODYEAR PHILIPPINES, INC. AND REMEGIO M. RAMOS, PETITIONERS, VS . MARINA L. ANGUS, RESPONDENT.
................................................................................................................................................................................... 209
G.R. No. 185449. November 12, 2015 ........................................................................................................ 209
BANCO DE ORO UNIBANK V. SAGAYSAY ...................................................................................................................... 211
G.R. No. 214961, September 16, 2015 ....................................................................................................... 211
PEREZ VS. COMPARTS INDUSTRIES, INC. ............................................................................................................... 213
G.R. No. 197557. October 5, 2016. ............................................................................................................ 213
DE LA SALLE ARANETA UNIVERSITY (DLS-AU) V. JUANITO C. BERNARDO........................................................ 216
G.R. No. 190809, February 13, 2017 ........................................................................................................... 216
CATOTOCAN VS. LOURDES SCHOOL OF QUEZON CITY .................................................................................................. 219
GR No.: 213486. April 26, 2017 .................................................................................................................... 219
PHILIPPINE AIRLINES, INC. VS ARJAN T. HASSARAM ........................................................................................................ 221
G.R. No. 217730. June 5, 2017. ................................................................................................................... 221
LAYA VS. COURT OF APPEALS ....................................................................................................................................... 223
GR No. 205813, January 10, 2018, En banc .............................................................................................. 223
MARIA DE LEON TRANSPORTATION, INC. VS DANIEL M. MACURAY ............................................................... 228
G.R 214940. June 6, 2018 ............................................................................................................................ 228
2011 NLRC RULES OF PROCEDURE, AMENDED ................................................................................................... 232
LOCKHEED DETECTIVE & WATCHMAN AGENCY, ........................................................................................................... 233
G.R. No. 185918, April 18, 2012 ................................................................................................................... 233
PORTILLO V. RUDOLF LIETZ, INC. ET.AL ........................................................................................................................... 235
G.R. No. 196539. October 10, 2012 ........................................................................................................... 235
BUILDING CARE CORP. VS. MACARAEG ....................................................................................................................... 237
G.R. No. 198357, December 10, 2012 ....................................................................................................... 237
ANDREW JAMES MCBURNIE VS. EULALIO GANZON, EGI-MANAGERS, INC. AND E. GANZON, INC................................... 239
GR No. 178034/1718117, October 17, 2013, En Banc.............................................................................. 239
INDOPHIL TEXTILE MILLS, INC. VS. ENGR. SALVADOR ADVIENTO ...................................................................... 242
GR No. 171212, August 4, 2014 .................................................................................................................. 242
138 MANILA MINING CORPORATION VS. LOWITO AMOR, ET. AL. ................................................................... 245
G.R. No. 182800. April 20, 2015, citing 2015 Mcburnie ............................................................................ 245
TOYOTA ALABANG INC VS. GAMES .............................................................................................................................. 248
GR No. 206612, Aug 17, 2015 ..................................................................................................................... 248
SOCIAL SECURITY SYSTEM V. UBANA .............................................................................................................................. 251
GR No. 200114, August 25, 2015 ................................................................................................................ 251
ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE PHILIPPINES, INC. CHAPTER (ICE CREAM AND CHILLED
PRODUCTS DIVISION), ITS OFFICERS, MEMBERS BONIFACIO T. FLORENDO, EMILIANO B. PALANAS AND
GENEROSO P. LAXAMANA VS. NESTLE PHILIPPINES, INC. .................................................................................. 254
GR No. 198675, Sept 23, 2015 ..................................................................................................................... 254
QUANTUM FOODS, INC. VS MARCELINO ESLOYO AND GLEN MAGSILA .......................................................................... 256
G.R. No. 213696. December 9, 2015 ......................................................................................................... 256
DELA ROSA LINER INC ET VS. BORELA, ET.AL ......................................................................................................... 258
GR No. 207286, July 29, 2016 ...................................................................................................................... 258
FONTANA DEVELOPMENT CORP., DENNIS PAK AS GENERAL MANAGER, PASTOR ISAAC AS DIRECTOR OF HUMAN
RESOURCES, CHRIS CHENG* AS DEPUTY GROUP FINANCIAL CONTROLLER, JESUS CHUA, REPRESENTATIVE MICHAEL
FELICIANO, ALMA EREDIANO, LEILANI VALIENTE, MAN CHOI AS GROUP FINANCIAL CONTROLLER, AND JAIME
VILLAREAL AS CHIEF ENGINEER VS. SASCHA VUKASINOVIC .................................................................................. 261
GR No. 222424, September 21, 2016 ......................................................................................................... 261
Sonza vs. ABS-CBN
GR No. 138051, June 10, 2004,
Facts:
In May 1994, ABS-CBN signed an agreement with Mel and Joey Management and
Developments Corporation (MJMDC), a television program. Referred to in the Agreement as
“Agent”, MJMDC agreed to provide Sonza’s services exclusively to ABS-CBN as talent for radio
and television. ABS-CBN agreed to pay Sonza’s services a monthly talent fee of P310, 000 for the
first year and P317,000 for the second and third year of the agreement.
On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President Lopez stating that he
will irrevocably resign in view of the recent events concerning his program and career, that he
is waiving and renouncing recovery of the remaining amount stipulated in the Agreement, but
reserves the right to seek recovery of the other benefits under said agreement.
On April 30, 1996, Sonza filed a complaint against ABS-CBN before the Department of Labor and
Employment, NCR alleging that ABS-CBN did not pay his salary, separation pay, service
incentive leave, 13th month pay , signing bonus, travel allowance and amounts due under the
Employees Stock Option Plan (ESOP). ABS-CBN moved for the dismissal of the complaint on the
ground that there was no employer-employee relationship between them. ABS-CBN insists that
Sonza was an independent contractor.
Issue:
Whether an employer-employee relationship exists.
Ruling:
The Court sustained ABS-CBN’s contention and hence, dismissed the petition.
The Supreme Court ratiocinated that Independent contractors often present themselves to
possess unique skills, expertise, talent, to distinguish them from ordinary employees. The specific
selection and hiring of Sonza, because of his unique skills, talent, and celebrity status not
possessed by an ordinary employee, is a circumstance indicative of an independent
contractual relationship. Whatever benefits Sonza enjoyed arose from a contract and not
because of an employer-employee relationship. Sonza’s talent fees are so huge and out of the
ordinary that they indicate more an independent contractual relationship.
Applying the control test in the case at bar, the Court found that Sonza is not an employee but
an independent contractor. First, ABS-CBN engaged Sonza’s services specifically to co-host the
“Mel and Jay” program. ABS-CBN did not assign any other work to Sonza. To perform his work,
Sonza only needed his skills and talent. Sonza delivered his lines appeared on the television and
sounded on radio, all outside the control of ABS-CBN. Sonza did not have to work eight hours a
day. The Agreement required Sonza to attend only rehearsals and tapings. ABS-CBN could not
dictate the contents of Sonza’s script. Sonza had a free hand on what to say or discuss in his
shows. Clearly, ABS-CBN did not exercise control over the means and methods of performance
of Sonza’s work.
Lazaro vs. Social Security Commission
G.R. No. 138254, July 30, 2004,
Facts:
Private respondent Laudato filed a petition before the SSC for social security coverage and
remittance of unpaid monthly social security contributions against her three employers. Among
the respondents was herein petitioner Angelito L. Lazaro (“Lazaro”), proprietor of Royal Star
Marketing (“Royal Star”), which is engaged in the business of selling home appliances. Petitioner
states that 1) Laudato was not a sales supervisor of Royal Star, but was a mere sales agent whom
he paid purely on commission basis.2) Laudato was not subjected to definite hours and
conditions of work. As such, Laudato could not be deemed an employee of Royal Star while
respondents contended that despite her employment as sales supervisor of the sales agents for
Royal Star from April of 1979 to March of 1986, Lazaro had failed during the said period, to report
her to the SSC for compulsory coverage or remit Laudato’s social security contributions.
Issue:
Whether or not respondent is an employee, bringing her under the coverage of the Social
Security Act.
Ruling:
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.
Phil. Global Comm. 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
respondent’s proposal in a document denominated as retainership contract which will be for a
period of one year, subject to renewal and clearly stated that respondent will cover the
retainership the company previously with Dr. Eulau. The agreement went until 1994, in the years
1995-1996, it was renewed verbally. The turning point of the parties’ relationship was when
petitioner, thru a letter bearing the subject TERMINATION – RETAINERSHIP CONTRACT, informed
Dr. de Vera of its decision to discontinue the latter’s retainer contract because the
management has decided that it would be more practical to provide medical services to its
employees through accredited hospitals near the company premises.
On January 1997, de Vera filled a complaint for illegal dismissal before the NLRC, alleging that
he had been actually employed by the company as its company physician since 1991. The
commission rendered decision in favor of Philcom and dismissed the complaint saying that de
Vera was an independent contractor. On appeal to NLRC, it reversed the decision of the Labor
Arbiter stating that de Vera is a regular employee and directed the company to reinstate him.
Philcom appealed to the CA where it rendered decision deleting the award but reinstating de
Vera. Philcom filed this petition involving the difference of a job contracting agreements from
employee-employer relationship.
Issue:
Whether or not there exists an employee-employer relationship between the parties.
Ruling:
SC ruled that there was no such relationship existing between Dr. de Vera and Phil. Com.
Upon reading the contract dated September 6, 1982, signed by the complainant himself , it
clearly states that is a retainership contract. The retainer fee is indicated thereon and the
duration of the contract for one year is also clearly indicated in paragraph 5 of the Retainership
Contract. The complainant cannot claim that he was unaware that the ‘contract’ was good
only for one year, as he signed the same without any objections. The complainant also
accepted its renewal every year thereafter until 1994. As a literate person and educated
person, the complainant cannot claim that he does not know what contract he signed and
that it was renewed on a year to year basis.The labor arbiter added the indicia, not disputed by
respondent, that from the time he started to work with petitioner, he never was included in its
payroll; was never deducted any contribution for remittance to the Social Security System (SSS);
and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his
professional fee, in accordance with the National Internal Revenue Code, matters which are
simply inconsistent with an employer-employee relationship.The elements of an employer-
employee relationship are wanting in this case. The record 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 latter’s 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.
ABS-CBN vs Nazareno (2006)
G.R. 164156. Sept 26, 2006
Facts:
ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production

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

Agreement (CBA) to be effective during the period from Dec 11, 1996 to Dec 11, 1999. However,
since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not
included to the CBA.
Due to a memorandum assigning PA’s to non-drama programs, and that the DYAB studio
operations would be handled by the studio technician. There was a revision of the schedule
and assignments and that respondent Gerzon was assigned as the full-time PA of the TV News
Department reporting directly to Leo Lastimosa.
On Oct 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave
Pay, and 13th Month Pay with Damages against the petitioner before the NLRC.
Issue:
WON the respondents are regular employees?
Ruling:
Respondents are considered regular employees of ABS-CBN and are entitled to the benefits
granted to all regular employees.
Where a person has rendered at least one year of service, regardless of the nature of the activity
performed, or where the work is continuous or intermittent, the employment is considered
regular as long as the activity exists. The reason being that a customary appointment is not
indispensable before one may be formally declared as having attained regular status. Article
280 of the Labor Code provides:
REGULAR AND CASUAL EMPLOYMENT.—The provisions of written agreement to the contrary

notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer except where the
employment has been fixed for a specific project or undertaking the completion or termination
of which has been determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment is for the duration
of the season.
Any employee who has rendered at least one year of service, whether continuous or
intermittent, is deemed regular with respect to the activity performed and while such activity
actually exists.The fact that respondents received pre-agreed “talent fees” instead of salaries,
that they did not observe the required office hours, and that they were permitted to join other
productions during their free time are 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 petitioner’s
personnel department just like any ordinary employee.
Second. The so-called “talent fees” of respondents correspond to wages given as a result of an
employer-employee relationship. Respondents did not have the power to bargain for huge
talent fees, a circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner for continued work.
Fourth. The degree of control and supervision exercised by petitioner over respondents through
its supervisors negates the allegation that respondents are independent contractors.
The presumption is that when the work done is an integral part of the regular business of the
employer and when the worker, relative to the employer, does not furnish an independent
business or professional service, such work is a regular employment of such employee and not
an independent contractor.
Francisco vs. NLRC
500 SCRA 690 [2006]
Facts:
Petitioner was hired by Kasei Corporation during the 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 Liason Officer to the City of Manila to secure
permits for the operation of the company.
In 1996, Petitioner was designated as Acting Manager. She was assigned to handle recruitment
of all employees and perform management administration functions. In 2001, she was replaced
by Liza Fuentes as Manager. Kasei Corporation reduced her salary to P2,500 per month, which
was until September. She asked for her salary but was informed that she was no longer
connected to the company. She did not anymore report to work since she was not paid for her
salary. She filed an action for constructive dismissal with the Labor Arbiter.
The Labor Arbiter found that the petitioner was illegally dismissed. NLRC affirmed the decision
while CA reversed it.
Issue:
Whether or not there was an employer-employee relationship.
Ruling:
The court held that in this jurisdiction, there has been no uniform test to determine the existence
of an employer-employee relation. Generally, courts have relied on the so-called right of
control test where the person for whom the services are performed reserves a right to control
not only the end to be achieved but also the means to be used in reaching such end. In
addition to the standard of right-of-control, the existing economic conditions prevailing
between the parties, like the inclusion of the employee in the payrolls, can help in determining
the existence of an employer-employee relationship.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employer’s power to control the employee with respect to the means and methods by which
the work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.
In Sevilla v. Court of Appeals, the court observed the need to consider the existing economic
conditions prevailing between the parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture in determining the existence
of an employer-employee relationship based on an analysis of the totality of economic
circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon
the circumstances of the whole economic activity, such as: (1) the extent to which the services
performed are an integral part of the employer’s business; (2) the extent of the worker’s
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7)
the degree of dependency of the worker upon the employer for his continued employment in
that line of business. The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that line of business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporation’s Technical Consultant. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in the latter’s line of
business.
There can be no other conclusion that petitioner is an employee of respondent Kasei

Corporation. She was selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued employment in that line of
business. Her main job function involved accounting and tax services rendered to Respondent
Corporation on a regular basis over an indefinite period of engagement. Respondent
Corporation hired and engaged petitioner for compensation, with the power to dismiss her for
cause. More importantly, Respondent Corporation had the power to control petitioner with the
means and methods by which the work is to be accomplished.
Nogales et. al. vs. Capitol Medical Center
G.R. No. 142625, December 19, 2006
Facts:
Pregnant Corazon Nogales ("Corazon") was under the exclusive prenatal care of Dr. Oscar
Estrada ("Dr. Estrada"). Corazon was admitted at the CMC. Dr. Estrada ordered the injection of
ten grams of magnesium sulfate. However, Dr. Ely Villaflor ("Dr. Villaflor"), who was assisting Dr.
Estrada, administered only 2.5 grams of magnesium sulfate. Dr. Estrada, assisted by Dr. Villaflor,
applied low forceps to extract Corazon's baby. In the process, piece of cervical tissue was
allegedly torn. The baby came out in an 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.
Coca cola Bottlers vs. Dr. Climaco
GR No. 146881 February 5, 2007
Facts:
Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-cola Bottlers

Phil.(petitioner) by virtue of a Retainer Agreement. Among the terms and conditions under their
retainer agreement are:
That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31, 1988. Either party
may terminate the contract upon giving a 30-day written notice to the other;
That petitioner shall compensate respondent a retainer fee of P3,800/month. The DOCTOR may
charge professional fee for hospital services rendered in line with his specialization;
That in consideration of the retainer’s fee, the DOCTOR agrees to perform the duties and
obligations in the COMPREHENSIVE MEDICAL PLAN, made an integral part of this retainer
agreement;
That the DOCTOR shall observe clinic hours at the company’s premises from Monday to
Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each day or
treatment from 7:30 a.m. to 8:30 a.m and 3:00pm to 4:00pm. It is further understood that the
DOCTOR shall be on call at all times during the other workshifts to attend to emergency case(s);
That no employee-employer relationship shall exist between the company and the DOCTOR.
The retainer agreement expired after 1 year. However, despite the non-renewal of the
agreement, respondent continued to perform his functions as company doctor to petitioner
until he received a letter dated march 9, 1995 from the company ending their retainership
agreement.
Respondent thereafter filed a complaint before the NLRC seeking recognition as a regular
employee of petitioner and thus prayed from payment of all the benefits of a regular employee
including 13th month pay, COLA, holiday pay, service incentive leave, and Christmas bonus.
Also, respondent filed another complaint for illegal dismissal against petitioner.
In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint was dismissed
by the Labor Arbiters and subsequently affirmed by the NLRC on the ground that no employer-
employee relationship existed between petitioner company and respondent.
However when it was elevated to CA for review, the latter ruled that employer-employee
relationship existed between the parties after applying the four-fold test: (1) power to hire
employee (2) payment of wages (3) power to dismissal (4) and power to control over the
employee with respect to the means and methods by which the work is to be accomplished.
The CA held it in this wise:
First, the agreement 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.
Secondly, the agreement showed that petitioner would compensate the doctor for
P3,800/month. This would represent the element of payment of wages.
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.
Lastly, the agreement reveal that Coca-cola control over the conduct of respondent in the
latter’s performance of his duties sas 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 employer’s
workplace or proximately close thereto that he cannot utilize his time effectively and gainfully
for his own purpose. Such is not the prevailing situation here. The respondent does not dispute
that fact that outside of the two (2) hours that he is required to be at petitioner company’s
premises, he is not at all further required to just sit around in the premises and wait for an
emergency to occur so as to enable him from using such hours for his own benefit and
advantage. In fact, respondent maintains his own private clinic attending his private practice
in the city, where he services his patients and bills them accordingly.
The Court finds that the requirement to be on call for emergency cases do not amount to such
control, but are necessary incidents to the Retainership Agreement.
The Supreme Court also notes that the Agreement granted to both parties the power to
terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not
wield the sole power of dismissal or termination. Therefore, the petition was GRANTED.
Calamba Medical center VS. NLRC, et. Al.
GR No. 176484, Nov. 28, 2008
Facts:
Calamba Medical Center, engaged the services of medical doctors-spouses Dr. Ronaldo and
Dr. Merceditha Lanzanas as part of its team of resident physicians.Reporting at the hospital
twice-a-week on twenty-four-hour shifts, respondents were paid a monthly "retainer" of P4,800.00
each. Also resident physicians were also given a percentage share out of fees charged for out-
patient treatments, operating room assistance and discharge billings, in addition to their fixed
monthly retainer.
The work schedules of the members of the team of resident physicians were fixed by petitioner's
medical director Dr. Desipeda, and they were issued ID, enrolled in the SSS and withheld tax
from them.
After an incident where Dr. Trinidad overheard a phone conversation between Dr. Ronaldo and
a fellow employee Diosdado Miscala, the former was given a preventive suspension and his
wife Dr. Merceditha was not given any schedule after sending the Memorandum. On March
1998, Dr. Ronaldo filed a complaint for illegal suspension and Dr. Merceditha for illegal dismissal.
Issue:
Whether or not there exists an employer-employee relationship between petitioner and the
spouses-respondents?
Ruling:
Drs. Lanzanas are declared employee by the petitioner hospital.Under the "control test," an
employment relationship exists between a physician and a hospital if the hospital controls both
the means and the details of the process by which the physician is to accomplish his task.
That petitioner exercised control over respondents gains light from the undisputed fact that in
the emergency room, the operating room, or any department or ward for that matter,
respondents' work is monitored through its nursing supervisors, charge nurses and orderlies.
Without the approval or consent of petitioner or its medical director, no operations can be
undertaken in those areas. For control test to apply, it is not essential for the employer to actually
supervise the performance of duties of the employee, it being enough that it has the right to
wield the power.
With respect to respondents' sharing in some hospital fees, this scheme does not sever the
employment tie between them and petitioner as this merely mirrors additional form or another
form of compensation or incentive similar to what commission-based employees receive as
contemplated in Article 97 (f) of the Labor Code.
Moreover, respondents were made subject to petitioner-hospital's Code of Ethics,the provisions

of which cover administrative and disciplinary measures on negligence of duties, personnel
conduct and behavior, and offenses against persons, property and the hospital's interest.
More importantly, petitioner itself provided incontrovertible proof of the employment status of
respondents, namely, the identification cards it issued them, the payslips and BIR W-2 (now 2316)
Forms which reflect their status as employees, and the classification as "salary" of their
remuneration. Moreover, it enrolled respondents in the SSS and Medicare (Philhealth) program.
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.
Escasiñas, et. al. vs. Shangrila-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-la’sMactan 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-la’s principal business – operation of hotels and
restaurants.
As to payment of wages, respondent doctor is the one who underwrites the following: salaries,
SSS contributions and other benefits of the staff; group life, group personal accident insurance
and life/death insurance for the staff with minimum benefit payable at 12 times the employee’s
last drawn salary, as well as value added taxes and withholding taxes, sourced from her
P60,000.00 monthly retainer fee and 70% share of the service charges from Shangri-la’s guests
who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as
workers, pay their SSS premium as well as their wages if they were not indeed her employees.
With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a
document, “Clinic Policies and Employee Manual” claimed to have been prepared by
respondent doctor exists, to which petitioners gave their conformity and in which they
acknowledged their co-terminus employment status. It is thus presumed that said document,
and not the employee manual being followed by Shangri-la’s regular workers, governs how they
perform their respective tasks and responsibilities.
In fine, as Shangri-la does not control how the work should be performed by petitioners, it is not
petitioners’ employer.
Tongko vs. The Manufacturer’s Life Insurance Co., Inc.
G.R. 167622 En Banc, January 25, 2011
Facts:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in
life insurance business. Renato A. Vergel De Dios was, during the period material, its President
and Chief Executive Officer. Gregorio V. Tongko started his professional relationship with
Manulife on July 1, 1977 by virtue of a Career Agent's Agreement (Agreement) he executed
with Manulife.
In the Agreement, it is provided that:
It is understood and agreed that the Agent is an independent contractor and nothing
contained herein shall be construed or interpreted as creating an employer-employee
relationship between the Company and the Agent.
The Company may terminate this Agreement for any breach or violation of any of the provisions
hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time
of the discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or
cancellation of the right to terminate this Agreement by the Company shall be construed for
any previous failure to exercise its right under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by
giving to the other party fifteen (15) days notice in writing.
In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990,
he became a Branch Manager. As the CA found, Tongko's gross earnings from his work at
Manulife, consisting of commissions, persistency income, and management overrides. The
problem started sometime in 2001, when Manulife instituted manpower development programs
in the regional sales management level. Relative thereto, De Dios addressed a letter dated
November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers
Meeting. Stating that Tongko’s Region was the lowest performer (on a per Manager basis) in
terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in this area.
Other issues were:"Some Managers are unhappy with their earnings and would want to revert
to the position of agents." And "Sales Managers are doing what the company asks them to do
but, in the process, they earn less." Tongko was then terminated.
Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife
for illegal 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:
The main issue of whether an agency or an employment relationship exists depends on the
incidents of the relationship. The Labor Code concept of “control” has to be compared and
distinguished with the “control” that must necessarily exist in a principal-agent relationship. The
principal cannot but also have his or her say in directing the course of the principal-agent
relationship, especially in cases where the company-representative relationship in the insurance
industry is an agency.
Under the Insurance Code, the agent must, as a matter of qualification, be licensed and must
also act within the parameters of the authority granted under the license and under the
contract with the principal. Other than the need for a license, the agent is limited in the way he
offers and negotiates for the sale of the company’s insurance products, in his collection
activities, and in the delivery of the insurance contract or policy. Rules regarding the desired
results (e.g., the required volume to continue to qualify as a company agent, rules to check on
the parameters on the authority given to the agent, and rules to ensure that industry, legal and
ethical rules are followed) are built-in elements of control specific to an insurance agency and
should not and cannot be read as elements of control that attend an employment relationship
governed by the Labor Code.
By the Agreement’s express terms, Tongko served as an “insurance agent” for Manulife, not as
an employee. Significantly, evidence shows that Tongko’s role as an insurance agent never
changed during his relationship with Manulife. If changes occurred at all, the changes did not
appear to be in the nature of their core relationship. Tongko essentially remained an agent, but
moved up in this role through Manulife’s recognition that he could use other agents approved
by Manulife, but operating under his guidance and in whose commissions he had a share; thus,
he became a lead agent. That Tongko assumed a leadership role but nevertheless wholly
remained an agent is the inevitable conclusion that results from the reading of the Agreement
(the only agreement on record in this case) and his continuing role thereunder as sales agent,
from the perspective of the insurance and the civil codes and in light of what Tongko himself
attested to as his role as a Regional Sales Manager.
Further , there is lack of evidence on record showing that Manulife ever exercised means-and
manner control, even to a limited extent over Tongko during his ascent in Manulife’s sales ladder.
What, to Tongko, serve as evidence of labor law control are the codes of conduct that Manulife
imposes on its agents in the sale of insurance. The mere presentation of codes or of rules and
regulations, however, is not per se indicative of labor law control as the law and jurisprudence
teach us.
As already recited above, the Insurance Code imposes obligations on both the insurance
company and its agents in the performance of their respective obligations under the Code,
particularly on licenses and their renewals, on the representations to be made to potential
customers, the collection of premiums, on the delivery of insurance policies, on the matter of
compensation, and on measures to ensure ethical business practice in the industry.
The general law on agency, on the other hand, expressly allows the principal an element of
control over the agent in a manner consistent with an agency relationship. In this sense, these
control measures cannot be read as indicative of labor law control. Foremost among these are
the directives that the principal may impose on the agent to achieve the assigned tasks, to the
extent that they do not involve the means and manner of undertaking these tasks. The law
likewise obligates the agent to render an account; in this sense, the principal may impose on
the agent specific instructions on how an account shall be made, particularly on the matter of
expenses and reimbursements. To these extents, control can be imposed through rules and
regulations without intruding into the labor law concept of control for purposes of employment.
Given this anemic state of the evidence, particularly on the requisite confluence of the factors
determinative of the existence of employer-employee relationship, the Court cannot
conclusively find that the relationship exists in the present case, even if such relationship only
refers to Tongko’s additional functions. Under this legal situation, the only conclusion that can
be made is that the absence of evidence showing Manulife’s control over Tongko’s contractual
duties points to the absence of any employer-employee relationship between Tongko and
Manulife. In the context of the established evidence, Tongko remained an agent all along;
although his subsequent duties made him a lead agent with leadership role, he was nevertheless
only an agent whose basic contract yields no evidence of means and manner control.
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 masiadorand 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 masiadorand 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 Arbiter’s Decision on September 14, 2004. And within
the 10-day appeal period, he filed the respondents’ appeal with the NLRC on September 24,
2004, but without posting a cash or surety bond equivalent to the monetary award granted by
the Labor Arbiter.
The NLRC held in its Resolution of October 18, 2006 that there was no employer-employee
relationship between petitioners and respondents, respondents having no part in the selection
and engagement of petitioners, and that no separate individual contract with respondents was
ever executed by petitioners.
The CA upheld the NLRC decision.
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 employee’s conduct, which is the most important
element.
As found by both the NLRC and the CA, respondents had no part in petitioners’ selection and
management; petitioners’ compensation was paid out of the arriba (which is a percentage
deducted from the total bets), not by petitioners; and petitioners performed their functions as
masiadorand sentenciadorfree 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.
Bernarte vs. Phil. Basketball Association et al.,
G.R. No. 192084, September 14, 2011
Facts:
Complainants, Jose Mel Bernarte and Renato Guevarra, aver that they were invited to join the
PBA as referees. During the leadership of Commissioner Emilio Bernardino, they were made to
sign contracts on a year-to-year basis. During the term of Commissioner Eala, however, changes
were made on the terms of their employment.
Bernarte, was not made to sign a contract during the first conference of the All-Filipino Cup
which was from February 23, 2003 to June 2003. It was only during the second conference when
he was made to sign a one and a half month contract for the period July 1 to August 5, 2003.
January 15, 2004, Bernarte received a letter from the Office of the Commissioner advising him
that his contract would not be renewed citing his unsatisfactory performance on and off the
court. It was a total shock for Bernarte who was awarded Referee of the year in 2003. He felt
that the dismissal was caused by his refusal to fix a game upon order of Ernie De Leon.
Guevarra alleges that he was invited to join the PBA pool of referees in February 2001. On March
1, 2001, he signed a contract as trainee. Beginning 2002, he signed a yearly contract as Regular
Class C referee. On May 6, 2003, respondent Martinez issued a memorandum to
Guevarra expressing dissatisfaction over his questioning on the assignment of referees officiating
out-of-town games. Beginning February 2004, he was no longer made to sign a contract.
The Court of Appeals denied the motion for reconsideration.
Complainants entered into two contracts of retainer with the PBA in the year 2003. The first
contract was for the period January 1, 2003 to July 15, 2003; and the second was for September
1 to December 2003. After the lapse of the latter period, PBA decided not to renew their
contracts.
Complainants were not illegally dismissed because they were not employees of the PBA. Their
respective contracts of retainer were simply not renewed. PBA had the prerogative of whether
or not to renew their contracts, which they knew were fixed.
Labor Arbiter’s decision, on 31 March 2005, declared petitioner an employee whose dismissal
by respondents was illegal. Accordingly, the Labor Arbiter ordered the reinstatement of
petitioner and the payment of backwages, moral and exemplary damages and attorney’s
fees.
In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiter’s judgment. The dispositive
portion of the NLRC’s decision reads:
WHEREFORE, the appeal is hereby DISMISSED. The Decision of Labor Arbiter Teresita D. Castillon-
Lora dated March 31, 2005 is AFFIRMED.
The Court of Appeals found petitioner an independent contractor since respondents did not
exercise any form of control over the means and methods by which petitioner performed his
work as a basketball referee. The Court of Appeals held:
While the NLRC agreed that the PBA has no control over the referees’ acts of blowing the
whistle and making calls during basketball games, it, nevertheless, theorized that the said acts
refer to the means and methods employed by the referees in officiating basketball games for
the illogical reason that said 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?
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 Arbiter’s decision moot as
respondents’ appeal was considered in the interest of substantial justice. We agree with the
NLRC. The ends of justice will be better served if we resolve the instant case on the merits rather
than allowing the substantial issue of whether petitioner is an independent contractor or an
employee linger and remain unsettled due to procedural technicalities.
The existence of an employer-employee relationship is ultimately a question of fact. As a general

rule, factual issues are beyond the province of this Court. However, this rule admits of exceptions,
one of which is where there are conflicting findings of fact between the Court of Appeals, on
one hand, and the NLRC and Labor Arbiter, on the other, such as in the present case.
To determine the existence of an employer-employee relationship, case law has consistently

applied the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the
employee on the means and methods by which the work is accomplished. The so-called
“control test” is the most important indicator of the presence or absence of an employer-
employee relationship.
We agree with respondents that once in the playing court, the referees exercise their own
independent judgment, based on the rules of the game, as to when and how a call or decision
is to be made. The referees decide whether an infraction was committed, and the PBA cannot
overrule them once the decision is made on the playing court. The referees are the only,
absolute, and final authority on the playing court. Respondents or any of the PBA officers cannot
and do not determine which calls to make or not to make and cannot control the referee when
he blows the whistle because such authority exclusively belongs to the referees. The very nature
of petitioner’s job of officiating a professional basketball game undoubtedly calls for freedom
of control by respondents.
Moreover, the following circumstances indicate that petitioner is an independent contractor:
(1) the referees are required to report for work only when PBA games are scheduled, which is
three times a week spread over an average of only 105 playing days a year, and they officiate
games at an average of two hours per game; and (2) the only deductions from the fees
received by the referees are withholding taxes.
In other words, unlike regular employees who ordinarily report for work eight hours per day for
five days a week, petitioner is required to report for work only when PBA games are scheduled
or three times a week at two hours per game. In addition, there are no deductions for
contributions to the Social Security System, Philhealth or Pag-Ibig, which are the usual
deductions from employees’ salaries. These undisputed circumstances buttress the fact that
petitioner is an independent contractor, and not an employee of respondents.
Lirio vs. Genovia
G.R. No. 169757; November 23, 2011
Facts:
Respondent Wilmer D. Genovia was hired on Aug. 15, 2001 as studio manager by petitioner
Cesar C. Lirio, owner of Celkor Ad Sonicmix Recording Studio, to promote and sell the studio’s
services to music enthusiasts and other prospective clients. He received a monthly salary of
P7,000.00 and additional commission of P100 per hour as recording technician.
Respondent 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 everyday, but petitioner never kept a daily time record to avoid paying the
employees overtime pay.
In a complaint for illegal dismissal, petitioner invoked the defense that no employer-employee
relationship exists between him and respondent. Theirs is one of an informal partnership since
they agreed to contribute money, property or industry to a common fund with the intention of
dividing the profits among themselves.
Issue:
Whether or not there existed an employer-employee relationship between the petitioners and
respondent.
Ruling:
The elements to determine the existence of an employment relationship are: (a) the selection
and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and
(d) the employer’s power to control the employee’s conduct. The most important element is
the employer’s control of the employee’s conduct, not only as to the result of the work to be
done, but also as to the means and methods to accomplish it.
It is settled that no particular form of evidence is required to prove the existence of an employer-
employee relationship. Any competent and relevant evidence to prove the relationship may
be admitted.
In this case, the documentary evidence presented by respondent to prove that he was an
employee of petitioner are as follows: (a) a document denominated as “payroll” (dated July
31, 2001 to March 15, 2002) certified correct by petitioner, which showed that respondent
received a monthly salary of P7,000, with the corresponding deductions due to absences
incurred by respondent; and two copies of petty cash 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. 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.
On the other hand, petitioner failed to prove that his relationship with respondent was one of
partnership. Such claim was not supported by any written agreement.
Charlie Jao vs Bcc Products Sales, Inc.
GR No. 163700, April 18, 2012
Facts:
Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President,
respondent Terrance Ty (Ty), employed him as comptroller starting from September 1995 with a
monthly salary of P20,000.00 to handle the financial aspect of BCC's business; that on October
19, 1995, the security guards of BCC, acting upon the instruction of Ty, barred him from entering
the premises of BCC where he then worked; that his attempts to report to work in November
and December 12, 1995 were frustrated because he continued to be barred from entering the
premises of BCC; and that he filed a complaint dated December 28, 1995 for illegal dismissal,
reinstatement with full 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:
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;
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.
Legend Hotel vs Realuyo
GR 153511, July 18, 2012
Facts:
This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a
hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for
alleged unfair labor practice, constructive illegal dismissal, and the
underpayment/nonpayment of his premium pay for holidays, separation pay, service incentive
leave pay, and 13111 month pay.
Respondent averred that he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant
from September 1992 with an initial rate of P400.00/night that was given to him after each night’s
performance; that his rate had increased to P750.00/night; and that during his employment, he
could not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for
three to six times/week. He added that the Legend Hotel’s restaurant manager had required
him to conform with the venue’s motif; that he had been subjected to the rules on employees’
representation checks and chits, a privilege granted to other employees; that on July 9, 1999,
the management had notified him that as a cost-cutting measure his services as a pianist would
no longer be required effective July 30, 1999; that he disputed the excuse, insisting that Legend
Hotel had been lucratively operating as of the filing of his complaint; and that the loss of his
employment made him bring his complaint.2
Issue:
Whether there exists an employer-employee relationship
Ruling:
Employer-employee relationship existed between the parties. The issue of whether or not an
employer-employee relationship existed between petitioner and respondent is essentially a
question of fact. The factors that determine the issue include who has the power to select the
employee, who pays the employee’s wages, who has the power to dismiss the employee, and
who exercises control of the methods and results by which the work of the employee is
accomplished.10 Although no particular form of evidence is required to prove the existence of
the relationship, and any competent and relevant evidence to prove the relationship may be
admitted,a finding that the relationship exists must nonetheless rest on substantial evidence,
which is that amount of relevant evidence that a reasonable mind might accept as adequate
to justify a conclusion.
A review of the circumstances reveals that respondent was, indeed, petitioner’s employee. He
was undeniably employed as a pianist in petitioner’s Madison Coffee Shop/Tanglaw Restaurant
from September 1992 until his services were terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection at the time it entered into the
service contract dated September 1, 1992 with respondent. This is true, notwithstanding
petitioner’s insistence that respondent had only offered his services to provide live music at
petitioner’s Tanglaw Restaurant, and despite petitioner’s position that what had really transpired
was a negotiation of his rate and time of availability. The power of selection was firmly
evidenced by, among others, the express written recommendation dated January 12, 1998 by
Christine Velazco, petitioner’s restaurant manager, for the increase of his remuneration.
Secondly, petitioner argues that whatever remuneration was given to respondent were only his
talent fees that were not included in the definition of wage under the Labor Code. Respondent
was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights
a week. Such rate of remuneration was later increased to P750.00 upon restaurant manager
Velazco’s recommendation. There is no denying that the remuneration denominated as talent
fees was fixed on the basis of his talent and skill and the quality of the music he played during
the hours of performance each night, taking into account the prevailing rate for similar talents
in the entertainment industry
Respondent’s remuneration, albeit denominated as talent fees, was still considered as included
in the term wage in the sense and context of the Labor Code, regardless of how petitioner
chose to designate the remuneration.
Thirdly, the power of the employer to control the work of the employee is considered the most
significant determinant of the existence of an employer-employee relationship. This is the so-
called control test, and is premised on whether the person for whom the services are performed
reserves the right to control both the end achieved and the manner and means used to achieve
that end.
A review of the records shows, however, shows that respondent performed his work as a Pianist
under petitioner’s supervision and control. Specifically, petitioner’s control of both the end
achieved and the manner and means used to achieve that end was demonstrated by the
following, to wit:
He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to
10:00 pm, three to six times a week;
He could not choose the place of his performance;
The restaurant’s manager required him at certain times to perform only Tagalog songs or music,
or to wear barong Tagalog to conform to the Filipiniana motif; and
He was subjected to the rules on employees’ representation check and chits, a privilege
granted to other employees.
The New Philippine Skylanders, Inc., vs. Dakila
G.R. No. 199547, Sept. 24, 2012
Facts:
November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union
affiliated with the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won
in the certification election conducted among the rank and file employees of Philippine
Skylanders, Inc. (PSI). Its rival union, Philippine Skylanders Employees Association-WATU (PSEA-
WATU) immediately protested the result of the election before the Secretary of Labor.
In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason
PAFLU’s supposed deliberate and habitual dereliction of duty toward its members. Attached to
the notice was a copy of the resolution adopted and signed by the officers and members of
PSEA authorizing their local union to disaffiliate from its mother federation.
PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its
name to Philippine Skylanders Employees Association -National Congress of Workers (PSEA-
NCW), and to maintain continuity within the organization, allowed the former officers of PSEA-
PAFLU to continue occupying their positions as elected officers in the newly-forged PSEA-NCW.
On 17 March, 1994, PSEA-NCW entered into a collective bargaining agreement with PSI which
was immediately registered with the Department of Labor and Employment.
PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied
the request.
PAFLU through Serafin Ayroso filed a complaint for unfair labor practice against PSI, its president
Mariles Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSI’s
refusal to bargain collectively with its workers, the company through its president and personnel
manager, was also liable for interfering with its employees’ union activities
Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco
Dakila. Through Ayroso PAFLU claimed that Dakila was present in PSEA’s organizational meeting
thereby confirming his illicit participation in union activities. Ayroso added that the members of
the local union had unwittingly fallen into the manipulative machinations of PSI and were lured
into endorsing a collective bargaining agreement which was detrimental to their interests.
PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional
party respondents. PAFLU averred that the local officers of PSEA-PAFLU, namely Macario
Cabanias, Pepito Rodillas, Sharon Castillo, Danilo Carbonel, Manuel Eda, Rolando Felix, Jocelyn
Fronda, Ricardo Lumba, Joseph Mirasol, Nerisa Mortel, Teofilo Quirong, Leonardo Reyes, Manuel
Cadiente, and Herminia Riosa, were equally guilty of unfair labor practice since they brazenly
allowed themselves to be manipulated and influenced by petitioner Francisco Dakila.
Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was
an inter-union conflict which lay beyond the jurisdiction of the Labor Arbiter. PSEA was no longer
affiliated with PAFLU, Ayroso or PAFLU for that matter had no personality to file the instant
complaint.
Labor Arbiter declared PSEA’s disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their
respective officers guilty of unfair labor practice.
As PSEA-NCW’s personality was not accorded recognition, its collective bargaining agreement
with PSI was struck down for being invalid.
PSI, PSEA and their respective officers appealed to the National Labor Relations Commission
(NLRC). But the NLRC upheld the Decision 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.
Tesoro et al., vs. Metro Manila Retreaders Inc., et al.,
GR No. 171482, March 12, 2014
This case concerns the effect on the status of employment of employees who entered into a
Service Franchise Agreement with their employer.
Facts:
On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro, Pedro Ang, and
Gregorio Sharp used to work as salesmen for respondents Metro Manila Retreaders, Inc.,
Northern Luzon Retreaders, Inc., or Power Tire and Rubber Corporation. These are sister
companies collectively called “Bandag”. Bandag offered repair and retread services for used
tires. In 1998, however, Bandag developed a franchising scheme that would enable others to
operate tire and retreading businesses using its trade name and service system. Petitioners quit
their jobs as salesmen and entered into separate Service Franchise Agreements (SFAs) with
Bandag for the operation of their respective franchises. Under this SFA, Bandag would provide
funding with the 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, non–payment 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 employer–employee relationship existed
between petitioners and Bandag.
Issue:
Whether or not petitioners remained to be Bandag’s salesmen under the franchise scheme it
entered into with them.
Ruling:
No, petitioners were no longer employees of Bandag the moment they entered into the SFA.
Franchising is a business method of expansion that allows an individual or group of individuals to
market a product or a service and to use of the patent, trademark, trade name and the systems
prescribed by the owner.
The tests for determining employer–employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer’s power to control the employee with respect to the means and methods by
which the work is to be accomplished. The last is called the “control test,” the most important
element.
When petitioners agreed to operate Bandag’s franchise branches in different parts of the
country, they knew that this substantially changed their former relationships. They were to cease
working as Bandag’s salesmen, the positions they occupied before they ventured into running
separate Bandag branches. They were to cease receiving salaries or commissions. Their incomes
were to depend on the profits they made. Yet, petitioners did not then complain of constructive
dismissal. They took their chances, ran their branches, Gregorio Sharp in La Union for several
months and Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan for over a year. Clearly, their
belated claim of constructive dismissal is quite hollow.
It is pointed out that Bandag continued, like an employer, to exercise control over petitioners’
work. It points out that Bandag: (a) retained the right to adjust the price rates of products and
services; (b) imposed minimum processed tire requirement (MPR); (c) reviewed and regulated
credit applications; and (d) retained the power to suspend petitioners’ services for failure to
meet service standards. But uniformity in prices, quality of services, and good business practices
are the essence of all franchises. A franchisee will damage the franchisor’s business if he sells at
different prices, renders different or inferior services, or engages in bad business practices. These
business constraints are needed to maintain collective responsibility for faultless and reliable
service to the same class of customers for the same prices.
This is not the “control” contemplated in employer–employee relationships. Control in such

relationships addresses the details of day to day work like assigning the particular task that has
to be done, monitoring the way tasks are done and their results, and determining the time during
which the employee must report for work or accomplish his assigned task.
Petitioners cannot use the revolving funds feature of the SFAs as evidence of their employer–
employee 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.
Royale Homes Marketing Corporation vs
G.R. No. 195190, July 28, 2014
Facts:
In 1994, 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, the last of which covered the period January 1 to December 31, 2003
where he held the position of Division 5 Vice-President-Sales.
Alcantara filed a Complaint for Illegal Dismissal9 against Royale Homes and its President Matilde
Robles, Executive Vice-President for Administration and Finance Ma. Melinda Bernardino, and
Executive Vice- President for Sales Carmina Sotto. Alcantara alleged that he is a regular
employee of Royale Homes since he is performing tasks that are necessary and desirable to its
business; that in 2003 the company gave him P1.2 million for the services he rendered to it; that
in the first week of November 2003, however, the executive officers of Royale Homes told him
that they were wondering why he still had the gall to come to office and sit at his table;10 and
that the acts of the executive officers of Royale Homes amounted to his dismissal from work
without any valid or just cause and in gross disregard of the proper procedure for dismissing
employees.
Royale Homes, on the other hand, vehemently denied that Alcantara is its employee. It argued
that the appointment paper of Alcantara is clear that it engaged his services as an
independent sales contractor for a fixed term of one year only. He never received any salary,
13th month pay, overtime pay or holiday pay from Royale Homes as he was paid purely on
commission basis. In addition, Royale Homes had no control on how Alcantara would
accomplish his tasks and responsibilities as he was free to solicit sales at any time and by any
manner which he may deem appropriate and necessary. He is even free to recruit his own sales
personnel to assist him in pursuance of his sales target.
According to Royale Homes, Alcantara decided to leave the company after his wife, who was
once connected with it as a sales agent, had formed a brokerage company that directly
competed with its business, and even recruited some of its sales agents. Although this was
against the exclusivity clause of the contract, Royale Homes still offered to accept Alcantara’s
wife back so she could continue to engage in real estate brokerage, albeit exclusively for
Royale Homes.
Issue:
Whether Alcantara was an independent contractor or an employee of Royale Homes.
Ruling:
Alcantara was an independent contractor.
The primary evidence of the nature of the parties’ relationship in this case is the written contract
that they signed and executed in pursuance of their mutual agreement. 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,27 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.
In determining the existence of an employer-employee relationship, this Court has generally

relied on the four-fold test, to wit: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the
employee with respect to the means and methods by which the work is to be
accomplished.29 Among the four, the most determinative factor in ascertaining the existence
of employer-employee relationship is the “right of control test”.
A person who performs work for another and is subjected to its rules, regulations, and code of
ethics does not necessarily become an employee.34 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 Court agrees with Royale Homes that 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. Understandably, Royale Homes has to fix the price,
impose requirements on prospective buyers, and lay down the terms and conditions of the sale,
including the mode of payment, which the independent contractors must follow. It is also
necessary for Royale Homes to allocate its inventories among its independent contractors,
determine who has priority in selling the same, grant commission or allowance based on
predetermined criteria, and regularly monitor the result of their marketing and sales efforts.
Guidelines indicative of labor law “control,” as the first Insular Life case tells us, should not merely
relate to the mutually desirable result intended by the contractual relationship; they must have
the nature of dictating the means or methods to be employed in attaining the result, or of fixing
the methodology and of binding or restricting the party hired to the use of these means.
The element of payment of wages is also absent in this case. As provided in the contract,
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.
Fuji Television Network Inc. vs Espiritu,
GR No. 204944-45, December 3, 2014
Facts:
In 2005, Arlene S. Espiritu (“Arlene”) was engaged by Fuji Television Network, Inc. (“Fuji”) as a
news correspondent/producer4 “tasked to report Philippine news to Fuji through its Manila
Bureau field office.”5 Arlene’s 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.
Sometime in January 2009, Arlene was diagnosed with lung cancer.7 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”8 since it would be difficult for her to
perform her job.9She “insisted that she was still fit to work as certified by her attending physician.”
After several verbal and written communications,11 Arlene and Fuji signed a non-renewal
contract on May 5, 2009 where it was stipulated that her contract would no longer be renewed
after its expiration on May 31, 2009. The contract also provided that the parties release each
other from liabilities and responsibilities under the employment contract.
In consideration of the non-renewal contract, Arlene “acknowledged receipt of the total
amount of US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-
end bonus, mid-year bonus, and separation pay.”13 However, Arlene affixed her signature on
the non-renewal contract with the initials “U.P.” for “under protest.”
On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a complaint for
illegal dismissal and attorney’s fees with the National Capital Region Arbitration Branch of the
National Labor Relations Commission. 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.
Arlene 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.
Issue:
Whether Arlene was a regular employee with a fixed-term contract.
Ruling:
Yes. Arlene was a regular employee with a fixed-term contract.
The test for determining regular employment is whether 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” as the test for determining regular employment.
In determining whether an employment should be considered regular or non-regular, the

applicable test is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The standard, supplied by
the law itself, is whether the work undertaken is necessary or desirable in the usual business or
trade of the employer, a fact that can be assessed by looking into the nature of the services
rendered and its relation to the general scheme under which the business or trade is pursued in
the usual course. It is distinguished from a specific undertaking that is divorced from the normal
activities required in carrying on the particular business or trade.205
However, there may 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.
In determining whether an employment should be considered regular or non-regular, the

applicable test is the reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. The standard, supplied by
the law itself, is whether the work undertaken is necessary or desirable in the usual business or
trade of the employer, a fact that can be assessed by looking into the nature of the services
rendered and its relation to the general scheme under which the business or trade is pursued in
the usual course. It is distinguished from a specific undertaking that is divorced from the normal
activities required in carrying on the particular business or trade.
However, there may 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.
Arlene’s contract indicating a fixed term did not automatically mean that she could never be
a regular employee. This is precisely what Article 280 seeks to avoid. The ruling in Brent remains
as the exception rather than the general rule.
Further, 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. This was recognized in 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.
Cabaobas et. al., v. Pepsi Cola,
GR No. 176908, March 25, 2015
Facts:
In 1999, Pepsi-Cola Products Philippines, Inc. (PCCPI) Tanauan plant allegedly incurred business
losses in the total amount of Php 29,167,390.00. To avert further losses, PCCPI implemented a
company-wide retrenchment program denominated as Corporate-wide Rightsizing Program
(CRP) and retrenched 47 employees in Tanauan Plant. 27 of the said employees lead by Molon
filed complaints for illegal dismissal before NLRC. Petitioners were permanent and regular
employees were able to receive letters informing them of the cessation. Petitioners alleged that
PCPPI was not facing serious financial losses because after their termination, it regularized 4
employees and hired replacement for the 47 previously dismissed employees and alleged that
CRP was just designed to prevent their union (LEPCEU-ALU). PCCPI countered that petitioners
were dismissed pursuant to its CRP to save the company from total bankcruptcy and collapse
thus it sent notices of termination to them and DOLE. In support of their argument that CRP is a
valid exercise of management prerogative, PCPPI submitted audited financial statements
showing that it suffered financial reverses in 1998 in the total of 700M, 27M of which was incurred
in Tanauan Plant.
Labor Arbiter rendered the dismissal of petitioners (Cabaobas et. al--10 from the 47 employees
who filed) to be illegal. NLRC declared the retrenchment program of PCPPI, thru CRP, a valid
exercise of management prerogatives. NLRC also declared that the union strike on July, 1999
illegal for having been conducted without legal authority and without observing the 7day strike
vote notice requirement as provided in Sec 2 and 7 of Rule XXII, Book V of the Omnibus Rules
Implementing Art 263 of the Labor Code. CA affirmed the NLRC decision.
On the other hand, when Molon et. al (the rest of the 37 employees) also questioned the
decision of NLRC in a separate CA. In this case, CA declared the strike conducted by the union
as legal and that the retrenchment effected is contrary to prescribed rules and procedure,
declaring that Molon et. al were illegally terminated.
Cabaobas et. al filed for petition for review assailing the decision in Molon et. al’s case.
However, during the pendency of the petition, the Court rendered a decision in Molon et. al
reversing the CA’s decision declaring that PCPPI had validly implemented its retrenchment
program.
Issue:
1) WON there is valid retrenchment.
2) WON the true motive of the retrenchment program was to prevent their union.
Ruling:
1) The Court applied the principle of stare decisis et non quieta movere (to adhere to
precedents and not to unsettle things which are established). Under this doctrine, when a court
has laid down a principle of law as applicable to a certain state of facts, it will adhere to that
principle and apply it to all future cases in which the facts are substantially the same; even
though the parties may be different. There is no dispute that the issues, subject matters and
causes of action between the parties in PCPPI v. Molon and the present case of Cabaobas are
identical namely the validity of the retrenchment program and the legality of its employees
termination. Upon evaluation of petitioners’ arguments, the Court still finds no reason to disturb
the CA ruling that affirmed the NLRC.
Ruling in Molon et. al: It is the prerogative of an employer to retrench its employees and is justified
if employer is able to prove the a clear and convincing evidence for its validity thru:
Retrenchment is reasonable necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real or if only expected
are reasonably imminent as perceived objectively and in good faith by the employer.
the employer served written notice both to the employees and to DOLE at least one month prior
to the intended date of retrenchment.
The employer pays the retrenched employees separation pay equivalent to 1 month or at least
½ month for every year of service, whichever is higher.
The employer exercises its prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right to security of
tenure.
The employer used fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status, efficiency, seniority, physical fitness,
age and financial hardship for certain workers.
In due regard of these requisites, the Court observes that PCPPI had validly implemented its
retrenchment program:
PCPPIs financial statements are substantial evidence.
Notice requirement were complied
Absent any clear showing of abuse, arbitrariness or capriciousness
Employees had already been paid the requisite separation pay.
Pepsi had NOT singled out members of the LEPCEU-ALU in implementing its retrenchment
programs because records reveal that the members of the company union (i.e., LEPCEU-
UOEF#49) were likewise among those retrenched
Records indicate that Pepsi proceed to implement its rightsizing program based on fair and
reasonable criteria recommended by the company supervisors.
2) Pepsi cannot be held to have used retrenchment to avoid the labor union of LECPCEU-ALU.
Pepsi tried to sit-down with its employees to arrive at mutually beneficial criteria which would
have been adopted for their intended retrenchment. It was rejected by the unions. It bears
stressing that all the 47 employees signed individual release and quitclaims and settled their
complaints with PCPPI with the assistance of LEPCEU-ALU. Furthermore, PCPPI’s rightsizing
program was implemented company-wide basis dilutes the claim of the employees that PCPPI’s
retrenchment was just a scheme to prevent union activities. Therefore, absent any perceived
threat to LEPCEU-ALU’s existence or a violation of employee’s right to self-organization---as
demonstrated by the foregoing actuations--- PCPPI cannot be said to have committed union
busting in this case.
Begino et al., vs. ABS-CBN Corp.,
GR No. 199166, April 20, 2015
Facts:
Respondent ABS-CBN Corporation (formerly ABS-CBN Broadcasting Corporation) is a television

and radio broadcasting corporation which, for its Regional Network Group in Naga City,
employed respondent Amalia Villafuerte (Villafuerte) as Manager. There is no dispute regarding
the fact that, thru Villafuerte, ABS-CBN engaged the services of petitioners Nelson Begino
(Begino) and Gener Del Valle (Del Valle) sometime in 1996 as Cameramen/Editors for TV
Broadcasting. Petitioners Ma. Cristina Sumayao (Sumayao) and Monina Avila-Llorin (Llorin) were
likewise similarly engaged as reporters sometime in 1996 and 2002, respectively. With their
services engaged by respondents thru Talent Contracts which, though regularly renewed over
the years, provided terms ranging from three (3) months to one (1) year, petitioners were given
Project Assignment Forms which detailed, among other matters, the duration of a particular
project as well as the budget and the daily technical requirements thereof. In the aforesaid
capacities, petitioners were tasked with coverage of news items for subsequent daily airings in
respondents’ TV Patrol Bicol Program.
Claiming that they were regular employees of ABS-CBN, petitioners

filed against respondents the complaint5 docketed as Sub-RAB 05-04- 00041-07 before the
National Labor Relations Commission’s (NLRC) SubRegional Arbitration Branch No. 5, Naga City.
In support of their claims for regularization, underpayment of overtime pay, holiday pay, 13th
month pay, service incentive leave pay, damages and attorney's fees, petitioners alleged that
they performed functions necessary and desirable in ABS-CBN's business.
Issue:
Whether or not the petitioners were regular employees.
Ruling:
Yes. The petitioners were regular employees.
To determine the existence of said relation, 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 ofdismissal; and (d) the employer's power to control the employee on the means and
methods by which the work is accomplished.23 Of these criteria, the so-called “control test” is
generally regarded as the most crucial and determinative indicator of the presence or absence
of an employer-employee relationship. Under this test, an employer-employee relationship is
said to exist where the person for whom the services are performed reserves the right to control
not only the end result but also the manner and means utilized to achieve the same.
Insofar as the nature of one’s employment is concerned, Article 280 of the Labor Code of
the Philippines also provides as follows:
ART. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the employment is for the
duration of the season. An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue while
such actually exists.
It has been ruled that the foregoing provision contemplates four kinds of employees, namely:
(a) regular employees or those who have been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; (b) project employees or
those whose employment has been fixed for a specific project or undertaking, thecompletion
or termination of which has been determined at the time of the
engagement of the employee; (c) seasonal employees or those who work or perform services
which are seasonal in nature, and the employment is for the duration of the season; and (d)
casual employees or those who are not regular, project, or seasonal employees.26 To the
foregoing classification of employee, jurisprudence has added that of contractual or fixed term
employee which, if not for the fixed term, would fall under the category of regular employment
in view of the nature of the employee’s engagement, which is to perform activity usually
necessary or desirable in the employer’s business.
The Court finds that, notwithstanding the nomenclature of their Talent Contracts and/or Project
Assignment Forms and the terms and condition embodied therein, petitioners are regular
employees of ABS-CBN. Time and again, it has been ruled that the test to determine whether
employment is regular or not is the reasonable connection between the activity performed by
the employee in relation to the business or trade of the employer.28 As cameramen/editors and
reporters, petitioners were undoubtedly performing functions necessary and essential to ABS-
CBN’s business of broadcasting television and radio content. It matters little that petitioners’
services were engaged for specified periods for TV Patrol Bicol and that they were paid
according to the budget allocated therefor. Aside from the fact that said program is a regular
weekday fare of the ABS-CBN’s Regional Network Group in Naga City, the record shows that,
from their initial engagement in the aforesaid capacities, petitioners were continuously re-hired
by respondents over the years. To the mind of the Court, respondents’ repeated hiring of
petitioners for its long-running news program positively indicates that the latter were ABS-CBN’s
regular employees. If the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems the repeated 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 employer’s
business.
As cameramen/editors and reporters, it also appears that petitioners were subject to the control
and supervision of respondents which, first and foremost, provided them with the equipments
essential for the discharge of their functions. Prepared at the instance of respondents,
petitioners’ Talent Contracts tellingly provided that ABS-CBN retained “all creative,
administrative, financial and legal control” of the program to which they were assigned. Aside
from having the right to require petitioners “to attend and participate in all promotional or
merchandising campaigns, activities or events for the Program,” ABS-CBN required the former
to perform their functions “at such locations and Performance/Exhibition Schedules” it provided
or, subject to prior notice, as it chose determine, modify or change. Even if they were unable to
comply with said schedule, petitioners were required to give advance notice, subject to
respondents’ approval.34 However obliquely worded, the Court finds the foregoing terms and
conditions demonstrative of the control respondents exercised not only over the results of
petitioners’ work but also the means employed to achieve the same.
Social Security System v. Ubana
GR No. 200114, August 25, 2015
Facts:
In her complaint for damages against the Social Security System (SSS), the DBP Service
Corporation, and the SSS Retirees Association, Debbie alleged that in July 1995 she applied for
employment with the SSS. Despite passing all the examinations and submitting the
requirements, she was referred to the DBP Service Corporation, passed the pre-employment
examination and was referred to SSS Naga for training and immediate deployment to SSS
Daet. She was made to sign a six-month Service Contract in May, 1996; and when she reported
to the SSS Daet Branch, she was assigned to various sections and divisions as Processor and Data
Encoder. Her salary was only P229.00 daily compared to a regular SSS Processor who receives
P846.45 daily. While her service contract with the DBP Service Corporation was never renewed,
she continued to be employed by the SSS; she was continually assured of being absorbed into
the SSS; in fact she was qualified for the position as she passed the required training. Because
of the oppressive and prejudicial treatment of the SSS, she was forced to resign in August 2002
as she could not stand anymore the exploitation, the agony of dissatisfaction, anxiety,
demoralization, and injustice. The defendants conspired to exploit her and violate civil service
rules and regulations and Civil Code provisions on Human relations, specifically Articles 19, 20
and 21. She prayed for actual damages by way of unrealized income, moral and exemplary
damages, and attorney’s fees.
The defendants filed a motion to dismiss for lack of jurisdiction, averring that the complaint was
predicated on the claims that arose out of employer-employee relations, thus cognizable by
the NLRC. At first, the RTC granted the motion to dismiss, but on motion for reconsideration by
Debbie, the RTC reversed itself and denied the motion to dismiss. It held that a perusal of the
complaint filed by Debbie substantially alleges that the case is for Damages. Having denied
the existence of employer-employee relationship between it and Debbie, and the case is for
damages, the regular trial courts, not the CSC has jurisdiction over the case.
SSS moved to reconsider, but the RTC denied, hence it filed a petition for certiorari with the
CA. The appellate court dismissed the petition, stating:
“It is the character of the principal relief sought that appears essential in this connection. Where
such principal relief is to be granted under labor legislation or a collective bargaining
agreement, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even
though a claim for damages might be asserted as an incident to such claim.
The pivotal question is whether the Labor Code has any relevance to the principal relief sought
in the complaint. As pointed out earlier, Ubaña did not seek refuge from the Labor Code in
asking for the award of damages. It was the transgression of Article[s] 19 and 20 of the New Civil
Code that she was insisting in wagering this case. The primary relief sought herein is for moral
and exemplary damages for the abuse of rights. The claims for actual damages for unrealized
income are the natural consequence for abuse of such rights.”
Issue:
Whether or not the RTC has jurisdiction over the complaint filed by Debbie.
Ruling:
The Court denies the Petition.
In Home Development Mutual Fund v. Commission on Audit,it was held that while they
performed the work of regular government employees, DBP Service Corporation personnel are
not government personnel, but employees of DBP Service Corporation acting as an
independent contractor. Applying the foregoing pronouncement to the present case, it can
be said that during respondent’s stint with petitioner, she never became an SSS employee, as
she remained an employee of DBP Service Corporation and SSS Retirees Association – the two
being independent contractors with legitimate service contracts with SSS.
Indeed, “[i]n legitimate job contracting, no employer-employee relation exists between the
principal and the job contractor’s employees. The principal is responsible to the job contractor’s
employees only for the proper payment of wages.”
In her Complaint, respondent acknowledges that she is not petitioner’s employee, but that
precisely she was promised that she would be absorbed into the SSS plantilla after all her years
of service with SSS; and that as SSS 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. In its pleadings, petitioner denied the existence of an employer-employee relationship
between it and respondent; in fact, it insists on the validity of its service agreements with DBP
Service Corporation and SSS Retirees Association – meaning that the latter, and not SSS, are
respondent’s true employers. Since both parties admit that there is no employment relation
between them, then there is no dispute cognizable by the NLRC. Thus, respondent’s case is
premised on the claim that in paying her only P229.00 daily – or P5,038.00 monthly – as against
a monthly salary of P18,622.00, or P846.45 daily wage, paid to a regular SSS Processor at the
time, petitioner exploited her, treated her unfairly, and unjustly enriched itself at her expense.
For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to acquire
jurisdiction over a dispute, there must be an employer-employee relation between the parties
thereto.
x x x It is well settled in law and jurisprudence that where no employer-employee relationship

exists between the parties and no issue is involved which may be resolved by reference to the
Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial
Court that has jurisdiction, x x x The action is within the realm of civil law hence jurisdiction over
the case belongs to the regular courts. While the resolution of the issue involves the application
of labor laws, reference to the labor code was only for the determination of the solidary liability
of the petitioner to the respondent where no employer-employee relation exists. 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

xxx
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. At
first glance, it is indeed unfair and unjust that as, Processor who has worked with petitioner for six
long years, she was paid only P5,038.00 monthly, or P229.00 daily, while a regular SSS employee
with the same designation and who performs identical functions is paid a monthly salary of
P18,622.00, or P846.45 daily wage. Petitioner may not hide under its service contracts to deprive
respondent of what is justly due her. As a vital government entity charged with ensuring social
security, it should lead in setting the example by treating everyone with justice and fairness. If it
cannot guarantee the security of those who work for it, it is doubtful that it can even discharge
its directive to promote the social security of its members in line with the fundamental mandate
to promote social justice and to insure the well-being and economic security of the Filipino
people.
In this jurisdiction, the “long honored legal truism of ‘equal pay for equal work'” has been
“impregnably institutionalized;” “[p]ersons who work with substantially equal qualifications, skill,
effort and responsibility, under similar conditions, should be paid similar salaries.” “That public
policy abhors inequality and discrimination is beyond contention. Our Constitution and laws
reflect the policy against these evils. The Constitution in the Article on Social Justice and Human
Rights exhorts Congress to ‘give highest priority to the enactment of measures that protect and
enhance the right of all people to human dignity, reduce social, economic, and political
inequalities.’ 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’.”
Century Properties Inc. v Babiano
GR no. 220978. July 5, 2016
Facts:
Babiano was hired by CPI as Director of Sales, and eventually appointed as Vice President for
Sales. As CPFs 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 eventually
promoted as Project Director. 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 two contracts which stipulated that no employer-employee
relationship exists between Concepcion and CPI.
After receiving reports that Babiano provided a competitor with information regarding CPFs
marketing strategies, spread false information regarding CPI and its projects, recruited CPI's
personnel to join the competitor, and for being absent without official leave (AWOL) for five (5)
days, CPI, through its Executive Vice President for Marketing and Development, sent Babiano a
Notice to Explain why he should not be charged with disloyalty, conflict of interest, and breach
of trust and confidence for his actuations.
Babiano tendered his resignation and revealed that he had been accepted by a competitor
of CPI. A Notice of Termination was served 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 CPFs marketing strategies; and (c) recruiting CPI personnel to join a competitor.
Concepcion likewise resigned.
Respondents filed a complaint for non-payment of commissions and damages against CPI. CPI
argued that Babiano is merely its agent tasked with selling its projects and was afforded due
process in the termination of employment with just causes. CPI contested that the NLRC had no
jurisdiction to hear the same because there were no employer-employee relations between
them.
Labor Arbiter (LA) ruled in CPI's favor and dismissed the complaint for lack of merit thereby
resulting in the forfeiture of his unpaid commissions in accordance with the same clause. The
NLRC reversed and set aside the LA ruling. The CA affirmed the NLRC ruling.
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:
The CA erred in limiting the "Confidentiality of Documents and Non-Compete Clause" only to
acts done after the cessation of the employer-employee relationship or to the "post-
employment" relations of the parties. As clearly stipulated, 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 because 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 Babiano breached said clause
while employed by CPI, which would then resolve the issue of his entitlement to his unpaid
commissions.
The CA correctly ruled that since there exists an employer-employee relationship between
Concepcion and CPI, the labor tribunals correctly assumed jurisdiction over her money claims.
The CA aptly pointed out that the NLRC failed to account for all the unpaid commissions due
to Concepcion for the period of August 9, 2008 to August 8, 2011. Indeed, Concepcion's right
to her earned commissions is a substantive right which cannot be impaired by an erroneous
computation of what she really is entitled to. Hence, following the dictates of equity and in order
to arrive at a complete and just resolution of the case, and avoid a piecemeal dispensation of
justice over the same, the CA correctly recomputed Concepcion's unpaid commissions,
notwithstanding her failure to seek a review of the NLRC's computation of the same.
In sum, the Court thus holds that the commissions of Babiano were properly forfeited for violating
the "Confidentiality of Documents and Non-Compete Clause." On the other hand, CPI remains
liable for the unpaid commissions of Concepcion in the sum of P591,953.05.
Joaquin Lu vs Tirso Enopia, et al.
G.R. No. 197899. March 6, 2017
Facts:
Respondents were hired as crew members of the fishing mother boat F/B MG-28 by the
petitioner who is the sole proprietor of Mommy Gina Tuna Resources (MGTR). Petitioner and
respondents had an income-sharing arrangement wherein 55% goes to petitioner and 45% to
the crew members with an additional 4% as “backing incentive.” Sometime in August 1997, 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.
Consequently, petitioner terminated their services.
On August 25 1997, respondents filed their complaint for illegal dismissal, monetary claims and
damages. They alleged that their refusal to sign the Joint Venture Fishing Agreement is not a just
cause for their termination. On the other hand, Petitioner denied having dismissed petitioners,
claiming that their relationship was one of joint venture and alleged that there was no employer-
employee relationship as its elements were not present, that: it was the piado (master fisherman)
who hired the crew members; 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. The Labor Arbiter dismissed the case for lack of merit finding that
there was no employer-employee relationship but a joint venture and that the checker and the
use of the radio were for the purpose of monitoring and supplying the logistics requirements of
the fishermen while in the sea which is also a mechanism to ensure that the proper sharing
system was implemented and does not constitute supervision. The LA Decision was affirmed by
the NLRC. Upon subsequent petitions for reconsideration, the case was remanded to CA and
rendered the herein assailed decision, reversing the NLRC, founding employer-employee
relationship between petitioner and respondents. Hence, this petition.
Issue:
Whether or not an employer-employee relationship exist between petitioner and respondents.
Ruling:
The Court denied the petition. 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. The Court find all these elements present in this case.
Petitioner failed to rebut the evidence of the Social Security System (SSS) online inquiry system
printouts of the respondents which stated MGTR as employer. The coverage of he Social Security
Law is predicated on the existence of an employer- employee relationship. Moreover, if indeed
a joint venture was agreed upon between petitioner and respondents, why would these
fishermen obtain vale or cash advance, which is deducted from the 4% backing incentive fee
divided among the fishermen, from petitioner and not from the piado who allegedly hired and
had control over them.
Also, the petitioner exercised control over respondents. Applying the control test, such test
merely calls for 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. Hence, the communication with
respondents at sea via the petitioner’s radio operator and checker throughout the duration of
fishing operations showed control and supervision over respondent’s activities.
The payment on percentage share of the fish catch would not be sufficient to negate the
employer-employee relationship existing between them since compensation on a percentage
commission falls within the scope of the meaning of the term “wage” as defined under article
97(f) of the Labor Code.
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. Being regular employees, they are entitled to security of tenure, under
Section 3, Article XIII of the 1987 Constitution which, guarantees the right of employees to
continue in their employment absent a just or authorized cause for termination. The petitioners
act of asking respondents 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 hence not
one of those just causes for termination.
PT &T vs. NLRC
G.R. No. 118978; May 23, 1997
Facts:
Grace de Guzman was initially hired by petitioner as a reliever for a fixed period from November
21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Under the
Reliever Agreement which she signed with Petitioner Company, her employment was to be
immediately terminated upon expiration of the agreed period. Thereafter, from June 10, 1991
to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondent’s services as reliever
were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went
on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement,
her services were terminated.
It now appears that private respondent had made the 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
company’s policy of not accepting married women for employment.
Private respondent was dismissed from the company effective January 29, 1992, which she
readily contested by initiating a complaint for illegal dismissal. Labor Arbiter handed down a
decision declaring that private respondent, who had already gained the status of a regular
employee, was illegally dismissed by petitioner. On appeal to the National Labor Relations
Commission (NLRC), said public respondent upheld the labor arbiter and it ruled that private
respondent had indeed been the subject of an unjust and unlawful discrimination by her
employer, PT&T.
Issue:
Whether or not discrimination merely by reason of the marriage of a female employee is

expressly prohibited by Article 136.
Ruling:
SC ruled that the stipulation is violative of Art. 136 of the Labor Code.
An employer is free to regulate, according to his discretion and best business judgment, all
aspects of employment, “from hiring to firing,” except in cases of unlawful discrimination or those
which may be provided by law. Petitioner’s policy of not accepting or considering as
disqualified from work any woman worker who contracts marriage runs afoul of the test of, and
the right against, discrimination, afforded all women workers by our labor laws and by no less
than the Constitution.
Respondent’s act of concealing the true nature of her status from PT&T could not be properly
characterized as willful or in bad faith as she was moved to act the way she did mainly because
she wanted to retain a permanent job in a stable company. In other words, she was practically
forced by that very same illegal company policy into misrepresenting her civil status for fear of
being disqualified from work.
The government, to repeat, abhors any stipulation or policy in the nature of that adopted by
petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:
“ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a
condition of employment or continuation of employment that a woman shall not get married,
or to stipulate expressly or tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of marriage.”
Under American jurisprudence, job requirements which establish employer preference or

conditions relating to the marital status of an employee are categorized as a “sex-plus”
discrimination where it is imposed on one sex and not on the other. Further, the same should be
evenly applied and must not inflict adverse effects on a racial or sexual group which is
protected by federal job discrimination laws.
Petitioner’s policy is not only in derogation of the provisions of Article 136 of the Labor Code on
the right of a woman to be free from any kind of stipulation against marriage in connection with
her employment, but it likewise assaults good morals and public policy, tending as it does to
deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres
in the individual as an intangible and inalienable right.
Hence, while it is true that the parties to a contract may establish any agreements, terms, and
conditions that they may deem convenient, the same should not be contrary to law, morals,
good customs, public order, or public policy. Carried to its logical consequences, it may even
be said that petitioner’s policy against legitimate marital bonds would encourage illicit or
common-law relations and subvert the sacrament of marriage.
Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils.
G.R. No. 162994, Sept. 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 employee’s employment with the company, the management and the employee will
explore the possibility of a “transfer to another department in a non-counterchecking position”
or preparation for employment outside the company after six months.
Reminders from Tecson’s district manager did not stop him from marrying.Tecson married Bettsy,
an Astra’s 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 Glaxo’s milk
division in which the other company had no counterpart. Thereafter, he bought the matter to
Grievance Committee but the parties failed to resolve such issue, Glaxo offered Tecson a
separation pay of one-half (½) month pay for every year of service, or a total of P50,000.00 but
he declined the offer. On November 15, 2000, the National Conciliation and Mediation Board
(NCMB) rendered its Decision declaring as valid Glaxo’s policy on relationships between its
employees and persons employed with competitor companies, and affirming Glaxo’s right to
transfer Tecson to another sales territory.
Tecson filed for a petition for review on the CA and the CA promulgated that the NCMB did not
err in rendering its decision. A recon was filed in appellate court but it was denied, hence this
petition for certiorari. Petitioners contention it was violative of constitutional law which is the
equal protection clause and he was constructively dismissed while the 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 Glaxo’s employees is reasonable under the circumstances because
relationships of that nature might compromise the interests of the company. In laying down the
assailed company policy, Glaxo only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than
the Constitution recognizes the right of enterprises to adopt and enforce such a policy to
protect its right to reasonable returns on investments and to expansion and growth.
The challenged company policy does not violate the equal protection clause of the
Constitution as petitioners erroneously suggest. It is a settled principle that the commands of the
equal protection clause are addressed only to the state or those acting under color of its
authority.
From the wordings of the contractual provision and the policy in its employee handbook, it is
clear that Glaxo does not impose an absolute prohibition against relationships between its
employees and those of competitor companies. Its employees are free to cultivate relationships
with and marry persons of their own choosing. What the company merely seeks to avoid is a
conflict of interest between the employee and the company that may arise out of such
relationships.
There was no merit in Tecson’s contention that he was constructively dismissed when he was
transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-
Agusan del Sur sales area, and when he was excluded from attending the company’s seminar
on new products which were directly competing with similar products manufactured by Astra.
Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or unlikely; when there is a
demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by
an employer becomes unbearable to the employee. The record does not show that Tecson
was demoted or unduly discriminated upon by reason of such transfer.
Star Paper Corp., vs Simbol (2006)
G.R. 164774. April 12, 2006
Facts:
Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of
the company, whom he married. Prior to the marriage, Ongsitco advised the couple that should
they decide to get married, one of them should resign pursuant to a company policy to which
Simbol complied.
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 employee’s right to security of tenure.
The questioned policy may not facially violate Article 136 of the Labor Code but it creates a
disproportionate effect and under the disparate impact theory, the only way it could pass
judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit
disproportionate, effect. The failure of petitioners to prove a legitimate business concern in
imposing the questioned policy cannot prejudice the employee’s right to be free from arbitrary
discrimination based upon stereotypes of married persons working together in one company.
Del Monte Phils. V. Velasco
G.R. No. 153477; March 6, 2007
Facts:
Lolita Velasco was hired by Del Monte as seasonal employee and was subsequently regularized
by Del Monte. On June 1987, petitioner warned Velasco of its absences and was repeatedly
reminded that her absence without permission may result to forfeiture of her vacation leave.
Another warning was sent due to her absences without permission which eventually led to the
forfeiture of her vacation entitlement. On September 1994, a notice of hearing was sent to
Velasco informing her of the charges filed against her for violating the Absence without leave
rule. On January 1995, after the hearing, Del Monte terminated the services of Velasco due to
excessive absence without leave. Feeling aggrieved, Velasco filed a case for illegal dismissal.
She asserted that she was absent since she was suffering urinary tract infection and she was
pregnant.
She sent an application for leave to the supervisor. Upon check up of the company doctor,
Velasco was advised to rest. On the following check-ups, she was again advised to rest where
this time, she was not able to get secure a leave.
The Labor Arbiter rendered decision that she was an incorrigible absentee. Respondent
appealed to the NLRC. NLRC vacated the decision of the Labor Arbiter. It decided that
respondent was illegally dismissed and was entitled to reinstatement. Petitioner appealed to CA
where it dismissed its claim and affirmed NLRC, thus, this petition.
Issue:
Whether or not the dismissal was illegal?
Ruling:
Yes. In this case, by the measure of substantial evidence, what is controlling is the finding of the
NLRC and the CA that respondent was pregnant and suffered from related ailments. It would
be unreasonable to isolate such condition strictly to the dates stated in the Medical Certificate
or the Discharge Summary. It can be safely assumed that the absences that are not covered
by, but which nonetheless approximate, the dates stated in the Discharge Summary and
Medical Certificate, are due to the continuing condition of pregnancy and related illnesses,
and, hence, are justified absences.
The termination was illegal since it comes within the purview of the prohibited acts provided in
Article 137 of the Labor Code. Based on Article 137, it shall be unlawful for any employer (1) to
deny any woman employee the benefits provided for in this Chapter or to discharge any
woman employed by him for the purpose of preventing her from enjoying any of the benefits
provided under this Code; (2) to discharge such woman on account of her pregnancy, or while
on leave or in confinement due to her pregnancy; and (3) to discharge or refuse the admission
of such woman upon returning to her work for fear that she may again be pregnant.
The respondent was illegally dismissed by the petitioner on account of her pregnancy. The act
of the employer is unlawful, it being contrary to law.
YRASUEGUI V. PHIL. AIRLINE
GR NO. 168081; Oct. 17, 2008
Facts:
This case portrays the peculiar story of an international flight steward who was dismissed
because of his failure to adhere to the weight standards of the airline company.
Petitioner was a former international flight steward of PAL. He had problems meeting the
required weight standards for cabin and crew. He was advised to go on leave without pay
several times to address his weight concerns, to no avail. PAL had him grounded until such time
he satisfactorily complies with the weight standards and he was directed to report every two
weeks for weight checks.
On November 5, 1992, petitioner weighed 205 lbs, way beyond his ideal weight of 166 lbs. On
June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal
weight, and considering the utmost leniency extended to him which spanned a period covering
a total of almost five (5) years, his services were considered terminated effective immediately
The Labor Arbiter ruled that he was illegally dismissed. The Labor Arbiter held that the weight
standards of PAL are reasonable in view of the nature of the job of petitioner.[15] However, the
weight standards need not be complied with under pain of dismissal since his weight did not
hamper the performance of his duties.[16] Assuming that it did, petitioner could be transferred
to other positions where his weight would not be a negative factor. NLRC affirmed the decision
of the Labor Arbiter, with modifications.
The CA, however, reversed the ruling. Contrary to the NLRC ruling, the weight standards of PAL
are meant to be a continuing qualification for an employee’s position. The failure to adhere to
the weight standards is an analogous cause for the dismissal of an employee under Article
282(e) of the Labor Code in relation to Article 282(a). It is not willful disobedience as the NLRC
seemed to suggest.
Issue:
Whether or not the petitioner was illegally dismissed.
Ruling:
I. The obesity of petitioner is a ground for dismissal under Article 282(e)[44] of the Labor Code.
[T]he standards violated in this case were not mere orders of the employer; they were the
prescribed weights that a cabin crew must maintain in order to qualify for and keep his or her
position in the company. In other words, they were standards that establish continuing
qualifications for an employee’s position.
By its nature, these qualifying standards are norms that apply prior to and after an employee is
hired. They 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
II. The dismissal of petitioner can be predicated on the bona fide occupational qualification
defense. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Being
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.
SIP 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 SIP’s “contract as GMPC concessionaire.The termination of

the concession contract caused the termination of the respondents’ employment, prompting
them to file a complaint for illegal dismissal, with money claims, against SIP and the spouses
Pablo. NLRC ruled in favor of the petitioner and CA affirmed the ruling of NLRC.SIP seeks a
reversal of the appellate court’s ruling that it was the employer of the respondents, claiming
that it was merely a labor-only contractor of GMPC
Issue:
Whether or not SIP was liable to them for their statutory benefits, although it was not made to
answer for their lost employment due to the involuntary nature of the canteen’s closure
Ruling:
The employer-employee relationship issue.
The CA ruled out SIP’s claim that it was a labor-only contractor or a mere agent of GMPC. We
agree with the CA; SIP and its proprietors could not be considered as mere agents of GMPC
because they exercised the essential elements of an employment relationship with the
respondents such as hiring, payment of wages and the power of control, not to mention that
SIP operated the canteen on its own account as it paid a fee for the use of the building and for
the privilege of running the canteen. The fact that the respondents applied with GMPC in
February 2004 when it terminated its contract with SIP, is another clear indication that the two
entities were separate and distinct from each other. We thus see no reason to disturb the CA’s
findings.
The respondent’s money claims
We likewise affirm the CA ruling on the monetary award to Batolina and the other
complainants. The free board and lodging SIP furnished the employees cannot operate as a
set-off for the underpayment of their wages. We held in Mabeza v. National Labor Relations
Commissionthat the employer cannot simply deduct from the employee’s wages the value of
the board and lodging without satisfying the following requirements: (1) proof that 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.”
SLL INTERNATIONAL CABLES SPECIALIST vs. NLRC
G.R. 172161; March 2, 2011
Facts:
Sometime in 1996, and January 1997, private respondents were hired by petitioner Lagon as
apprentice or trainee cable/lineman. The three were paid the full minimum wage and other
benefits but since they were only trainees, they did not report for work regularly but came in as
substitutes to the regular workers or in undertakings that needed extra workers to expedite
completion of work. Soon after they were engaged as private employees for their Islacom
project in Bohol. Private respondents started on March 15, 1997 until December 1997. Upon the
completion of their project, their employment was also terminated. Private respondents
received the amount of P145.00, the minimum prescribed daily wage for Region VII. In July 1997,
the amount of P145 was increased to P150.00 and in October of the same year, the latter was
increased to P155.00.
On May 21, 1999, private respondents for the 4th time worked with Lagon's project in Camarin,
Caloocan City with Furukawa Corporation as the general contractor. Their contract would
expire on February 28, 2000, the period of completion of the project. From May 21, 1997-
December 1999, private respondents received the wage of P145.00. At this time, the minimum
prescribed rate for Manila was P198.00. In January to February 28, the three received the wage
of P165.00. The existing rate at that time was P213.00.
For reasons of delay on the delivery of imported materials from Furukawa Corporation, the
Camarin project was not completed on the scheduled date of completion. Face[d] with
economic problem[s], Lagon was constrained to cut down the overtime work of its worker[s][,]
including private respondents. Thus, when requested by private respondents on February 28,
2000 to work overtime, Lagon refused and told private respondents that if they insist, they would
have to go home at their own expense and that they would not be given 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 complaint for illegal dismissal, non-
payment of wages, holiday pay, 13th month pay for 1997 and 1998 and service incentive leave
pay as well as damages and attorney's fees
Issue:
Whether or not the respondent should be allowed to recover the differential due to the failure
of the petitioner to pay the minimum wage.
Whether or not value of the facilities that the private respondents enjoyed should be included
in the computation of the "wages" received by them
Ruling:
As a general rule, on payment of wages, a party who alleges payment as a defense has the
burden of proving it. Specifically with respect to labor cases, the burden of proving payment of
monetary claims rests on the employer, the rationale being that the pertinent personnel files,
payrolls, records, remittances and other similar documents -- which will show that overtime,
differentials, service incentive leave and other claims of workers have been paid -- are not in
the possession of the worker but in the custody and absolute control of the employer.
In this case, petitioners, aside from bare allegations that private respondents received wages
higher than the prescribed minimum, failed to present any evidence, such as payroll or 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.[20] Mere availment is not sufficient to allow deductions from employees'
wages.[21]
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.
Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc.
G.R. No. 176985, April 1, 2013
Facts:
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers

Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a District Sales Supervisor
(DSS) for Las Piñas City, Metro Manila.
As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time, the
Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the
computation of retirement benefits, as follows: Basic Monthly Salary + Monthly Average
Performance Incentive (which is the total performance incentive earned during the year
immediately preceding 12 months) No. of Years in Service.
Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives

(SMI) and to the amount of PhP496,016.67which respondent allegedly deducted illegally,
representing the unpaid accounts of two dealers within his jurisdiction, petitioner filed a
complaint before the NLRC on June 11, 2002 for the payment of his "Full Retirement Benefits,
Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary
Damages, and Attorney's Fees."
(Apparently, Petitioner argued that the granting of SMIto 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:
the grant or benefit is founded on a policy or has ripened into a practice over a long period of
time;
the practice is consistent and deliberate;
the practice is not due to error in the construction or application of a doubtful or difficult
question of law; and
The 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.
Royal Plant Workers Union vs. Coca-Cola Bottlers Philippines Inc.
GR No. 198783, April 15, 2013
Facts:
Under the employ of each bottling plant of Coca-Cola are bottling operators. In the case of the
plant in Cebu City, there are 20 bottling operators who work for its Bottling Line 1 while there are
12-14 bottling operators who man its Bottling Line 2. All of them are male and they are members
of herein respondent Royal Plant Workers Union (ROPWU).
In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their
request. In 1988, the bottling operators of then Bottling Line 1 followed suit and asked to be
provided also with chairs. Their request was likewise granted. Sometime in September 2008, the
chairs provided for the operators were removed pursuant to a national directive of petitioner.
This directive is in line with the "I Operate, I Maintain, I Clean" program of petitioner for bottling
operators, wherein every bottling operator is given the responsibility to keep the machinery and
equipment assigned to him clean and safe. The program reinforces the task of bottling
operators to constantly move about in the performance of their duties and responsibilities.
With this task of moving constantly to check on the machinery and equipment assigned to him,
a bottling operator does not need a chair anymore, hence, petitioner’s directive to remove
them. Furthermore, CCBPI rationalized that the removal of the chairs is implemented so that the
bottling operators will avoid sleeping, thus, prevent injuries to their persons. As bottling operators
are working with machines which consist of moving parts, it is imperative that they should not
fall asleep as to do so would expose them to hazards and injuries. In addition, sleeping will
hamper the efficient flow of operations as the bottling operators would be unable to perform
their duties competently.
Issue:
Whether or not the removal of the bottling operators’ chairs was a valid exercise of
management prerogative. ---YES
Ruling:
According to the Union, such removal constitutes a violation of the 1) Occupational Health and
Safety Standards which provide that every worker is entitled to be provided by the employer
with appropriate seats, among others; 2) policy of the State to assure the right of workers to a
just and humane condition of work as provided for in Article 3 of the Labor Code;8 3) Global
Workplace Rights Policy of CCBPI which provides for a safe and healthy workplace by
maintaining a productive workplace and by minimizing the risk of accident, injury and exposure
to health risks; and 4) diminution of benefits provided in Article 100 of the Labor Code.
The Court has held that management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place, and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal
and recall of workers. The exercise of management prerogative, however, is not absolute as it
must be exercised in good faith and with due regard to the rights of labor.10
In the present controversy, it cannot be denied that CCBPI removed the operators’ chairs
pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean" program,
launched to enable the Union to perform their duties and responsibilities more efficiently. The
chairs were not removed indiscriminately. They were carefully studied with due regard to the
welfare of the members of the Union. The removal of the chairs was compensated by: a) a
reduction of the operating hours of the bottling operators from a two-and-one-half (2 ½)-hour
rotation period to a one-and-a-half (1 ½) hour rotation period; and b) an increase of the break
period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted
to avoid instances of operators sleeping on the job while in the performance of their duties and
responsibilities and because of the fact that the chairs were not necessary considering that the
operators constantly move about while working. In short, the removal of the chairs was designed
to increase work efficiency. Hence, CCBPI’s exercise of its management prerogative was made
in good faith without doing any harm to the workers’ rights.
The rights of the Union under any labor law were not violated. There is no law that requires
employers to provide chairs for bottling operators. There was no violation either of the Health,
Safety and Social Welfare Benefit provisions under Book IV of the Labor Code of the Philippines.
As shown in the foregoing, the removal of the chairs was compensated by the reduction of the
working hours and increase in the rest period. The directive did not expose the bottling operators
to safety and health hazards.
The Union should not complain too much about standing and moving about for one and one-
half (1 ½) hours because studies show that sitting in workplaces for a long time is hazardous to
one’s health. The CBA between the Union and CCBPI contains no provision whatsoever requiring
the management to provide chairs for the operators in the production/manufacturing line while
performing their duties and responsibilities.
The Court completely agrees with the CA ruling that the removal of the chairs did not violate
the general principles of justice and fair play because the bottling operators’ working time was
considerably reduced from two and a half (2 ½) hours to just one and a half (1 ½) hours and the
break period, when they could sit down, was increased to 30 minutes between rotations. The
bottling operators’ new work schedule is certainly advantageous to them because it greatly
increases their rest period and significantly decreases their working time. A break time of thirty
(30) minutes after working for only one and a half (1 ½) hours is a just and fair work schedule.
The operators’ chairs cannot be considered as one of the employee benefits covered in Article
10016 of the Labor Code. In the Court’s view, the term "benefits" mentioned in the non-
diminution rule refers to monetary benefits or privileges given to the employee with monetary
equivalents.
Such benefits or privileges form part of the employees’ wage, salary or compensation making
them enforceable obligations.
This Court has already decided several cases regarding the non-diminution rule where the
benefits or privileges involved in those cases mainly concern monetary considerations or
privileges with monetary equivalents. Without a doubt, equating the provision of chairs to the
bottling operators is something within the ambit of "benefits'' in the context of Article 100 of the
Labor Code is unduly stretching the coverage of the law. The interpretations of Article 100 of
the Labor Code do not show even with the slightest hint that such provision of chairs for the
bottling operators may be sheltered under its mantle.
National Wages and Productivity Commission et al., vs The Alliance of Progressive
Labor et al.
G.R. No. 150326, March 12, 2014
Facts:
On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages
throughout the Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the
different regions.
Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered
the NWPC to formulate policies and guidelines on wages, incomes and productivity
improvement at the enterprise, industry and national levels; to prescribe rules and guidelines for
the determination of appropriate minimum wage and productivity measures at the regional,
provincial or industry levels; and to review regional wage levels set by the RTWPBs to determine
whether the levels were in accordance with the prescribed guidelines and national
development plans, among others.
On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of Republic
Act No. 6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their
region, provinces or industries therein; and to issue the corresponding wage orders, subject to
the guidelines issued by the NWPC.
Consequently, the RTWPB–NCR issued Wage Order No. NCR–07 on October 14, 1999 imposing
an increase of P25.50/day on the wages of all private sector workers and employees in the NCR
and pegging the minimum wage rate in the NCR at P223.50/day.6 However, Section 2 and
Section 9 of Wage Order No. NCR–07 exempted certain sectors and industries from its coverage
Section 2. The adjustment in this Order does not cover the following:
A. [W]orkers in the following sectors which were granted corresponding wage increases on
January 1, 1999 as prescribed by Wage Order No. NCR–06:
a.1. Agriculture workers
–Plantation P12.00
–Non–plantation P18.50
a.2. Cottage/handicraft industry P16.00
a.3. Private hospitals with bed capacity of 100 or lessP12.00
a.4. Retail/Service establishments
–Employing 11–15 workers P12.00
–Employing not more than 10 workers P19.00
B. Workers in small establishments employing less that ten (10) workers.
x x x x
Section 9. Upon application with and as determined by the Board, based on documentation
and other requirements in accordance with applicable rules and regulations issued by the
Commission, the following may be exempt from the applicability of this Order:
Distressed establishments as defined in the NPWC Guidelines No. 01, series of 1996;
Exporters including indirect exporters with at least 50% export sales and with forward contracts
with their foreign buyers/principals entered into on or twelve (12) months before the date of
publication of this Order may be exempt during the lifetime of said contract but not to exceed
twelve (12) months from the effectivity of this Order.
Feeling aggrieved by their non–coverage 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. NCR–07. They
contended that neither the NWPC nor the RTWPB–NCR had the authority to expand the non–
coverage 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. NCR–07. It
observed that the RTWPB’s power to determine exemptible categories was adjunct to its wage
fixing function conferred by Article 122(e) of the Labor Code, as amended by Republic Act No.
6727; that such authority of the RTWPB was also recognized in NWPC Guidelines No. 01, Series of
1996.
The APL and TNMR assailed the decisions of the NWPC on certiorari in the CA, contending that
the power of the RTWPB–NCR 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 RTWPB–NCR.
Issue:
Whether or not the RTWPB–NCR had
Ruling:
The RTWPB–NCR had the authority to provide additional exemptions from the minimum wage
adjustments embodied in Wage Order No. NCR–07
The NWPC promulgated NWPC Guidelines No. 001–95 (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. 001–
95 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 ESTABLISHMENTS
Exemption of establishments from compliance with the wage increases and cost of living
allowances prescribed by the Boards may be granted in order to (1) assist establishments
experiencing temporary difficulties due to losses maintain the financial viability of their
businesses and continued employment of their workers; (2) encourage the establishment of new
businesses and the creation of more jobs, particularly in areas outside the National Capital
Region and Export Processing Zones, in line with the policy on industry dispersal; and (3) ease
the burden of micro establishments, particularly in the retail and service sector, that have a
limited capacity to pay.
The following categories of establishments may be exempted upon application with and as
determined by the Board:
Distressed establishments
New business enterprises (NBEs)
Retail/Service establishments employing not more than ten (10) workers
Establishments adversely affected by natural calamities
Under the guidelines, the RTWPBs could issue exemptions from the application of the wage
orders as long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC
enumerated four exemptible establishments, but the list was not exclusive. The RTWPBs had the
authority to include in the wage orders establishments that belonged to, or to exclude from the
four enumerated exemptible categories.
If the exemption was outside of the four exemptible categories, like here, the exemptible
category should be: (1) in accord with the rationale for exemption; (2) reviewed/approved by
the NWPC; and (3) upon review, the RTWPB issuing the wage order must submit a strong and
justifiable reason or reasons for the inclusion of such category. It is the compliance with the
second requisite that is at issue here.
The NWPC, in arriving at its decision, weighed the arguments of the parties and ruled that the
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, social–economic data and informations gathered prior to the issuance of Wage
Order No. NCR–07.The very fact that the validity of the assailed sections of Wage Order No.
NCR–07 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. NCR–07 is presumed to be regularly issued in the absence of any strong
showing of grave abuse of discretion on the part of RTWPB–NCR. The presumption of validity is
made stronger by the fact that its validity was upheld by the NWPC upon review.
David/Yiels Hog Dealer vs Macasio
GR No. 195466, July 2, 2014
Facts:
In January 2009, Macasio filed before the LA a complaint7 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 andattorney’s fees. Macasio also claimed payment for service incentive leave (SIL).
Macasio alleged9 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.
Macasio disputed David’s allegations.11 He argued that, first, David did not start his business
only in 2005. He pointed to the Certificate of Employment12 that David issued in his favor which
placed the date of his employment, albeit erroneously, in January 2000. Second, he reported
for work every day which the payroll or time record could have easily proved had David
submitted them in evidence.
Refuting Macasio’s submissions,13 David claims that Macasio was not his employee as he hired
the latter on “pakyaw” or task basis. He also claimed that he issued the Certificate of
Employment, upon Macasio’s request, only for overseas employment purposes. He pointed to
the “Pinagsamang Sinumpaang Salaysay,”14 executed by Presbitero Solano and Christopher
(Antonio Macasio’s co-butchers), to corroborate his claims.
Issue:
Whether or not Macasio was employee.
Ruling:
Yes. Macasio was employee.
To determine the existence of an employer-employee relationship, four elements generally

need to be considered, namely: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s
conduct. These elements or indicators comprise the so-called “four-fold” test of employment
relationship. Macasio’s relationship with David satisfies this test.
First, David engaged the services of Macasio, thus satisfying the element of “selection and
engagement of the employee.” David categorically confirmed this fact when, in his
“Sinumpaang Salaysay,” he stated that “nag apply po siya sa akin at kinuha ko siya na
chopper[.]”39 Also, Solano and Antonio stated in their “Pinagsamang Sinumpaang
Salaysay”40 that “[k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David bilang
butcher” and “kilala namin si xxx Macasio na isa ring butcher xxx ni xxx David at kasama namin
siya sa aming trabaho.”
Second, David paid Macasio’s wages. Both David and Macasio categorically stated in their
respective pleadings before the lower tribunals and even before this Court that the former had
been paying the latter P700.00 each day after the latter had finished the day’s task. Solano
and Antonio also confirmed this fact of wage payment in their “Pinagsamang Sinumpaang
Salaysay.”41 This satisfies the element of “payment of wages.”
Third, David had been setting the day and time when Macasio should report for work. This power
to determine the work schedule obviously implies power of control. By having the power to
control Macasio’s work schedule, David could regulate Macasio’s work and could even refuse
to give him any assignment, thereby effectively dismissing him.
And fourth, David had the right and power to control and supervise Macasio’s work as to the
means and methods of performing it. In addition to setting the day and time when Macasio
should report for work, the established facts show that David rents the place where Macasio
had been performing his tasks. Moreover, Macasio would leave the workplace only after he
had finished chopping all of the hog meats given to him for the day’s task. Also, David would
still engage Macasio’s services and have him report for work even during the days when only
few hogs were delivered for butchering.
Under this overall setup, all those working for David, including Macasio, could naturally be
expected to observe certain rules and requirements and David would necessarily exercise some
degree of control as the chopping of the hog meats would be subject to his specifications. Also,
since Macasio performed his tasks at David’s workplace, David could easily exercise control
and supervision over the former. Accordingly, whether or not David actually exercised this right
or power to control is beside the point as the law simply requires the existence of this power to
control 4243 or, as in this case, the existence of the right and opportunity to control and supervise
Macasio.
In sum, the totality of the surrounding circumstances of the present case sufficiently points to an
employer-employee relationship existing between David and Macasio.
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.45 Once the
work or task is completed, the worker receives a fixed amount as wage, without regard to the
standard measurements of time generally used in pay computation.
In Macasio’s case, the established facts show that he would usually start his work at 10:00
p.m. Thereafter, regardless of the total hours that he spent at the workplace or of the total
number of the hogs assigned to him for chopping, Macasio would receive the fixed amount of
P700.00 once he had completed his task. Clearly, these circumstances show a “pakyaw” or
task basis engagement that all three tribunals uniformly found.
In sum, the existence of employment relationship between the parties is determined by applying
the “four-fold” test; engagement on “pakyaw” or task basis does not determine the parties’
relationship as it is simply a method of pay computation. Accordingly, Macasio is David’s
employee, albeit engaged on “pakyaw” or task basis.
Our Haus Realty Development Corp., vs. Parian et al.
GR. No. 204651, August 6, 2014
Facts:
Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo
Tenedero were all laborers working for petitioner Our Haus Realty Development Corporation
(Our Haus), a company engaged in the construction business. The respondents’ respective
employment records and daily wage rates from 2007 to 2010 are summarized in the
table7 below:
Name Date Years of Year and Place of Daily Rate

Hired Service Assignment
Alexander M. October 1999 10 years 2007-2010- Quezon City P353.50

Parian
Jay C. Erinco January 2000 10 years 2008- Quezon City P342.00

2009- Antipolo
2010- Quezon City
Alexander R. 2005 5 years 2007-2010- Quezon City P312.00

Canlas
Jerry Q. Sabulao August 1999 10 years 2008- Quezon City P342.00

2009- Antipolo
2010- Quezon City
Bernardo N. 1994 16 years 2007-2010- Quezon City P383.50

Tenedero
Sometime in May 2010, Our Haus experienced financial distress. To alleviate its condition, Our
Haus suspended some of its construction projects and asked the affected workers, including the
respondents, to take vacation leaves.
Eventually, the respondents were asked to report back to work but instead of doing so, they
filed with the LA a complaint for underpayment of their daily wages. They claimed that except
for respondent Bernardo N. Tenedero, their wages were below the minimum rates prescribed in
the following wage orders from 2007 to 2010:Wage Order No. NCR-13, which provides for a daily
minimum wage rate ofP362.00 for the non-agriculture sector (effective from August 28, 2007 until
June 13, 2008); and
Wage Order No. NCR-14, which provides for a daily minimum wage rate ofP382.00 for the non-
agriculture sector (effective from June 14, 2008 until June 30, 2010).
The respondents also alleged that Our Haus failed to pay them their holiday, service incentive
leave (SIL), 13th month and overtime pays.
Issue:
Whether the respondents’ wages complied with the law’s minimum requirement.
Ruling:
No. The respondents’ wages are not complied with the law’s minimum requirement.
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.
As the CA correctly ruled, these requirements, as summarized in Mabeza, are the following:
 proof must be shown that such facilities are customarily furnished by the trade;
 the provision of deductible facilities must be voluntarily accepted in writing by the
employee; and
 The facilities must be charged at fair and reasonable value.
 The facility must be customarily furnished by the trade
In a string of cases, we have concluded that one of the badges to show that a facility is
customarily furnished by the trade is the existence of a company policy or guideline showing
that provisions for a facility were designated as part of the employees’ salaries.41 To comply
with this, Our Haus presented in its motion for reconsideration with the NLRC the
joint sinumpaang salaysay of four of its alleged employees. These employees averred that they
were recipients of free lodging, electricity and water, as well as subsidized meals from Our
Haus.We agree with the NLRC’s finding that the sinumpaang salaysay statements submitted by
Our Haus are self-serving.
Under the law,only the value of the facilities may be deducted from the employees’ wages but
not the value of supplements. Facilities include articles or services for the benefit of the
employee or his family but exclude tools of the trade or articles or services primarily for the
benefit of the employer or necessary to the conduct of the employer’s business. The law also
prescribes that the computation of wages shall exclude whatever benefits, supplements or
allowances given to employees. Supplements are paid to employees on top of their basic pay
and are free of charge. Since it does not form part of the wage, a supplement’s value may not
be included in the determination of whether an employer complied with the prescribed
minimum wage rates.
The provision of deductible facilities must be voluntarily accepted in writing by the employee
In Mayon Hotel, we reiterated that a facility may only be deducted from the wage if the
employer was authorized in writing by the concerned employee.51 As it diminishes the take-
home pay of an employee, the deduction must be with his express consent. Again, in the motion
for reconsideration with the NLRC, Our Haus belatedly submitted fivekasunduans, supposedly
executed by the respondents, containing their conformity to the inclusion of the values of the
meals and housing to their total wages. 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. These five kasunduans were also undated, making us wonder
if they had really been executed when respondents first assumed their jobs.
The facility must be charged at a fair and reasonable value
Our Haus admitted that it deducted the amount of P290.00 per week from each of the
respondents for their meals. But it now submits that it did not actually withhold the entire amount
as it did not figure in the computation the money it expended for the salary of the cook, the
water, and the LPG used for cooking, which amounts to P249.40 per week per person. From
these, it appears that the total meal expense per week for each person is P529.40, making Our
Haus’ P290.00 deduction within the 70% ceiling prescribed by the rules.
Milan et al., vs NLRC
GR No. 202961, February 4, 2015
Facts:
An employer is allowed to withhold terminal pay and benefits pending the employee’s return
of its properties. Petitioners are respondent Solid Mills, Inc.’s (Solid Mills) employees.They are
represented by the National Federation of Labor Unions (NAFLU), their collective bargaining
agent. As Solid Mills’ employees, petitioners and their families were allowed to occupy SMI
Village, a property owned by Solid Mills.3 According to Solid Mills, this was “[o]ut of liberality and
for the convenience of its employees . . . [and] on the condition that the employees . . . would
vacate the premises anytime the Company deems fit.” In September 2003, petitioners were
informed that effective October 10, 2003, Solid Mills would cease its operations due to serious
business losses.5 NAFLU recognized Solid Mills’ closure due to serious business losses in the
memorandum of agreement dated September 1, 2003.6 The memorandum of agreement
provided for Solid Mills’ grant of separation pay less accountabilities, accrued sick leave
benefits, vacation leave benefits, and 13th month pay to the employees.7 Pertinent portions of
the agreement provide:
WHEREAS, the COMPANY has incurred substantial financial losses and is currently experiencing
further severe financial losses.
Issues:
Whether the employer is allowed to withhold terminal pay and benefits pending the employee’s
return of its properties.
Ruling:
Yes. The employer is allowed to withhold terminal pay and benefits pending the employee’s
return of its properties.
Requiring clearance before the release of last payments to the employee is a standard
procedure among employers, whether public or private. Clearance procedures are instituted
to ensure that the properties, real or personal, belonging to the employer but are in the
possession of the separated employee, are returned to the employer before the employee’s
departure.
As a general rule, employers are prohibited from withholding wages from employees. The Labor
Code provides:
Art. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person,
directly or indirectly, to withhold any amount from the wages of a worker or induce him to give
up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever
without the worker’s consent.
The Labor Code also prohibits the elimination or diminution of benefits. Thus:
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be
construed to eliminate or in any way diminish supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.
However, our law supports the employers’ institution of clearance procedures before the
release of wages. As an exception to the general rule that wages may not be withheld and
benefits may not be diminished, the Labor Code provides:
Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any person, shall make
any deduction from the wages of his employees, except:
1. In cases where the worker is insured with his consent by the employer, and the deduction is
to recompense the employer for the amount paid by him as premium on the insurance;
2. For union dues, in cases where the right of the worker or his union to check-off has been
recognized by the employer or authorized in writing by the individual worker concerned; and
3. In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor and Employment. (Emphasis supplied)
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, generally, it shall be included in the employee’s accountabilities that are subject
to clearance procedures.
It may be true that not all employees enjoyed the privilege of staying in respondent Solid Mills’
property. However, this alone does not imply that this privilege when enjoyed was not a result
of the employer-employee relationship. Those who did avail of the privilege were employees
of respondent Solid Mills. Petitioners’ possession should, therefore, be included in the term
“accountability.”
Accountabilities of employees are personal. They need not be uniform among all employees
in order to be included in accountabilities incurred by virtue of an employer-employee
relationship.
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,
National Labor Relations Commission, and the Court of Appeals 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.
The return of the property’s possession became an obligation or liability on the part of the
employees when the employer-employee relationship ceased. Thus, respondent Solid Mills has
the right to withhold petitioners’ wages and benefits because of this existing debt or
liability. In Solas v. Power and Telephone Supply Phils., Inc., et al., this court recognized this right
of the employer when it ruled that the employee in that case was not constructively dismissed.
There was valid reason for respondents’ withholding of petitioner’s salary for the month of
February 2000. Petitioner does not deny that he is indebted to his employer in the amount of
around P95,000.00. Respondents explained that petitioner’s salary for the period of February 1-
15, 2000 was applied as partial payment for his debt and for withholding taxes on his income;
while for the period of February 15-28, 2000, petitioner was already on absence without leave,
hence, was not entitled to any pay.81
The law does not sanction a situation where employees who do not even assert any claim over
the employer’s property are allowed to take all the benefits out of their employment while they
simultaneously withhold possession of their employer’s property for no rightful reason.
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.”
For these reasons, we cannot hold that petitioners are entitled to interest of their withheld
separation benefits. These benefits were properly withheld by respondent Solid Mills because of
their refusal to return its property.
Toyota Pasig Inc vs. De Peralta
GR No. 213488, Nov 7, 2016
Facts:
Respondent, Vilma De Peralta filed a complaint for illegal dismissal, illegal deduction, unpaid
commission, annual profit sharing, damages, and attorney's fees against Petitioner Toyota Pasig.
Respondent alleged that petitioner initially hired her as a cashier. Eventually in 2004, she worked
her way up to the position of Insurance Sales Executive. However, things turned sour when her
husband, respondent’s husband "Romper" De Peralta, also petitioner's employee and the
President of the Toyota Shaw- Pasig Workers Union — Automotive Industry Workers Alliance
(TSPWU-AIWA), organized a collective bargaining unit through a certification election.
According to respondent, petitioner suddenly dismissed from service the officials/directors of
TSPWU-AIWA, including her husband.
Petitioner allegedly started harassing respondent for her husband's active involvement in TSPWU-
AIWA, which resulted to the issuance of a Notice to Explain 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. she was preventively suspended
because of such charge.
On February 3, 2012, respondent received a Notice of Termination, which prompted her to fie
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.
Petitioner maintained that respondent was discharged from service for just cause and with due
process. 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. Petitioner further averred that respondent's
claims for commissions, tax rebates, and other benefits were unfounded and without
documentation and validation.
Labor Arbiter Ruling and NLRC Ruling
Labor Arbiter (LA) dismissed the complaint for lack of merit, but ordered petitioner to pay
respondent the amount of 11,111.50 representing the latter's salary for January 2012. NLRC
affirmed the LA ruling with modification finding petitioner liable to respondent in the amount of
P617,248.08crepresenting the latter's unpaid commissions, tax rebate for achieved monthly
targets, salary deductions, salary for the month of January 2012, and success share/profit
sharing.
The CA affirmed the NLRC ruling in toto.
Issue:
Whether or not the CA correctly upheld petitioner's liability to respondent in the amount of
P617,248.08 representing the latter's unpaid commissions, tax rebate for achieved monthly
targets, salary deductions, salary for the month of January 2012, and success share/profit
sharing..
Ruling: NO
Petition without merit
Section 97 (f) of the Labor Code reads:
(f)"Wage" paid to any employee shall mean the remuneration of earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task,
piece, or commission basis,xxxxx
In Iran v. NLRC , the Court thoroughly explained the wisdom behind why such inclusion as follows:
While commissions are, indeed, incentives or forms of encouragement to inspire employees to

put a little more industry on the jobs particularly assigned to them, still these commissions are
direct remunerations for services rendered. In fact commissions have been defined as the
recompense, compensation or reward of an agent, salesman, executor, trustee, receiver,
factor, broker or bailee, when the same is calculated as a percentage on the amount of his
transactions or on the profit to the principal. The nature of the work of a salesman and the reason
for such type of remuneration for services rendered demonstrate clearly that commissions are
part of a salesman's wage or salary. xxx xxx
The NLRC asserts that the inclusion of commissions in the computation of wages would negate
the practice of granting commissions only after an employee has earned the minimum wage
or over. While such a practice does exist, the universality and prevalence of such a practice is
questionable at best.
Supreme Court has taken judicial notice of the fact that some salesmen do not receive any
basic salary but depend entirely on commissions and allowances or commissions alone,
although an employer-employee relationship exists. Undoubtedly, this salary structure is
intended for the benefit of the corporation establishing such, on the apparent assumption that
thereby its salesmen would be moved to greater enterprise and diligence and close more sales
in the expectation of increasing their sales commissions. This, however, does not detract from
the character of such commissions as part of the salary or wage paid to each of its salesmen
for rendering services to the corporation.
In this case, respondent's monetary claims, such as commissions, tax rebates for achieved
monthly targets, and success share/profit sharing, are given to her as incentives or forms of
encouragement in order for her to put extra effort in performing her duties as an ISE.
Clearly, such claims fall within the ambit of the general term "commissions" which in 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, 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.
Indubitably, petitioner failed to discharge its afore-described burden. 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. 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.
JAIME N. SORIANO, MICHAEL VERNON M. GUERRERO, MARY ANN L. REYES, MARAH
SHARYN M. DE CASTRO and CRIS P. TENORIO vs. SECRETARY OF FINANCE and the
COMMISSIONER OF INTERNAL REVENUE
G.R. No. 184450. January 24, 2017
Facts:
On 19 May 2008, the Senate filed its Senate Committee Report No. 53 on Senate Bill No. (S.B.)
2293. On 21 May 2008, former President Gloria M. Arroyo certified the passage of the bill as
urgent through a letter addressed to then Senate President Manuel Villar. On the same day, the
bill was passed on second reading IN the Senate and, on 27 May 2008, on third reading. The
following day, 28 May 2008, the Senate sent S.B. 2293 to the House of Representatives for the
latter's concurrence.
On 04 June 2008, S.B. 2293 was adopted by the House of Representatives as an amendment to
House Bill No. (H.B.) 3971.
On 17 June 2008, R.A. 9504 entitled "An Act Amending Sections 22, 24, 34, 35, 51, and 79 of
Republic Act No. 8424, as Amended, Otherwise Known as the National Internal Revenue Code
of 1997," was approved and signed into law by President Arroyo. The following are the salient
features of the new law:
1. It increased the basic personal exemption from ₱20,000 for a single individual, ₱25,000 for the
head of the family, and ₱32,000 for a married individual to P50,000 for each individual.
2. It increased the additional exemption for each dependent not exceeding four from ₱8,000
to ₱25,000.
3. It raised the Optional Standard Deduction (OSD) for individual taxpayers from 10% of gross
income to 40% of the gross receipts or gross sales.
4. It introduced the OSD to corporate taxpayers at no more than 40% of their gross income.
5. It granted MWEs exemption from payment of income tax on their minimum wage, holiday
pay, overtime pay, night shift differential pay and hazard pay.
Section 9 of the law provides that it shall take effect 15 days following its publication in the
Official Gazette or in at least two newspapers of general circulation. Accordingly, R.A. 9504 was
published in the Manila Bulletin and Malaya on 21 June 2008. On 6 July 2008, the end of the 15-
day period, the law took effect.
RR 10-2008
On 24 September 2008, the BIR issued RR 10-2008, dated 08 July 2008, implementing the
provisions of R.A. 9504. The relevant portions of the said RR read as follows:
SECTION 1. Section 2.78.1 of RR 2-98, as amended, is hereby further amended to read as follows:
Sec. 2.78.1. Withholding of Income Tax on Compensation Income.
The amount of 'de minimis' benefits conforming to the ceiling herein prescribed shall not be
considered in determining the ₱30,000.00 ceiling of 'other benefits' excluded from gross income
under Section 32 (b) (7) (e) of the Code. Provided that, the excess of the 'de minimis' benefits
over their respective ceilings prescribed by these regulations shall be considered as part of
'other benefits' and the employee receiving it will be subject to tax only on the excess over the
₱30,000.00 ceiling. Provided, further, that MWEs receiving 'other benefits' exceeding the
₱30,000.00 limit shall be taxable on the excess benefits, as well as on his salaries, wages and
allowances, just like an employee receiving compensation income beyond the SMW.
(B) Exemptions from Withholding Tax on Compensation. - The following income payments are
exempted from the requirements of withholding tax on compensation:
(13) Compensation income of MWEs who work in the private sector and being paid the Statutory
Minimum Wage (SMW), as fixed by Regional Tripartite Wage and Productivity Board
(RTWPB)/National Wages and Productivity Commission (NWPC), applicable to the place where
he/she is assigned.
Comment of the OSG
The Office of the Solicitor General (OSG) filed a Consolidated Comment and took the position
that the application of R.A. 9504 was intended to be prospective, and not retroactive. This was
supposedly the general rule under the rules of statutory construction: law will only be applied
retroactively if it clearly provides for retroactivity, which is not provided in this instance.
Petitioners Jaime N. Soriano et al. primarily assail Section 3 of RR 10-2008 providing for the
prorated application of the personal and additional exemptions for taxable year 2008 to begin
only effective 6 July 2008 for being contrary to Section 4 of Republic Act No. 9504.2
Petitioners argue that the prorated application of the personal and additional exemptions
under RR 10-2008 is not "the legislative intendment in this jurisdiction."3 They stress that Congress
has always maintained a policy of "full taxable year treatment"4 as regards the application of
tax exemption laws. They allege further that R.A. 9504 did not provide for a prorated application
of the new set of personal and additional exemptions.
Issues:
Assailing the validity of RR 10-2008, all four Petitions raise common issues, which may be distilled
into three major ones:
First, whether the increased personal and additional exemptions provided by R.A. 9504 should
be applied to the entire taxable year 2008 or prorated, considering that R.A. 9504 took effect
only on 6 July 2008.
Second, whether an MWE is exempt for the entire taxable year 2008 or from 6 July 2008 only.
Third, whether Sections 1 and 3 of RR 10-2008 are consistent with the law in providing that an
MWE who receives other benefits in excess of the statutory limit of ₱30,000 19 is no longer entitled
to the exemption provided by R.A. 9504.
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Held:
I.
Whether the increased personal and additional exemptions provided by R.A. 9504 should be
applied to the entire taxable year 2008 or prorated, considering that the law took effect only
on 6 July 2008
The personal and additional exemptions established by R.A. 9504 should be applied to the entire
taxable year 2008.
Umali is applicable.
Umali v. Estanislao supports this Comi's stance that R.A. 9504 should be applied on a full-year
basis for the entire taxable year 2008. In Umali, Congress enacted R.A. 7167 amending the 1977
National Internal Revenue Code (NIRC). The amounts of basic personal and additional
exemptions given to individual income taxpayers were adjusted to the poverty threshold level.
R.A. 7167 came into law on 30 January 1992. Controversy arose when the Commission of Internal
Revenue (CIR) promulgated RR 1-92 stating that the regulation shall take effect on
compensation income earned beginning 1 January 1992. The issue posed was whether the
increased personal and additional exemptions could be applied to compensation income
earned or received during calendar year 1991, given that R.A. 7167 came into law only on 30
January 1992, when taxable year 1991 had already closed.
This Court ruled in the affirmative, considering that the increased exemptions were already
available on or before 15 April 1992, the date for the filing of individual income tax returns.
Further, the law itself provided that the new set of personal and additional exemptions would
be immediately available upon its effectivity. While R.A. 7167 had not yet become effective
during calendar year 1991, the Court found that it was a piece of social legislation that was in
part intended to alleviate the economic plight of the lower-income taxpayers. For that purpose,
the new law provided for adjustments "to the poverty threshold level" prevailing at the time of
the enactment of the law.
We now arrive at this important point: the policy of full taxable year treatment is established, not
by the amendments introduced by R.A. 9504, but by the provisions of the 1997 Tax Code, which
adopted the policy from as early as 1969.
There is, of course, nothing to prevent Congress from again adopting a policy that prorates the
effectivity of basic personal and additional exemptions. This policy, however, must be explicitly
provided for by law - to amend the prevailing law, which provides for full-year treatment. As
already pointed out, R.A. 9504 is totally silent on the matter. This silence cannot be presumed by
the BIR as providing for a half-year application of the new exemption levels. Such presumption
is unjust, as incomes do not remain the same from month to month, especially for the MWEs.
Therefore, there is no legal basis for the BIR to reintroduce the prorating of the new personal and
additional exemptions. In so doing, respondents overstepped the bounds of their rule-making
power. It is an established rule that administrative regulations are valid only when these are
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1
consistent with the law. Respondents cannot amend, by mere regulation, the laws they
administer. To do so would violate the principle of non-delegability of legislative powers.
The prorated application of the new set of personal and additional exemptions for the year
2008, which was introduced by respondents, cannot even be justified under the exception to
the canon of non-delegability; that is, when Congress makes a delegation to the executive
branch. The delegation would fail the two accepted tests for a valid delegation of legislative
power; the completeness test and the sufficient standard test. The first test requires the law to
be complete in all its terms and conditions, such that the only thing the delegate will have to
do is to enforce it. The sufficient standard test requires adequate guidelines or limitations in the
law that map out the boundaries of the delegate's authority and canalize the delegation.
In this case, respondents went beyond enforcement of the law, given the absence of a provision
in R.A. 9504 mandating the prorated application of the new amounts of personal and additional
exemptions for 2008. Further, even assuming that the law intended a prorated application, there
are no parameters set forth in R.A. 9504 that would delimit the legislative power surrendered by
Congress to the delegate. In contrast, Section 23(d) of the 1939 Tax Code authorized not only
the prorating of the exemptions in case of change of status of the taxpayer, but also authorized
the Secretary of Finance to prescribe the corresponding rules and regulations.
II.
Whether an MWE is exempt for the entire taxable year 2008 or from 6 July 2008 only
The MWE is exempt for the entire taxable year 2008.
As in the case of the adjusted personal and additional exemptions, the MWE exemption should
apply to the entire taxable year 2008, and not only from 6 July 2008 onwards. We see no reason
why Umali cannot be made applicable to the MWE exemption, which is undoubtedly a piece
of social legislation. It was intended to alleviate the plight of the working class, especially the
low-income earners. In concrete terms, the exemption translates to a ₱34 per day benefit, as
pointed out by Senator Escudero in his sponsorship speech.50
As it stands, the calendar year 2008 remained as one taxable year for an individual taxpayer.
Therefore, RR 10-2008 cannot declare the income earned by a minimum wage earner from 1
January 2008 to 5 July 2008 to be taxable and those earned by him for the rest of that year to
be tax-exempt. To do so would be to contradict the NIRC and jurisprudence, as taxable income
would then cease to be determined on a yearly basis.
III.
Whether Sections 1 and 3 of RR 10-2008 are consistent with the law in declaring that an MWE
who receives other benefits in excess of the statutory limit of ₱30,000 is no longer entitled to the
exemption provided by R.A. 9504, is consistent with the law.
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2
Sections 1 and 3 of RR 10-2008 add a requirement not found in the law by effectively declaring
that an MWE who receives other benefits in excess of the statutory limit of ₱30,000 is no longer
entitled to the exemption provided by R.A. 9504.
Nowhere in the above provisions of R.A. 9504 would one find the qualifications prescribed by
the assailed provisions of RR 10-2008. The provisions of the law are clear and precise; they leave
no room for interpretation - they do not provide or require any other qualification as to who are
MWEs.
To be exempt, one must be an MWE, a term that is clearly defined. Section 22(HH) says he/she
must be one who is paid the statutory minimum wage if he/she works in the private sector, or
not more than the statutory minimum wage in the non-agricultural sector where he/she is
assigned, if he/she is a government employee. Thus, one is either an MWE or he/she is not. Simply
put, MWE is the status acquired upon passing the litmus test - whether one receives wages not
exceeding the prescribed minimum wage.
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3
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4
Tiger Construction and Development Corp. vs. Abay et al.
G.R. 164141; Feb 26, 2010
The general rule is that any decision rendered without jurisdiction is a total nullity and may be
struck down at any time, the party that asserts it must be in good faith and not evidently availing
thereof simply to thwart the execution of an award that has long become final and executory.
Facts:
On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before
the Regional Office of the Department of Labor and Employment (DOLE), an inspection was
conducted by DOLE officials at the premises of petitioner TCDC. Several labor standard
violations were noted, such as deficiencies in record keeping, non-compliance with various
wage orders, non-payment of holiday pay, and underpayment of 13th month pay. The case
was then set for summary hearing.
Consistent with Article 129 of the Labor Code of the Philippines in relation to Article 217 of the
same Code, this instant case should be referred back to the National Labor Relations
Commission (NLRC) Sub-Arbitration Branch V, Naga City, on the ground that the aggregate
money claim of each worker exceeds the jurisdictional amount of this Office [which] is (sic) Five
Thousand Pesos Only (P5,000.00).
Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas (Secretary Sto.
Tomas), in an apparent reversal of Director Manalo’s endorsement, issued another inspection
authority on August 2, 2002 in the same case. Pursuant to such authority, DOLE officials
conducted another investigation of petitioner’s premises and the same violations were
discovered.
According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of
lack of jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE
regional office after July 25, 2002 were null and void for want of jurisdiction.
aving the case in her office once more, Director Manalo finally issued an Order dated January
29, 2003 denying petitioner’s motion for reconsideration for lack of merit
Issue:
Whether or not the petitioner can still assail the January 29, 2003 Order of Director Manalo
allegedly on the ground of lack of jurisdiction, after said Order has attained finality and is already
in the execution stage.
Ruling:
The petition lacks merit.Petitioner admits that it failed to appeal the January 29, 2003 Order
within the period prescribed by law. It likewise admits that the case was already in the execution
process when it resorted to a belated appeal to the DOLE Secretary. Petitioner, however,
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5
excuses itself from the effects of the finality of the Order by arguing that it was allegedly issued
without jurisdiction and may be assailed at any time.
Director Manalo’s initial endorsement of the case to the NLRC, on the mistaken opinion that the
claim was within the latter’s jurisdiction, did not oust or deprive her of jurisdiction over the case.
She therefore retained the jurisdiction to decide the case when it was eventually returned to
her office by the DOLE Secretary. Jurisdiction or authority to try a certain case is conferred by
law and not by the interested parties, much less by one of them, and should be exercised
precisely by the person in authority or body in whose hands it has been placed by the law. [18]
We also cannot accept petitioner’s theory that Director Manalo’s initial endorsement of the
case to the NLRC served as a dismissal of the case, which prevented her from subsequently
assuming jurisdiction over the same. The said endorsement was evidently not meant as a final
disposition of the case; it was a mere referral to another agency, the NLRC, on the mistaken
belief that jurisdiction was lodged with the latter. It cannot preclude the regional director from
subsequently deciding the case after the mistake was rectified and the case was returned to
her by the DOLE Secretary, particularly since it was a labor case where procedural lapses may
be disregarded in the interest of substantial justice.
In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and
can no longer be questioned (as it is final and executory), we can no longer entertain
petitioner’s half-hearted and unsubstantiated arguments that the said Order was allegedly
based on erroneous computation and included non-employees. Likewise, we find no more
need to address petitioner’s contention that the CA erred in dismissing its petition on the ground
of its belated compliance with the requirement of certification against forum-shopping.
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People’s Broadcasting (Bombo Radyo Phils) vs. Sec of DOLE et al.
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 NLRC’s determination of the existence of an employer-
employee relationship, or that should the existence of the employer-employee relationship be
disputed, the DOLE would refer the matter to the NLRC. The DOLE must have the power to
determine whether or not an employer-employee relationship exists, and from there to decide
whether or not to issue compliance orders in accordance with Art. 128(b) of the Labor Code,
as amended by RA 7730.
The DOLE, in determining the existence of an employer-employee relationship, has a ready set
of guidelines to follow, the same guide the courts themselves use. The elements to determine
the existence of an employment relationship are: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; (4) the employer’s power to
control the employee’s conduct. The use of this test is not solely limited to the NLRC. The DOLE
Secretary, or his or her representatives, can utilize the same test, even in the course of inspection,
making use of the same evidence that would have been presented before the NLRC.
The determination of the existence of an employer-employee relationship by the DOLE must be

respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730
would be rendered nugatory if the alleged employer could, by the simple expedient of
disputing the employer-employee relationship, force the referral of the matter to the NLRC. The
Court issued the declaration that at least a prima facie showing of the absence of an employer-
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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.
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Superior Packaging Corp. vs. Balagsay et al.,
G.R. 178909; October 10, 2012
Facts:
The petitioner engaged the services of Lancer to provide reliever services to its business, which
involves the manufacture and sale of commercial and industrial corrugated boxes. According
to petitioner, the respondents were engaged for four (4) months from February to June 1998
and their tasks included loading, unloading and segregation of corrugated boxes.
Thereafter, respondents filed complaint against the petitioner and President, Cesar Luz (Luz), for
underpayment of wages, non-payment of premium pay for worked rest, overtime pay and non-
payment of salary. Upon receipt Department of Labor and Employment (DOLE) conducted an
inspection of the petitioner’s premises and found several violations, to wit:
 Non-presentation of payrolls and daily time records;

 Non-submission of annual report of safety organization;
 Medical and accident/illness reports;
 Non-registration of establishment under Rule 1020 of Occupational and Health
Standards; and
 No trained first aide.
Due to the petitioner’s failure to appear in the summary investigations conducted by the DOLE,
an Orderwas issued on June 18, 2003 finding in favor of the respondents and adopting the
computation of the claims submitted. Petitioner and Luz were ordered, among others, to pay
respondents their total claims in the amount of Eight Hundred Forty Thousand Four Hundred Sixty-
Three Pesos and 38/100 (P 840,463.38).
Petitioner filed a motion for reconsideration on the ground that respondents are not its
employees but of Lancer and that they pay Lancer in lump sum for the services rendered. The
DOLE, however, denied its motion because petitioner failed to support its claim that the
respondents are not its employees, and even assuming that they were employed by Lancer,
the petitioner still cannot 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.
Their appeal to the Secretary of DOLE was dismissed thus, l petitioner and Luz filed a petition
for certiorari with the Court of Appeals (CA).
On November 17, 2006, the CA affirmed the Secretary of DOLEs orders, with the modification in
that Luz was absolved of any personal liability under the award.
Hence, this petition for review under Rule 45 of the Rules of Court.
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Issue:
Whether or not DOLE has authority to determine the existence of an employer-employee

relationship?Whether Superior Packaging Corporation may be held solidarily liable with Lancer
Staffing & Services Network, Inc. (Lancer) for respondents unpaid money claims?
Ruling:
The petition is bereft of merit.
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. The determination
of the existence of an employer-employee relationship by the DOLE must be respected.
With regard to the contention that there is no evidence to support the finding that the
respondents rendered overtime work and that they worked on their rest day, the resolution of
this argument requires a review of the factual findings and the evidence presented, Court said
that it is not a trier of facts and it applies with greater force in labor cases. Hence, where the
factual findings of the labor tribunals or agencies conform to, and are affirmed by, the CA, the
same are accorded respect and finality, and are binding to Supreme Court.
It was the consistent conclusion of the DOLE and the CA that Lancer was not an independent
contractor but was engaged in "labor-only contracting"; hence, the petitioner was considered
an indirect employer of respondents and liable to the latter for their unpaid money claims.
At the time of the respondents employment in 1998, the applicable regulation was DOLE
Department Order No. 10, Series of 1997. Under said Department Order, labor-only contracting
was defined as follows:
Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer
shall be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are directly
related to the principal business or operations of the employer in which workers are habitually
employed.
Labor-only contracting is prohibited and the person acting as contractor shall be considered
merely as an agent or intermediary of the employer who shall be responsible to the workers in
the same manner and extent as if the latter were directly employed by him.
According to the CA, the totality of the facts and surrounding circumstances of this case point
to such conclusion that Lancer was, indeed, a labor-only contractor. Aside from these is the
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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.
Petitioner therefore, being the principal employer and Lancer, being the labor-only contractor,
are solidarily liable for respondents unpaid money claims.
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SHS Perforated Materials, Inc. et al., vs. Diaz,
GR No. 185814, Oct. 13, 2010
Facts:
Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing
under the laws of the Republic of the Philippines and registered with the Philippine Economic
Zone Authority. Petitioner Winfried Hartmannshenn (Hartmannshenn), a German national, is its
president. Thus, the wages of SHS employees are paid out by ECCP, through its Accounting
Services Department headed by Juliet Taguiang (Taguiang). Manuel F. Diaz (respondent) was
hired by petitioner SHS as Manager for Business Development on probationary status
During respondent’s employment, Hartmannshenn was often abroad and, because of business
exigencies, his instructions to respondent were either sent by electronic mail or relayed through
telephone or mobile phone. During meetings with the respondent, Hartmannshenn expressed
his dissatisfaction over respondent’s poor performance. respondent acknowledged his poor
performance and offered to resign from the company.
On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on
November 22 and 24, 2005, notified respondent of his arrival through electronic mail messages
and advised him to get in touch with him. Respondent claimed that he never received the
messages. Hartmannshenn instructed Taguiang not to release respondent’s salary.
Respondent served on SHS a demand letter and a resignation letter. It is precisely because of
illegal and unfair labor practices such as these that I offer my resignation with neither regret nor
remorse.
Appealing for the release of his salary respondent filed a Complaint against the petitioners for
illegal dismissal; non-payment of salaries/wages and 13th month pay with prayer for
reinstatement and full backwages; exemplary damages, and attorney’s fees, costs of suit, and
legal interest.
Issues:
Whether or not the temporary withholding of respondent’s salary/wages by petitioners was a

valid exercise of management prerogative.
Ruling:
Withholding respondent’s salary was not a valid exercise of management prerogative.
Management prerogative refers “to the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work assignments, working methods, processes
to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and
discipline, and dismissal and recall of work.” Although management prerogative refers to “the
right to regulate all aspects of employment,” it cannot be understood to include the right to
temporarily withhold salary/wages without the consent of the employee.
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Any withholding of an employee’s wages by an employer may only be allowed in the form of
wage deductions under the circumstances provided in Article 113 of the Labor Code, as set
forth below:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is
(b) For union dues, in cases where the right of the worker or his union to check-off has been
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an

employer becomes so unbearable on the part of the employee that it would foreclose any
choice by him except to forego his continued employment. It exists where there is cessation of
work because continued employment is rendered impossible, unreasonable or unlikely, as an
offer involving a demotion in rank and a diminution in pay.
In this case, the withholding of respondent’s salary does not fall under any of the circumstances
provided under Article 113. Neither was it established with certainty that respondent did not
work from November 16 to November 30, 2005. Hence, the Court agrees with the LA and the
CA that the unlawful withholding of respondent’s salary amounts to constructive dismissal.
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Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo,
G.R. No. 188169, November 28, 2011
Facts:
Respondents were employed as goldsmiths by the petitioner Niña Jewelry Manufacturing of

Metal Arts, Inc. There were incidents of theft involving goldsmiths in Niña Jewelry's employ:
The petitioner imposed a policy for goldsmiths, which were intended to answer for any loss or
damage which Niña Jewelry may sustain by reason of the goldsmiths' fault or negligence in
handling the gold entrusted to them, requiring them to post cash bonds or deposits in varying
amounts but in no case exceeding 15% of the latter's salaries per week.
The petitioner alleged that the goldsmiths were given the option not to post deposits, but to sign
authorizations allowing the former to deduct from the latter's salaries amounts not exceeding
15% of their take home pay should it be found that they lost the gold entrusted to them. The
deposits shall be returned upon completion of the goldsmiths' work and after an accounting of
the gold received.
The respondents claimed otherwise insisting that petitioner left the goldsmiths with no option but
to post the deposits. The next day after the policy was imposed, the respondents no longer
reported for work and signified their defiance against the new policy which at that point had
not even been implemented yet. The respondents alleged that they were constructively
dismissed by the petitioner as their continued employments were made dependent on their
readiness to post the required deposits. The respondents then filed a complaint for illegal
dismissal and for the award of separation pay against the petitioner, and later filed their
amended complaint which excluded their earlier prayer for separation pay but sought
reinstatement and payment of back wages, attorney's fees and 13th month pay.
Issues:
Whether or not Niña Jewelry Manufacturing of Metal Arts, Inc. may impose the policy for their
goldsmiths requiring them to post cash bonds or deposits; and
Whether or not there is constructive dismissal.
Ruling:
1) NO, the Niña Jewelry may not impose the policy. Articles 113 and 114 of the Labor Code are
clear as to what are the exceptions to the general prohibition against requiring deposits and
effecting deductions from the employees' salaries.
ART. 113. Wage Deduction — No employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees, except:
(a)In cases where the worker is insured with his consent by the employer, and the deduction is
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(b)For union dues, in cases where the right of the worker or his union to check-off has been
(c)In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor.
Article 114.Deposits for loss or damage — No employer shall require his worker to make deposits
from which deductions shall be made for the reimbursement of loss of or damage to tools,
materials, or equipment supplied by the employer, except when the employer is engaged in
such trades, occupations or business where the practice of making deposits is a recognized
one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules
and regulations.
The petitioners should first establish that the making of deductions from the salaries is authorized
by law, or regulations issued by the Secretary of Labor. The petitioners failed to prove that their
imposition of the new policy upon the goldsmiths under Niña Jewelry's employ falls under the
exceptions specified in Articles 113 and 114 of the Labor Code.
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.
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Locsin II vs. Mekeni Food Corp.,
GR No. 192105, December 9, 2013
Facts:
Petitioner Antonio Locsin II was the Regional Sales Manager of respondent Mekeni Food
Corporation. He was hired on February 2004 to oversee the NCR and Luzon operation. In
addition to his compensation and benefit package, a car was offered to him under which one-
half of the cost of the vehicle is to be paid by the company and the other half to be deducted
from petitioner's salary. The car valued at 280,000 which Locsin paid through salary deductions
of 5,000 per month.
On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted from his
monthly salary and applied as part of his share in the car plan. Upon resignation, petitioner
made personal and written follow-ups regarding his unpaid salaries, commissions, benefits, and
offer to purchase his service vehicle. Mekeni replied that the company car plan benefit applied
only to employees who have been with the company for five years; for this reason, the balance
that petitioner should pay on his service vehicle stood at P116,380.00 if he opts to purchase the
same.
On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a
Complaint for the recovery of monetary claims consisting of unpaid salaries, commissions,
sick/vacation leave benefits, and recovery of monthly salary deductions which were earmarked
for his cost-sharing in the car plan.
Issue:
Whether or not petitioner is entitled to a refund of all the amounts applied to the cost of the
service vehicle under the car plan.
Ruling:
Any benefit or privilege enjoyed by petitioner from using the service vehicle was merely
incidental and insignificant, because for the most part the vehicle was under Mekeni's control
and supervision. Free and complete disposal is given to the petitioner only after the vehicle's
cost is covered or paid in full. Until then, the vehicle remains at the beck and call of Mekeni.
Given the vast territory petitioner had to cover to be able to perform his work effectively and
generate business for his employer, the service vehicle was an absolute necessity, or else
Mekeni's business would suffer adversely. Thus, it is clear that while petitioner was paying for half
of the vehicle's value, Mekeni was reaping the full benefits from the use thereof.
Under Article 22 of the Civil Code, “every person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the expense of
the latter without just or legal ground, shall return the same to him." Article 2142 of the same
Code likewise clarifies that there are certain lawful, voluntary and unilateral acts which give rise
to the juridical relation of quasi-contract, to the end that no one shall be unjustly enriched or
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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.
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TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union,
GR No. 191714, Feb 26, 2014
Facts:
On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation workers union
(THS-GQ Union) filed their Complaint for Unfair Labor Practice (ULP) by way of union busting, and
Illegal Lockout, with moral and exemplary damages and attorney’s fees, against T&H Shopfitters
Corporation (T&H Shopfitters) and Gin Queen Corporation before the Labor Arbiter (LA).
1st CAUSE:
In their desire to improve their working conditions, respondents and other employees of held
their first formal meeting on November 23, 2003 to discuss the formation of a union. The following
day, seventeen (17) employees were barred from entering petitioners’ factory premises located
in Castillejos, Zambales, and ordered to transfer to T&H Shopfitters’ warehouse at Subic Bay
Freeport Zone (SBFZ) purportedly because of its expansion. Afterwards, the said seventeen (17)
employees were repeatedly ordered to go on forced leave due to the unavailability of work.
Respondents contended that the affected employees were not given regular work
assignments, while subcontractors were continuously hired to perform their functions.
Respondents sought the assistance of the National Conciliation and Mediation Board.
Subsequently, an agreement between petitioners and THS-GQ Union was reached. Petitioners
agreed to give priority to regular employees in the distribution of work assignments. Respondents
averred, however, that petitioners never complied with its commitment but instead hired
contractual workers. Instead, Respondents claimed that the work weeks of those employees in
the SBFZ plant were drastically reduced to only three (3) days in a month.
2nd CAUSE:
On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was
issued to hold the certification election in both T&H Shopfitters and Gin Queen.
On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The
officers and members of the THS-GQ Union were purportedly excluded from the field trip. On
the evening of the field trip, a certain Angel Madriaga, a sales officer of petitioners,
campaigned against the union in the forthcoming certification election.
When the certification election was scheduled on October 11, 2004, the employees were
escorted from the field trip to the polling center in Zambales to cast their votes. The remaining
employees situated at the SBFZ plant cast their votes as well. Due to the heavy pressure exerted
by petitioners, the votes for "no union" prevailed.
3rd CAUSE:
A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed
its employees of the expiration of the lease contract between Gin Queen and its lessor in
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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,13 to wit:
Article 257. Unfair labor practices of employers.––It shall be unlawful for an employer to commit
any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-
organization;
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
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The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its
employees, to the exclusion of union members, before the scheduled certification election; 2)
the active campaign by the sales officer of petitioners against the union prevailing as a
bargaining agent during the field trip; 3) escorting its employees after the field trip to the polling
center; 4) the continuous hiring of subcontractors performing respondents’ functions; 5)
assigning union members to the Cabangan site to work as grass cutters; and 6) the enforcement
of work on a rotational basis for union members, taken together, reasonably support an
inference that, indeed, such were all orchestrated to restrict respondents’ free exercise of their
right to self-organization.
The Court is of the considered view those petitioners’ undisputed actions prior and immediately
before the scheduled certification election, while seemingly innocuous, unduly meddled in the
affairs of its employees in selecting their exclusive bargaining representative.
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Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso.,
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.
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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.
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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 petitioner’s boutique. Her
primary tasks were attending to all customer needs, ensuring efficient inventory, coordinating
orders from clients, cashiering and reporting to the accounting department. The petitioner
learned that some of their employees had access to their POS system with the use of a universal
password given to them by a certain Elmer Flores, who in turn learned of the password from the
respondent. The petitioner then conducted an investigation and asked the petitioner to explain
why she should not be disciplinarily dealt with. During the investigation the respondent was
placed under preventive suspension. After investigation the petitioner terminated the
respondent on the grounds of loss of trust or confidence. This respondent was given her final
wage and benefits less the inventory variance incurred by the store. This urged the respondent
to file a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and separation
pay. The labor arbiter ruled in her favour awarding her backwages. The petitioner appealed the
decision in the NLRC and the decision was reversed. However, upon the respondent’s petition
for certiorari in the court of appeals the decision was reinstated. Hence, this petition.
Issue:
Whether the negative sales variance could be validly deducted from the respondent’s wage?
Ruling:
No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except in cases where the
employer is authorized by law or regulations issued by the Secretary of Labor and Employment,
among others. The Omnibus Rules 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:
That the employee concerned is clearly shown to be responsible for the loss or damage;
That the employee is given reasonable opportunity to show cause why deduction should not
be made;
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That the amount of such deduction is fair and reasonable and shall not exceed the actual loss
or damage; and
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.
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Netlink Computer Inc. vs Delmo
GR No. 160827, June 18, 2014
Facts:
On November 3, 1991, Netlink Computer, Inc. Products and Services (Netlink) hired Eric S. Delmo
(Delmo) as account manager tasked to canvass and source clients and convince them to
purchase the products and services of Netlink. Delmo worked in the field most of the time. He
and his fellow account managers were not required to accomplish time cards to record their
personal presence in the office of Netlink.1 He was able to generate sales worth P35,000,000.00,
more or less, from which he earned commissions amounting to P993,558.89 and US$7,588.30. He
then requested payment of his commissions, but Netlink refused and only gave him partial cash
advances chargeable to his commissions. Later on, Netlink began to nitpick and fault find, like
stressing his supposed absences and tardiness. In order to force him to resign, Netlink issued
several memoranda detailing his supposed infractions of the company’s attendance policy.
Despite the memoranda, Delmo continued to generate huge sales for Netlink.
On November 28, 1996, Delmo was shocked when he was refused entry into the company
premises by the security guard pursuant to a memorandum to that effect. His personal
belongings were still inside the company premises and he sought their return to him. This incident
prompted Delmo to file a complaint for illegal dismissal.
In its answer to Delmo’s complaint, Netlink countered that there were guidelines regarding
company working time and its utilization and how the employees’ time would be recorded.
Allegedly, all personnel were required to use the bundy clock to punch in and out in the
morning, and in and out in the afternoon. Excepted from the rules were the company officers,
and the authorized personnel in the field project assignments. Netlink claimed that it would be
losing on the business transactions closed by Delmo due to the high costs of equipment, and in
fact his biggest client had not yet paid. Netlink pointed out that Delmo had become very lax in
his obligations, with the other account managers eventually having outperformed him. Netlink
asserted that warning, reprimand, and suspension memoranda were given to employees who
violated company rules and regulations, but such actions were considered as a necessary
management tool to instill discipline.
Issues:
Whether or not the payment of the commissions should be in US dollars.
Ruling:
Yes. The payment of the commissions should be in US dollars.
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. 8183,10 which provides as follows:
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Section 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.
There was no written contract between Netlink and Delmo stipulating that the latter’s
commissions would be paid in US dollars. The absence of the contractual stipulation
notwithstanding, Netlink was still liable to pay Delmo in US dollars because the practice of paying
its sales agents in US dollars for their US dollar-denominated sales had become a company
policy. This was impliedly admitted by Netlink when it did not refute the allegation that the
commissions earned by Delmo and its other sales agents had been paid in US dollars. Instead
of denying the allegation, Netlink only sought a declaration that the US dollar commissions be
paid using the exchange rate at the time of sale. The principle of non-diminution of benefits,
which has been incorporated in Article 10013 of 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 the payment of US dollar commissions having ripened into a company practice, there is no
way that the commissions due to Delma 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 Delma.
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PLDT vs Estranero,
GR No. 192513, October 15, 2014
Facts:
Petitioner PLDT is a public utility corporation engaged in the business of providing

telecommunication services to the general public. On July 1, 1995, PLDT employed the
respondent as an Auto-Mechanic/Electrician Helper, Job Grade 3 with a monthly salary of
P15,000.00 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.
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 not qualified for retirement pay which required an
employee to have worked for at least 15 years. The respondent was nonetheless entitled to 200%
of his basic monthly salary for every year of service by way of redundancy pay or equivalent to
P240,000.00. In addition, he was also entitled to other benefits he has earned for the years prior
to, and during the year of his actual separation, i.e., 2002 and 2003 sick leave benefits, 2002 and
2003 vacation leave and vacation leave premium benefits, longevity pay, mid-year bonus,
13th month pay and Christmas bonus, all in the sum of P27,028.37. Thus, his aggregate
redundancy pay plus other earned benefits amounted to 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.,7 Social Security System (SSS), and the
Manggagawa ng Komunikasyon sa Pilipinas, which summed to P267,028.37.8 Thus, PLDT
deducted the said amount from the payment that the respondent was supposed to receive as
his redundancy pay.
As a result, when the respondent was made to sign the Receipt, Release and Quitclaim, it
showed that 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.
Subsequently, the respondent filed a complaint for illegal dismissal with reinstatement, as well
as moral and exemplary damages plus attorney's fees, docketed as NLRC-NCR Case No. 04-
02820-97, against PLDT and Ernani Tumimbang (petitioners), the Division Head of the Fleet
Management Division where the respondent was assigned.
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Issues:
Whether or not the petitioners can validly deduct the respondent's outstanding loan obligation
from his redundancy pay.
Ruling:
No. The petitioners cannot validly deduct the respondent's outstanding loan obligation from his
redundancy pay.
It is clear in Article 11315 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.16 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 11617 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.
As aptly stated by the CA, the matter would have been different if the deductions refer to the
respondent's contributions for his being a member of SSS, HDMF, or withholding taxes on income,
because if such was the case, the contributions are deductions already sanctioned by existing
laws. Here, it is evidently emphasized that the subject deductions pertain to the respondent's
outstanding loans from various entities.
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Milan et al vs. NLRC
GR No. 202961 Feb. 4, 2015
Facts:
Milan et.al are Solid Mills, Inc.’s (Solid Mills) employees. They are represented by the National
Federation of Labor Unions (NAFLU), their collective bargaining agent.As Solid Mills’ employees,
Milan et.al. and their families were allowed to occupy SMI Village, a property owned by Solid
Mills. According to Solid Mills, this was “[o]ut of liberality and for the convenience of its
employees . . . [and] on the condition that the employees would vacatethe premises anytime
the Company deems fit.”
In September 2003, Milan et.al were informed that effective October 10, 2003, Solid Mills would
cease its operations due to serious business losses. NAFLU recognized Solid Mills’ closure due to
serious business losses in the memorandum of agreement dated September 1, 2003. The
memorandum of agreement provided for Solid Mills’ grant of separation pay less
accountabilities, accrued sick leave benefits, vacation leave benefits, and 13thmonth pay to
the employees. The agreement was entered into with full knowledge by the parties of their rights
under the law and they bound themselves not to conduct any concerted action of whatsoever
kind, otherwise the grant of financial assistance as discussed above will be withheld.Solid Mills
filed its Department of Labor and Employment termination report on September 2, 2003.Later,
Solid Mills, through Alfredo Jingco, sent to Milan et.al individual notices to vacate SMI Village.
Milan et.al. were no longer allowed to report for work by October 10, 2003. They were required
to sign a memorandum of agreement with release and quitclaim before their vacation and sick
leave benefits, 13th month pay, and separation pay would be released. Employees who signed
the memorandum of agreement were considered to have agreed to vacate SMI Village, and
to the demolition of the constructed houses inside as condition for the release of their
termination benefits and separation pay. Milan et.al. refused to sign the documents and
demanded to be paid their benefits and separation pay.
Hence, they filed complaints before the Labor Arbiter for alleged nonpayment of separation
pay, accrued sick and vacation leaves, and 13th month pay. They argued that their accrued
benefits and separation pay should not be withheld because their payment is based on
company policy and practice. Moreover, the 13thmonth pay is based on law, specifically,
Presidential Decree No. 851. Their possession of Solid Mills property is not an accountability that
is subject to clearance procedures. They had already turned over to Solid Mills their uniforms
and equipment when Solid Mills ceased operations.On the other hand, Solid Mills argued that
Milan et.al.’s complaint was premature because they had not vacated its property.
The Labor Arbiter ruled in favor of Milan et.al. According to the Labor Arbiter, Solid Mills illegally
withheld petitioners’ benefits and separation pay. The memorandum of agreement dated
September 1, 2003 stated no condition to the effect that petitioners must vacate Solid Mills’
property before their benefits could be given to them. Milan et.al.’s possession should not be
construed as their“accountabilities” that must be cleared first before the release of benefits.
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0
Solid Mills appealed to the National Labor Relations Commission. The National Labor Relations
Commission affirmed part of the decision but reversed and set aside another part and decided
that Milan et.al.’s monetary claims in the form of separation pay, accrued 13thmonth pay for
2003, accrued vacation and sick leave pays are held in abeyance pending compliance of their
accountabilities to respondent company by turning over the subject lots they respectively
occupy at SMI Village Sucat Muntinlupa City, Metro Manila to Solid Mills. Linga and four other
were already paid their respective separation pays and benefits. Meanwhile, Teodora Mahilom
already retired long before Solid Mills’ closure. She was already given her retirement benefits.
The National Labor Relations Commission ruled that because of petitioners’ failure to vacate
Solid Mills’ property, Solid Mills was justified in withholding their benefits and separation pay. Solid
Millsgranted the petitioners the privilege to occupy its property on account of petitioners’
employment. It had the prerogative to terminate such employee relationship made it
incumbent upon petitioners to turn over the property to Solid Mills.The Court of Appeals ruled
that Solid Mills’ act of allowing its employees to make temporary dwellings in its property was a
liberality on its part. It may be revoked any time at its discretion.
Issue:
Whether or not an employer is allowed to withhold terminal pay and benefits pending the
employee’s return of its properties.
Ruling:
Yes. The fact that majority of NAFLU’s members were not occupants of respondent Solid Mills’
property is evidence that possession of the property was not contemplated in the agreement.
“Accountabilities” should be interpreted to refer only to accountabilities that were incurred by
petitioners while they were performing their duties as employees at the worksite. Moreover,
applicable laws, company practice, or policies do not provide that 13thmonth pay, and sick
and vacation leave pay benefits, may be withheld pending satisfaction of liabilities by the
employee. Requiring clearance before the release of last payments to the employee is a
standard procedure among employers, whether public or private. Clearance procedures are
instituted to ensure that the properties, real or personal, belonging to the employer but are in
the possession of the separated employee, are returned to the employer before the employee’s
departure.
As a general rule, employers are prohibited from withholding wages from employees (Art. 116,
Labor Code). The Labor Code also prohibits the elimination or diminution of benefits (Art. 100,
Labor Code).However, our law supports the employers’ institution of clearance procedures
before the release of wages. As an exception to the general rule that wages may not be
withheld and benefits may not be diminished, the Labor Code provides: Art. 113. Wage
deduction. No employer, in his own behalf or inbehalf of any person, shall make any deduction
from the wages of his employees, except:
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In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
For union dues, in cases where the right of the worker or his union to check-off has been
In cases where the employer is authorized by law or regulations issued by the Secretary of Labor
and Employment.
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.” Accountabilities of
employees are personal. They need not be uniform among all employees in order to be
included in accountabilities incurred by virtue of an employer-employee relationship. Milan
et.al. do not categorically deny 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, National Labor
Relations Commission, and the Court of Appeals is that Solid Mills allowed the use of its property
for the benefit of Milan et.al. as its employees. Milan et.al were merely allowed to possess and
use it out of Solid Mills’ liberality. The employer may, therefore,demand the property at will.
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2
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Congson vs. NLRC
G.R. No. 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.
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North Davao Mining vs. NLRC
G.R. 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 company’s 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 ½hours’ 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 2½ 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.
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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.
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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 respondent’s 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 company’s fiscal situation, the employee’s
future performance on the job, or the employee’s continued stay in a position. In short, absent
any proof, there is no vested right to salary increases.
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San Juan De Dios Hospital vs. NLRC,
282 SCRA 316 [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 petitioner’s 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,
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and the Court will not hesitate to strike down an administrative interpretation that deviates from
the provision of the statute.
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.
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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 respondent’s 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.
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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;
Where the work is non-manual work in nature or does not involve strenuous physical exertion;
Where the establishment regularly operates not less than sixteen hours a day;
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
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
respondent’s act, therefore, of going home to take his dinner does not constitute
abandonment.
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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
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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.
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Bisig Manggagawa sa Tryco vs. NLRC
G.R. No. 151309, Oct. 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 company’s 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, Lariño and Barte to report to the
company’s 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
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5
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, Tryco’s 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.
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Dasco v. Philtranco Service Enterprises, Inc.,
G.R. No. 211141, June 29, 2016
Facts:
This case stemmed from a complaint for regularization, underpayment of wages, non-payment
of service incentive leave (SIL) pay, and attorney's fees, filed 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, Dasco et al (petitioners) were employed by the Philtranco (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 filed a case against the respondents alleging that: (1) they were
already qualified 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 five days, without overtime pay and below the minimum wage rate; (3) they cannot be
considered as field 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 five-day SIL since the time they were hired by the
respondents.
In response, the respondents asserted that: (1) the petitioners were paid on a fixed 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 fixed 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 field personnel whose time outside the company premises cannot be determined with
reasonable certainty since they ply provincial routes and are left alone in the field unsupervised.
Ruling of the LA
On October 17, 2011, the LA rendered a Decision in favor of the Philtranco (respondents) but
declared the Dasco et al (petitioners) as regular employees of the respondents. The LA held
that the respondents were able to prove that the petitioners were paid on a fixed 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 field personnel. The
petitioners interposed a Partial Appeal before the NLRC.
Ruling of the NLRC
The NLRC granted the petitioners' appeal and modified the LA's decision. The NLRC held that
the petitioners are not field personnel considering that they ply specific routes with fixed time
schedules determined by the respondents; thus, they are entitled to minimum wage, SIL pay,
and overtime benefits. With regard to the respondents' claim that the petitioners have a fixed
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7
term contract, the NLRC concurred with the findings 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 fixed period agreed upon. Meanwhile, during the
pendency of this case before the CA, the petitioners filed a motion for issuance of writ of
execution to enforce the NLRC decision.
Ruling of the CA
The CA reversed and set aside the NLRC rulings and reinstated the LA's decision. Consequently,
the writ of execution, levy, auction sale and certificate of sale of PSEI's properties were declared
null and void. In overturning the NLRC's decision, the CA considered the petitioners as field
workers and, on that basis, denied their claim for benefits, such as overtime pay and SIL pay.
According to the CA, there was no way for the respondents to supervise the petitioners on their
job. The petitioners are practically on their own in plying the routes in the field, as in fact, they
can deviate from the fixed routes, take short cuts, make detours, and take breaks, among
others. The petitioners work time and performance are not constantly supervised by the
respondents, thus making them field personnel.
Issue:
Whether the petitioners as bus drivers and/or conductors are field personnel, and thus entitled
to overtime pay and SIL pay.
Ruling of the Court:
The determination of whether bus drivers and/or conductors are considered as field personnel
was already threshed out in the case of Auto Bus Transport Systems, Inc. v. Bautista. The NLRC
properly concluded that the petitioners are not field personnel but regular employees who
perform tasks usually necessary and desirable to the respondents' business and 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 specified 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 specific
bus terminals at a specified time. In addition, there are always dispatchers in each and every
bus terminal, who supervise and ensure prompt departure at specified times and arrival at the
estimated proper time. Obviously, these drivers and/or conductors cannot be considered as
field personnel because they are under the control and constant supervision of the bus
companies while in the performance of their work.
Clearly, the petitioners, as bus drivers and/or conductors, are left alone in the field with the duty
to comply with the conditions of the respondents' franchise, as well as to take proper care and
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8
custody of the bus they are using. Thus, they are consequently entitled to the benefits accorded
to regular employees of the respondents, including overtime pay and SIL pay.
HSY Marketing LTD vs. Virgilio O. Villastique

G.R no. 219569. August 27, 2016
Facts:
On January 3, 2003, petitioner hired respondent as a field driver for Fabulous Jeans & Shirt &
General Merchandise. On January 10, 2011, respondent figured in an accident when the
service vehicle 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 filing a complaint for illegal dismissal with money
claims against petitioner, Fabulous Jeans, and its owner, Alexander G. Arqueza before the
NLRC.
In defense, petitioner contended that respondent committed various violations such as being
a reckless driver. 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|||
Labor Arbiter Ruling: The charge of illegal dismissal is dismissed. The LA declared that neither was
there a notice of termination issued to him, nor was he prevented from showing up in petitioner's
place of business. There was likewise no evidence submitted by petitioner that respondent had
indeed voluntarily resigned.
NLRC Ruling: In a Resolution 32 dated April 30, 2012, the 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.
CA Ruling: Affirmed in toto the NLRC Resolutions, observing that the failure of petitioner,et al. to
present the alleged resignation letter of respondent belied their claim that he voluntarily
resigned; and that the fact of filing by respondent of the labor complaint was inconsistent with
the charge of abandonment.
Ruling:
Petition is partly meritorious
First Issue:
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9
Whether there is employee-employer relationship.
There is employee-employer relationship. In fact, it is even worth noting that 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 "a field driver for the Cagayan de Oro Branch of HSY
Marketing.
Second Issue:
Whether respondent had been dismissed
respondent had not been dismissed at all. Other than the latter's unsubstantiated allegation of
having been verbally terminated from his work, no substantial evidence was presented to show
that he was indeed dismissed or was prevented from returning to his work. In the absence of
any showing of an overt or positive act proving that petitioner had dismissed respondent, the
latter's claim of illegal dismissal cannot be sustained, as such supposition would be self-serving,
conjectural, and of no probative value.
Third Issue:
Whether respondent should be given separation and service incentive leave pay.
While petitioner should not be adjudged liable for separation pay, the Court nonetheless
sustains the award of service incentive leave pay in favor of respondent, in accordance with
the finding of the CA that respondent was a regular employee of petitioner and is, therefore,
entitled to such benefit. The Court has already held that company drivers who are under the
control and supervision of management officers — like respondent herein — are regular
employees entitled to benefits including service incentive leave pay.
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Nate Casket Maker et al., vs. Arango, et al.,
GR 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 that
respondents are pakyaw workers who are paid per job order and are staying" workers with free
board and lodging. Petitioners 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.
On the other hand, respondents alleged in their Position Paper, 9 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. When the respondents refused to sign the
Contract of Employment, petitioners terminated them immediately.
On February 8, 2007, respondents led 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 Ruling:
Labor Arbiter (LA) Eduardo J. Carpio, issued a Decision dismissing the complaint for lack of merit.
While the LA acknowledged that respondents being pakyaw workers are considered regular
employees, he ruled that petitioners did not terminate the services of respondents and believed
in the denial of petitioners that respondents were called to their office on March 15, 2007 since
respondents already initiated the present case on February 8, 2007. On the issue of
underpayment, the LA held that respondents were earning more than the minimum wage per
day; and as pakyaw workers, though they are deemed regular workers, they are not entitled to
overtime pay, holiday pay, service incentive leave pay and 13th month pay citing the case of
field personnel and those paid on purely commission basis.
Respondents elevated it to the National Labor Relations Commission (NLRC).
NLRC Ruling:
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. A motion for reconsideration was filed by respondents but the same was denied.
Respondents filed a petition for certiorari to the Court of Appeals (CA).
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CA Ruling:
CA reversed and set aside the decision of the NLRC. A motion for reconsideration was filed by
petitioners but the same was denied by the CA.
Issues:
Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling
on the case?
Whether respondents' employment was terminated?
Whether respondents who are pakyaw workers and considered regular workers are entitled to
overtime pay, holiday pay, service incentive leave pay and 13th month pay?
Held:
The Supreme Court held that complainants were regular employees. They were illegally
dismissed for service. However, they are not entitled to 13th month pay.
Determination of regular employment
Article 280 of the Labor Code classifies employees into regular, project, seasonal, and casual. It
further classifies regular employees into two kinds: (I) those "engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the employer"; and (2) casual
employees who have "rendered at least one year of service, whether such service is continuous
or broken.”
The “control test” assumes primacy in the overall consideration. Under this test, an employment
relation obtains where work is performed or services are rendered under the control and
supervision of the party contracting of service, not only as the result of the work but also as to
the manner and details of the performance.
There is no dispute that the tasks performed by respondents as carpenters, painters,

and mascilladors were necessary and desirable in the usual business of petitioners who are
engaged in the manufacture and selling of caskets. In addition, 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.
Moreover, 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.
Dismissal of the regular employees
As correctly observed by the CA, there was the absence of proof to show that petitioners
conducted an investigation on the alleged drinking and petty quarrelling of respondents nor
did the petitioners provide respondents with an opportunity to explain their side with respect to
charges against them. The validity of the charge must be established in a manner consistent
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2
with due process. These circumstances, taken together, lead us to conclude that petitioners
indeed terminated respondents' employment. The positive assertion of respondents that they
were dismissed by petitioners is more convincing than the mere denial of petitioners.
In termination cases, the burden of proving just and valid cause for dismissing an employee from
his employment rests upon the employer, and the latter's failure to do so would result in a finding
that the dismissal is unjustified. Petitioners failed to discharge this burden.
Exemption from coverage of 13th month pay
In the case of David v. Macasio, held that workers engaged on pakyaw or "task basis" are
entitled to holiday and service incentive leave pay (SIL) provided they are not field personnel.
With respect to the payment of 13th month pay, however, SC held that they are not entitled to
such benefit. The governing law on 13th month pay is Presidential Decree No. 851.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 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.
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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:
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.
Whether or not SMC was not accorded with due process of law in the issuance of the
compliance order.
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:
‘Amun Jadīd (New Year), which falls on the first day of the first lunar month of Muharram;
Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third
lunar month of Rabi-ul-Awwal;
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Lailatul Isrā Wal Mi’rāj (Nocturnal Journey and Ascension of the Prophet Muhammad), which
falls on the twenty-seventh day of the seventh lunar month of Rajab;
‘Īd-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
‘Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhū’l-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. -
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;
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 worker’s 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
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6
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
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7
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
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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.
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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 attorney’s 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 employer’s 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.
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0
In this case, private respondents exercised control over the work of petitioners. As tailors,
petitioners worked in the company’s 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.
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1
R&E Transport vs. Latag
G.R. No. 155214, Feb. 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 Mallorca’s 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 Latag’s 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.
As to the Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when
it ruled that the document was invalid and could not bar her from demanding the benefits
legally due her husband. This is not 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.
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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.
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3
Asian Transmission vs. CA
425 SCRA 478 [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.
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4
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-à-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;
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5
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
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6
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.
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7
San Miguel Corp., vs. Del Rosario
G.R. No. 168194, Dec. 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 petitioner’s 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 employee’s 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 petitioner’s belated claim that respondent became a probationary employee
starting October 1, 2000 work against respondent. As earlier stated, the payroll authorities
indicating that respondent’s 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.
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8
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 employee’s 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 petitioner’s 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 petitioner’s 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
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9
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 attorney’s 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 attorney’s 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 attorney’s 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.
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Penaranda vs. Baganga Plywood Corp.
G.R. No. 159577, May 3, 2006
Facts:
Sometime in June 1999, Petitioner Charlito Peñaranda 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, Peñaranda 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.
Peñaranda 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, Peñaranda 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. Petitioner’s 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 Peñaranda 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.
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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:
 The primary duty consists of the performance of work directly related to management
policies of the employer;
 Customarily and regularly exercise discretion and independent judgment;
(i) 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
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 petitioner’s work involves:
To supply the required and continuous steam to all consuming units at minimum cost.
To supervise, check and monitor manpower workmanship as well as operation of boiler and
accessories.
 To evaluate performance of machinery and manpower.

 To follow-up supply of waste and other materials for fuel.
 To train new employees for effective and safety white working.
 Recommend parts and suppliers purchases. acEHSI
 To recommend personnel actions such as: promotion, or disciplinary action.
 To check water from the boiler, feedwater and softener, regenerate softener if beyond
hardness limit.
 Implement Chemical Dosing.
 Perform other task as required by the superior from time to time." 34
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
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2
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.
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3
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. In light of such admission, petitioner's submission of its 360 divisor
in the computation of employees' salaries gains significance.
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. In said case, the employees were required to work only from
Monday to Friday and half of Saturday. Thus, the minimum allowable divisor is 287, which is the
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4
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.
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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 ½) 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.
Petitioner’s contention that there is no factual or legal basis for the inclusion of said amount
since respondent‘s repatriation is well-taken.
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PNCC Skyway Traffic Management and Security Division Workers Organization,
GR No. 171231, Feb. 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.
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7
Radio Mindanao Network, Inc. vs. Ybarola
G.R. 198662; Sept. 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 RMN’s 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 attorney’s 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 arbiter’s 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
arbiter’s separation pay award, rejecting the NLRC’s 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.
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8
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
respondent’s 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.
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9
Robina Farms Cebu vs. Villa
GR No. 175869, April 18, 2016
Facts:
Elizabeth Villa filed a complaint against Robina Farms (URC) for illegal suspension, illegal
dismissal, nonpayment of overtime pay, and nonpayment of service incentive leave pay. Villa
averred that she had been employed Robina Farms as sales clerk since August 1981. In 2001,
she availed of the special retirement program being offered for 10 serving at least 10 years.
In 2002, she received a memorandum from Lily Ngochua requiring her to explain her failure to
issue invoices for unhatched eggs in the months of January to February 2002 since she had
overlooked the delivery receipts. An administrative hearing occurred which found her to have
violated the compay rule on the timely issuance of invoices which resulted in delay in the
payment of buyers considering that the payment had depended upon the receipt of the
invoices Because of that, she was suspended for 10 days. She then had been advised to cease
working because her application for retirement had already been approved but later her
application was disapproved since the management did not approve the benefits equivalent
to 86% of her salary rate applied for, but only 1/2 month for every year of service. She was
prevented form going back to work by confiscating her gate pass, then found out she had been
replaced.
Labor Arbiter found her to not have been dismissed and ordered URC to reinstate her but
without pay for backwages.On appeal, NLRC rendered a decision in favor of Villa plus payment
of backwages, SLIP and overtime pay amounting to 143, 592.91. On appeal, CA ruled in favor
of Villa. Hence, this petition.
Issue:
Whether or not Villa had been illegally dismissed.
Ruling:
The petition is bereft of merit.
In the case at bar, it is clear that private respondent was not admitted immediately after her
suspension. The advice given by de Guzman not to report anymore and to tender resignation
are strong indications that petitioners wanted to severe the employer-employee relationship
between them and that of private respondent. This is buttressed by the fact that when private
respondent signified her intention to return back to work after learning of the disapproval of her
application, she was prevented to enter the petitioner's premises by confiscating her ID and
informing her that a new employee has already replaced her.
However, Villa’sapplication for early retirement did not manifest her intention to sever the
employer-employee relationship. Although she applied for early retirement, she did so upon the
belief that she would receive a higher benefit based on the petitioner's offer. As such, her
consent to be retired could not be fairly deemed to have been knowingly and freely given.
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0
Retirement is the result of a bilateral act of both the employer and the employee based on their
voluntary agreement that upon reaching a certain age, the employee agrees to sever his
employment.The difficulty in the case of Villa arises from determining whether the retirement
was voluntary or involuntary. The line between the two is thin but it is one that the Court has
drawn. On one hand, voluntary retirement cuts the employment ties leaving no residual
employer liability; on the other, involuntary retirement amounts to a discharge, rendering the
employer liable for termination without cause. The employee's intent is decisive. In determining
such intent, the relevant parameters to consider are the fairness of the process governing the
retirement decision, the payment of stipulated benefits, and the absence of badges of
intimidation or coercion.
In case of early retirement programs, the offer of benefits must be certain while the acceptance
to be retired should be absolute. The acceptance by the employees contemplated herein must
be explicit, voluntary, free and uncompelled.
In Jaculbe v. Silliman University, we elucidated that: [A]n employer is free to impose a retirement
age less than 65 for as long as it has the employees' consent. Stated conversely, employees are
free to accept the employer's offer to lower the retirement age if they feel they can get a better
deal with the retirement plan presented by the employer. Thus, having terminated petitioner
solely on the basis of a provision of a retirement plan which was not freely assented to by her,
respondent was guilty of illegal dismissal.
Under the circumstances, the CA did not err in declaring the petitioner guilty of illegal dismissal
for violating Article 282 of the Labor Code and the twin notice rule.
Firstly, entitlement to overtime pay must first be established by proof that the overtime work was
actually performed before the employee may properly claim the benefit. The burden of proving
entitlement to overtime pay rests on the employee because the benefit is not incurred in the
normal course of business. Failure to prove such actual performance transgresses the principles
of fair play and equity.
And, secondly, the NLRC's reliance on the daily time records (DTRs) showing that Villa had
stayed in the company's premises beyond eight hours was misplaced. The DTRs did not
substantially prove the actual performance of overtime work. The petitioner correctly points out
that any employee could render overtime work only when there was a prior authorization
therefor by the management.Without the prior authorization, therefore, Villa could not validly
claim having performed work beyond the normal hours of work. Moreover, Section 4 (c), Rule I,
Book III of the Omnibus Rules Implementing the Labor Code relevantly states as follows:
Section 4. Principles in determining hours worked. — The following general principles shall govern
in determining whether the time spent by an employee is considered hours worked for purposes
of this Rule:
(c) If the work performed was necessary, or it benefited the employer, or the employee could
not abandon his work at the end of his normal working hours because he had no replacement,
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1
all time spent for such work shall be considered as hours worked, if the work was with the
knowledge of his employer or immediate supervisor.
Although the 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, the employer is still obliged to prove
that it fully paid the accrued service incentive leave pay to the employee.
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2
Dasco v. Philtranco Service Enterprises, Inc.,
G.R. No. 211141, [June 29, 2016])
Facts:
This case stemmed from a complaint for regularization, underpayment of wages, non-payment
of service incentive leave (SIL) pay, and attorney's fees, filed 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, Dasco et al (petitioners) were employed by the Philtranco (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 filed a case against the respondents alleging that: (1) they were
already qualified 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 five days, without overtime pay and below the minimum wage rate; (3) they cannot be
considered as field 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 five-day SIL since the time they were hired by the
respondents.
In response, the respondents asserted that: (1) the petitioners were paid on a fixed 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 fixed 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 field personnel whose time outside the company premises cannot be determined with
reasonable certainty since they ply provincial routes and are left alone in the field unsupervised.
Ruling of the LA
On October 17, 2011, the LA rendered a Decision in favor of the Philtranco (respondents) but
declared the Dasco et al (petitioners) as regular employees of the respondents. The LA held
that the respondents were able to prove that the petitioners were paid on a fixed 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 field personnel. The
petitioners interposed a Partial Appeal before the NLRC.
Ruling of the NLRC
The NLRC granted the petitioners' appeal and modified the LA's decision. The NLRC held that
the petitioners are not field personnel considering that they ply specific routes with fixed time
schedules determined by the respondents; thus, they are entitled to minimum wage, SIL pay,
and overtime benefits. With regard to the respondents' claim that the petitioners have a fixed
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term contract, the NLRC concurred with the findings 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 fixed period agreed upon. Meanwhile, during the
pendency of this case before the CA, the petitioners filed a motion for issuance of writ of
execution to enforce the NLRC decision.
Ruling of the CA
The CA reversed and set aside the NLRC rulings and reinstated the LA's decision. Consequently,
the writ of execution, levy, auction sale and certificate of sale of PSEI's properties were declared
null and void. In overturning the NLRC's decision, the CA considered the petitioners as field
workers and, on that basis, denied their claim for benefits, such as overtime pay and SIL pay.
According to the CA, there was no way for the respondents to supervise the petitioners on their
job. The petitioners are practically on their own in plying the routes in the field, as in fact, they
can deviate from the fixed routes, take short cuts, make detours, and take breaks, among
others. The petitioners work time and performance are not constantly supervised by the
respondents, thus making them field personnel.
Issue:
Whether the petitioners as bus drivers and/or conductors are field personnel, and thus entitled
to overtime pay and SIL pay.
Ruling of the Court :
The determination of whether bus drivers and/or conductors are considered as field personnel
was already threshed out in the case of Auto Bus Transport Systems, Inc. v. Bautista. The NLRC
properly concluded that the petitioners are not field personnel but regular employees who
perform tasks usually necessary and desirable to the respondents' business and 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 specified 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 specific
bus terminals at a specified time. In addition, there are always dispatchers in each and every
bus terminal, who supervise and ensure prompt departure at specified times and arrival at the
estimated proper time. Obviously, these drivers and/or conductors cannot be considered as
field personnel because they are under the control and constant supervision of the bus
companies while in the performance of their work.
Clearly, the petitioners, as bus drivers and/or conductors, are left alone in the field with the duty
to comply with the conditions of the respondents' franchise, as well as to take proper care and
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custody of the bus they are using. Thus, they are consequently entitled to the benefits accorded
to regular employees of the respondents, including overtime pay and SIL pay.
HSY Marketing LTD vs. Virgilio O. Villastique

G.R no. 219569. August 27, 2016
Facts:
On January 3, 2003, petitioner hired respondent as a field driver for Fabulous Jeans & Shirt &
General Merchandise. On January 10, 2011, respondent figured in an accident when the
service vehicle 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 filing a complaint for illegal dismissal with money
claims against petitioner, Fabulous Jeans, and its owner, Alexander G. Arqueza before the
NLRC.
In defense, petitioner contended that respondent committed various violations such as being
a reckless driver. 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|||
Labor Arbiter Ruling: The charge of illegal dismissal is dismissed. The LA declared that neither was
there a notice of termination issued to him, nor was he prevented from showing up in petitioner's
place of business. There was likewise no evidence submitted by petitioner that respondent had
indeed voluntarily resigned.
NLRC Ruling: In a Resolution 32 dated April 30, 2012, the 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.
CA Ruling: Affirmed in toto the NLRC Resolutions, observing that the failure of petitioner,et al. to
present the alleged resignation letter of respondent belied their claim that he voluntarily
resigned; and that the fact of filing by respondent of the labor complaint was inconsistent with
the charge of abandonment.
Ruling:
Petition is partly meritorious
First Issue:
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Whether there is employee-employer relationship.
There is employee-employer relationship. In fact, it is even worth noting that 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 "a field driver for the Cagayan de Oro Branch of HSY
Marketing.
Second Issue:
Whether respondent had been dismissed
respondent had not been dismissed at all. Other than the latter's unsubstantiated allegation of
having been verbally terminated from his work, no substantial evidence was presented to show
that he was indeed dismissed or was prevented from returning to his work. In the absence of
any showing of an overt or positive act proving that petitioner had dismissed respondent, the
latter's claim of illegal dismissal cannot be sustained, as such supposition would be self-serving,
conjectural, and of no probative value.
Third Issue:
Whether respondent should be given separation and service incentive leave pay.
While petitioner should not be adjudged liable for separation pay, the Court nonetheless
sustains the award of service incentive leave pay in favor of respondent, in accordance with
the finding of the CA that respondent was a regular employee of petitioner and is, therefore,
entitled to such benefit. The Court has already held that company drivers who are under the
control and supervision of management officers — like respondent herein — are regular
employees entitled to benefits including service incentive leave pay.
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DE LA SALLE ARANETA UNIVERSITY (DLS-AU) v. JUANITO C. BERNARDO
G.R. No. 190809, February 13, 2017
FACTS:
Bernardo taught as a part-time professional lecturer at DLS-AU since 1974. On November 8, 2003,
DLS-AU informed him that he could not teach anymore due to the retirement age limit. Bernardo
was 75 years old at the time and was being paid P246.50 per hour. DOLE informed him that he
was entitled to receive benefits under RA 7641, also known as the "New Retirement Law.”
a.) Petitioner’s Arguments
DLS-AU argued that Bernardo was not covered by the law since he was a part-time employee
and that Bernardo was not entitled to any kind of separation pay or benefits. Dr. Bautista
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
preceeding 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. The school further averred that Bernardo’s employment bond
was severed when he reached the mandatory retirement age of 65. 10 years have passed since
then. His claim for retirement benefits should have prescribed, because under Article 291 of the
Labor Code, all money claims shall be filed within three years from the time the cause of action
accrues.
b.) Respondent’s Arguments
Bernardo alleged that he started working as a part-time professional lecturer at DLS-AU on June
1, 1974 for an hourly rate of P20.00. Bernardo taught for two semesters and the summer for the
school year 1974-1975. Bernardo then took a leave of absence from June 1, 1975 to October
31, 1977 when he was assigned by the Philippine Government to work in Papua New Guinea.
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. At the time of his retirement, Bernardo was being paid
P246.50 per hour.
NLRC: The Labor Arbiter dismissed Bernardo’s complaint on the ground of prescription. This was
reversed by the NLRC. It held that the school is estopped from claiming prescription because it
permitted Bernardo to work beyond the mandatory retirement age. Furthermore, part-time
employees are covered under RA 7641.
Under Republic Act No. 7641, part-time workers are entitled to retirement pay of one-half month
salary for every years of service, provided that the following conditions are present: (a) there is
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no retirement plan between the employer and employees; (b) the employee has reached the
age of 60 years old for optional retirement or 65 years old for compulsory retirement; and (c) the
employee should have rendered at least five years of service with the employer.
Bernardo avowed that all these conditions were extant in his case.
CA: The CA affirmed in toto the NLRC judgment.
ISSUE:
1. W/N part-time employees receive retirement benefits despite a lack of CBA
2. W/N Bernardo’s claim has prescribed
3. W/N the doctrine of equitable estoppel applies
RULING:
1. YES.
Based on RA 7641, its Implementing Rules, and the October 24, 1996 Labor Advisory, the only
employees exempted from retirement pay are: (1) those 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) those of retail, service and
agricultural establishments or operations regularly employing not more than 10 employees.
Under expressiouniusestexclusioalterius , Since part-time employees are not among those
specifically exempted, Bernardo’s claim stands. Being 75 years old at the time of his retirement,
having served DLS-AU for a total of 27 years, and not being covered by the grant of retirement
benefits in the CBA - is unquestionably qualified to avail himself of retirement benefits under said
statutory provision, i.e. , equivalent to one-half month salary for every year of service, a fraction
of at least six months being considered as one whole year.
2. NO.
Art. 306 [291]. Money claims. - All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three years from the time the
cause of action accrued; otherwise they shall be forever barred. A cause of action has three
elements: (a) a right in favor of the plaintiff; (b) an obligation on the part of the defendant to
respect or not to violate such right; and (c) 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. The third element occurred when DLS-AU refused to pay Bernardo's retirement
benefits. Only then did the period of prescription begin to run. Bernardo's right to retirement
benefits and the obligation of DLS-AU to pay such benefits are already established under Article
302 [287] of the Labor Code, as amended by Republic Act No. 7641. However, there was a
violation of Bernardo's right only after DLS-AU informed him on November 8, 2003 that the
university no longer intended to offer him another contract of employment, and already
accepting his separation from service, Bernardo sought his retirement benefits, but was denied
by DLS AU. Therefore, the cause of action for Bernardo's retirement benefits only accrued after
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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, filed with the NLRC on February 26, 2004, was
filed within the three-year prescriptive period provided under Article 291 of the Labor Code.
Even granting arguendo that Bernardo's cause of action already accrued when he reached
65 years old, we cannot simply overlook the fact that DLS-AU had repeatedly extended
Bernardo's employment even when he already reached 65 years old. DLS-AU still knowingly
offered Bernardo, and Bernardo willingly accepted, contracts of employment to teach for
semesters and summers in the succeeding 10 years. Since DLS-AU was still continuously engaging
his services even beyond his retirement age, Bernardo deemed himself still employed and
deferred his claim for retirement benefits, under the impression that he could avail himself of the
same upon the actual termination of his employment. The equitable doctrine of estoppel is thus
applicable against DLS-AU.
3. YES.
For the principle of equitable estoppel to apply, there must be (a) conduct amounting to false
representation or concealment of material facts or at least calculated to convey the impression
that the facts are otherwise than, and inconsistent with, those which the party subsequently
attempts to assert; (b) intent, or at least expectation that this conduct shall be acted upon, or
at least influenced by the other party; and (c) knowledge, actual or constructive, of the actual
facts.
In this case, DLS-AU, kept its silence that Bernardo had already reached the compulsory
retirement age of 65 years old. It even continuously offered him contracts of employment for
the next 10 years. It should not be allowed to escape its obligation to pay Bernardo's retirement
benefits.
Conclusion:
The instant Petition is DISMISSED for lack of merit. The Decision dated June 29, 2009 and
Resolution dated January 4, 2010 of the Court of Appeals in CA-G.R. SP No. 106399 are
AFFIRMED.
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Reyes v. 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, 2997. 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 Php 42,766.19,
which consists of Php 10,919.22 basic salary and Php 31,846.97 average monthly commission,
petitioner refused to accept the check issued by private respondent in the amount of Php
200,322.21. Instead, he filed a complaint for retirement benefits, 13th month pay, tax refund,
earned sick and vacation leaves, financial assistance, service incentive leave pay, damages
and attorney’s fees.
The Labor Arbiter rendered a decision holding that sales commission is part of the basic salary
of a unit manager. Thus, respondent Universal Robina Corporation-Grocery Division was ordered
to pay complainant representing his retirement benefits, 13th month pay for 1997, 13th month
pay differential for 1996 and 1995, VL and SL Cash conversion, withheld commission for 1997,
financial assistance and tax refund plus attorney’s fees equivalent to 5% of the total award. On
appeal, the NLRC modified the decision of the Labor Arbiter by excluding the overriding
commission in the computation of the retirement benefits and 13th month pay and deleted the
award of attorney’s fees. The CA dismissed the petition which was on appeal for lack of merit.
Hence, the petition.
Issues:
Whether or not the average monthly sales commission is included in the computation of
retirement benefits and 13th month pay.
Ruling:
The petition lacks merit. Any seeming inconsistencies between Philippine Duplicators and Boie-
Takeda had been clarified by the court in the resolution dated Feb. 15, 1995 in the Philippine
Duplicators case.
The Court thus clarified that in Philippine Duplicators, the salesmen’s commissions, comprising a
predetermined 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 nor any other fringe
benefit, but a potion of the salary structure which represents an automatic increment to the
monetary value initially assigned to each unit of work rendered by a salesman.
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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 the 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. Thus, our review thereof in
the case at bar would violate the settled rule that findings of facts of quasi-judicial bodies like
the NLRC, and affirmed by the Court of Appeals in due course, are conclusive on this Court,
which is not a trier of facts. Nevertheless, should petitioner’s commissions be considered in the
computation of his retirement benefits and 13th month pay?
We rule in the negative.
As aptly observed by the Court of Appeals:
In fine, Boie-Takeda and Philippine Duplicator particularize the types of earnings and
remuneration that should or should not properly be included or integrated in the basic salary
and which questions are to be resolved or determined on a case-to-case basis, in the light of
the specific and detailed facts of each case. In other words, 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 Reyes was receiving a monthly sum of Php 10,919.22 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 any 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.
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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.
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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 petitioner’s 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 12 months.
Respondent protested the prorated scheme, claiming that on several occasions petitioner did
not prorate the payment of the same benefits to 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 Art 100 of the Labor Code. Thus, they filed a complaint before the NCMB. The
parties submitted the case for a voluntary arbitration.
The voluntary arbitrator ruled in favour of petitioner and found that the giving of the contested
benefits in full, irrespective of the actual service rendered within one year has not ripened into
a practice. The CA ruled that the CBA did not intend to foreclose the application of prorated
payments of leave benefits to covered employees. The appellate court found that petitioner,
however, had an existing voluntary practice of paying the aforesaid benefits in full to its
employees, thereby rejecting the claim that petitioner erred in paying full benefits to its seven
employees. Petitioner moved for the reconsideration of the decision but its motion was denied,
hence this petition.
Issues:
WON the grant of the 13th month pay, bonus, and leave encashment in full regardless of actual
service rendered constitutes a voluntary employer practice;
WON the prorated payment of the said benefits constitute diminution of benefits under Art. 100
of the Labor Code.
Ruling:
The petition ultimately fails.
First, we determine whether the intent of the CBA provisions is to grant full benefits regardless of
service actually rendered by an employee to the company. According to petitioner, there is a
one-year cut-off in the entitlement to the benefits provided in the CBA which is evident from the
wording of its pertinent provisions as well as of the existing law. We agree with petitioner.
There is no doubt that in order to be entitled to the full monetization of 16 days of vacation and
sick leave, one must have rendered at least 1 year of service. The clear wording of the provisions
does not allow any other interpretation. Anent the 13th month pay and bonus, we agree with
the findings of Mangabat that the CBA provisions did not give any meaning different from that
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4
given by the law, thus it should be computed at 1/12 of the total compensation which an
employee receives for the whole calendar year. The bonus is also equivalent to the amount of
the 13th month pay given, or in proportion to the actual service rendered by an employee within
the year.
On the second issue, however, petitioner founders.
Petitioner granted, in several instances, full benefits to employees who have not served a full
year. Petitioner, however, claims that its full payment of benefits regardless of the length of
service to the company does not constitute voluntary employer practice. It points out that the
payments had been erroneously made and they occurred in isolated cases. We disagree.
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 Art. 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 favour 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
Davao Fruits 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 favourable 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 employer’s 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. Meanwhile in Davao Integrated Port Stevedoring Services v. Abarques, the Court
ordered the payment of the cash equivalent of the unenjoyed sick leave benefits to its
intermittent workers after finding that said workers had received these benefits for almost four
years until the grant was stopped due to a different interpretation of the CBA provisions. We
held that the employer cannot unilaterally withdraw the existing privilege of computation of
conversion to cash given to said workers, and as also noted that the employer had in fact
granted and paid cash equivalent of the unenjoyed portion of the sick leave benefits to some
intermittent workers.
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 7 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 6 years, 3 years, or even as
short as 2 years. Petitioner cannot shirk away from its responsibility by merely claiming that it was
a mistake or error.
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5
Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it could have easily
presented other proofs, such as the names of the other employees who did not fully serve for
one year and thus were given prorated benefits. Experientially, a perfect attendance in the
workplace is always the goal but it is seldom achieved. There must have been other employees
who had reported for work less than a full year and who as a consequence received only
prorated benefits. This could have easily bolstered petitioner’s theory of mistake/error, but sadly,
no evidence to that effect was presented.
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6
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 Caballeda worked as a welder for URSUMCO from March 1989 until June 23, 1997
with a salary of Php 123.00 per day, while respondent Cadalin worked for URSUMCO as crane
operator from 1976 to June 15, 1997 with a salary of Php 209.30/day.
On April 24, 1991, Gokongwei Jr., President of URSUMCO, issued a Memo establishing the
company policy on “Compulsory Retirement” of its employees. All employees corporate-wide
who attain 60years of age on or before April 30, 1991 shall be considered retired on May 31,
1991. Henceforth, any employee shall be considered retired 30days after he attains age 60.
Subsequently, RA No 7641 was enacted into law amending Art 287 of the Labor Code.
On April 29, 1993, URSUMCO and the National Federaion 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 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, having reached the age of 60, were allegedly forced to retire by
URSUMCO. Agripino averred that URSUMCO illegally dismissed him from employment when he
was forced to retire upon reaching the age of 60. Upon the termination of his employment, he
accepted his separation pay and applied for retirement benefits with the SSS. Alejandro, on the
other hand, filed his application for retirement with URSUMCO, attaching his birth and baptismal
certificates. He accepted his retirement benefits and executed a quitclaim in favor of
URSUMCO.
Agripino filed a complaint for illegal dismissal, damages and attorney’s fees. He alleged that his
compulsory retirement was in violation of the provisions of RA 7641 and, was in effect a form of
illegal dismissal. Alejandro likewise filed a complaint for illegal dismissal, underpayment of
retirement benefits, damages and attorney’s 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 60 who were
allowed to continuously report for work.
The LA ruled in favor of respondents. The NLRC set aside the LA’s decision ruling that Alejandro
voluntarily retired but since his retirement benefit was based merely on 15days salary for every
year of service, such benefit should be recomputed to conform to the provisions of Art. 287 of
the Labor Code as amended. With respect to Agripino, the NLRC held that URSUMCO’s claim
that Agripino was a mere casual employee was obviously designed to avoid paying Agripino
his retirement benefit. On appeal, CA declared that URSUMCO illegally dismissed the
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respondents since the Memo unilaterally imposed upon the respondents compulsory retirement
at the age of 60. The CA found that there is no existing CBA or employment contract between
the parties that provides for early compulsory retirement. Hence, the present petition.
Issues:
WON RA 7641 can be given retroactive effect.
WON respondents were illegally terminated on account of compulsory retirement or the same
voluntarily retired.
Ruling:
The petition lacks merit.
First. The issue of the retroactive effect of RA 7641 on prior existing employment contracts has
long been settled. The doctrine in Enriquez Security Services, Inc. v. Cabotaje, has been
repeatedly upheld and clarified in several cases. Pursuant thereto, this court imposed 2 essential
requisites in order that RA 7641 may be given retroactive effect: (1) the claimant for retirement
benefits was still in the employ of the employer at the time the statute took effect; and (2) the
claimant had complied with the requirements for eligibility for such retirement benefits under
the statute.
It is evident from the records that when respondents were compulsorily retired from the service,
RA 7641 was already in full force and effect. The petitioners failed to prove that the respondents
did not comply with the requirements for eligibility under the law for such retirement benefits. In
sum, the aforementioned requisites were adequately satisfied, thus warranting the retroactive
application of RA 7641 in this case.
Second. 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 doe 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 2 types of retirement: (1)
compulsory (2) optional. The first takes place at age 65 while the second is primarily determined
by the CBA or other employment contract or employer’s retirement plan. In the absence of any
provision on optional retirement in a CBA, other employment contract, or employer’s retirement
plan, an employee may optionally retire upon reaching hte age of 60 or more, but not beyond
65, provided he has served at least 5 years in the establishment concerned. That prerogative is
exclusively lodged in the employee.
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8
Generally, the law looks with disfavour 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.
In exceptional cases, the Court has accepted the validity of quitclaims executed by employees
if the employer is able to prove the following requisites: (10) the employee executes a deed of
quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the
consideration of the quitclaim is credible and reasonable; and (4) the contract is not contrary
to law, public order, public policy, morals or good customs or prejudicial to a third person with
a right recognized by law. In this case, petitioners failed to establish all the foregoing requisites.
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.
We find no reversible error and thus sustain the ruling of the CA that respondents did not
voluntarily retire but were rather forced to retire tantamount to illegal dismissal
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9
Lourdes Cercado vs. Uniprom, Inc.
G.R. No. 188154; October 13, 2010
Facts:
Petitioner Lourdes A. Cercado started working for respondent UNIPROM, Inc. on December 15,
1978 as a ticket seller assigned at Fiesta Carnival. Later on, she was promoted as cashier and
then as clerk typist. On April 1, 1980, UNIPROM instituted an Employees’ Non-Contributory
Retirement Plan which provides that any participant with twenty (20) years of service, regardless
of age, may be retired at his option or at the option of the company. On January 1, 2001,
UNIPROM amended the retirement plan in compliance with RA 7641. Under the revised
retirement plan, UNIPROM reserved the option to retire employees who were qualified to retire
under the program.
Sometime in December 2000, UNIPROM implemented a company-wide early retirement

program for its 41 employees, including herein petitioner, who, at that time, was 47 years old,
with 22 years of continuous service to the company. She was offered an early retirement
package amounting to P171,982.90, but she rejected the same. UNIPROM exercised its option
under the retirement plan, and decided to retire Cercado effective at the end of business hours
on February 15, 2001. A check of even date in the amount of P100,811.70, representing her
retirement benefits under the regular retirement package, was issued to her. Cercado refused
to accept the check. UNIPROM nonetheless pursued its decision and Cercado was no longer
given any work assignment. This prompted Cercado to file a complaint for illegal dismissal
before the Labor Arbiter, alleging, among others, that UNIPROM did not have a bona fide
retirement plan, and that even if there was, she did not consent thereto.
The LA rendered a decision finding petitioner to be illegally dismissed. Respondent company

was ordered to reinstate her with payment of full backwages. The NLRC affirmed the LA’s
decision, adding that there was no evidence that Cercado consented to the alleged
retirement plan of UNIPROM or that she was notified thereof. On certiorari, the CA set aside the
decisions of the LA and the NLRC declaring respondent’s retirement as valid and legal being in
conformity with petitioners’ Retirement Plan. Hence, the present petition.
Issues:
Whether or not UNIPROM has a bona fide retirement plan;
Whether or not petitioner was validly retired pursuant thereto.
Ruling:
The 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. Article 287 of the Labor Code, as amended by R.A. No.
7641, pegs the age for compulsory retirement at 65 years, while the minimum age for optional
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retirement is set at 60 years. An employer is, however, 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.
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 of law.
In numerous decided cases, the retirement plans in issue were the result of negotiations and
eventual agreement between the employer and the employees. The plan was either embodied
in a 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. Unfortunately, no similar situation obtains in the
present case. In fact, not even an iota of voluntary acquiescence to UNIPROM’s early retirement
age option is attributable to petitioner.
The assailed retirement plan of UNIPROM is not embodied in a CBA or in any employment
contract or agreement assented to by petitioner and her co-employees. On the contrary,
UNIPROM’s Employees’ Non-Contributory Retirement Plan was unilaterally and compulsorily
imposed on them. This is evident in the following provisions of the 1980 retirement plan and its
amended version in 2000. Verily, petitioner was forced to participate in the plan, and the only
way she could have rejected the same was to resign or lose her job. The assailed CA Decision
did not really make a finding that petitioner actually accepted and consented to the plan. The
CA simply declared that petitioner was deemed aware of the retirement plan on account of
the length of her employment with respondent. Implied knowledge, regardless of duration,
cannot equate to the voluntary acceptance required by law in granting an early retirement
age option to an employer. The law demands more than a passive acquiescence on the part
of employees, considering that an employer’s early retirement age option involves a concession
of the former’s constitutional right to security of tenure.
his or her employment with the former. Acceptance by the employees of an early retirement
age option must be explicit, voluntary, free, and uncompelled. While an employer may
unilaterally retire an employee earlier than the legally permissible ages under the Labor Code,
this prerogative must be exercised pursuant to a mutually instituted early retirement plan. In
other words, only the implementation and execution of the option may be unilateral, but not
the adoption and institution of the retirement plan containing such option. For the option to be
valid, the retirement plan containing it must be voluntarily assented to by the employees or at
least by a majority of them through a bargaining representative.
We disagree with the CA’s conclusion that the retirement plan is part of petitioner’s employment
contract with respondent. It must be underscored that petitioner was hired in 1978 or 2 years
before the institution of UNIPROM’s retirement plan in 1980. Logically, her employment contract
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did not include the retirement plan, much less the early retirement age option contained
therein.
We also cannot subscribe to respondent’s submission that petitioner’s consent to the retirement
plan may be inferred from her signature in the personnel action forms containing the phrase:
"Employee hereby expressly acknowledges receipt of and undertakes to abide by the provisions
of his/her Job Description, Company Code of Conduct and such other policies, guidelines, rules
and regulations the company may prescribe." It should be noted that the personnel action forms
relate to the increase in petitioner’s salary at various periodic intervals. To conclude that her
acceptance of the salary increases was also, simultaneously, a concurrence to the retirement
plan would be tantamount to compelling her to agree to the latter. Moreover, voluntary and
equivocal acceptance by an employee of an early retirement age option in a retirement plan
necessarily connotes that her consent specifically refers to the plan or that she has at least read
the same when she affixed her conformity thereto.
Hence, consistent with the Court’s ruling in Jaculbe, having terminated petitioner merely on the
basis of a provision in the retirement plan which was not freely assented to by her, UNIPROM is
guilty of illegal dismissal. Petitioner is thus entitled to reinstatement without loss of seniority rights
and to full backwages computed from the time of her illegal dismissal in February 16, 2001 until
the actual date of her reinstatement. If reinstatement is no longer possible because the position
that petitioner held no longer exists, UNIPROM shall pay backwages as computed above, plus,
in lieu of reinstatement, separation pay equivalent to one-month pay for every year of service.
This is consistent with the preponderance of jurisprudence relative to the award of separation
pay in case reinstatement is no longer feasible.
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2
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 RMN. They eventually became account managers, soliciting
advertisements and servicing various clients of RMN. The respondents’ services were terminated
as a result of RMN’s 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 attorney’s 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 arbiter’s 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
arbiter’s separation pay award, rejecting the NLRC’s 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.
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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
respondent’s length of service – 25 years for Ybarola and 19 years for Rivera.
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4
Padillo vs. Rural bank of Nabunturan Inc.
G.R. No. 199338; Jan. 21, 2013
Facts:
On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed by respondent
Rural Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to liquidity problems which
arose sometime 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. In this regard, the Bank
procured Philam Plan Certificate of Full Payment No. 88204, Plan Type 02FP10SC, Agreement
No. PP98013771 (Philam Life Plan) in favor of Padillo for a benefit amount of P100,000.00 and
which was set to mature on July 11, 2009. During the latter part of 2007, Padillo suffered a mild
stroke due to hypertension which consequently impaired his ability to effectively pursue his work.
On September 10, 2007, he wrote a letter addressed to respondent Oropeza, the president of
the bank, expressing his intention to avail of an early retirement package. Despite several follow-
ups, his request remained unheeded. On October 3, 2007, Padillo was separated from
employment due to his poor and failing health as reflected in a Certification dated December
4, 2007 issued by the Bank. Not having received his claimed retirement benefits, Padillo filed with
the NLRC a complaint for the recovery of unpaid retirement benefits.
Ruling:
The Labor Code provision on termination on the ground of disease under Article 297 does not
apply in this case, considering that it was the petitioner and not the Bank who severed the
employment relations. It was Padillo who voluntarily retired and that he was not terminated by
the Bank.
Under Article 300 of the Labor Code, in the absence of any applicable agreement, an
employee must:
Retire when he is at least sixty (60) years of age and
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 employee's entitlement to the retirement benefits under Article 300 of the Labor
Code.
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. In the absence of any applicable contract or any evolved
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5
company policy, Padillo should have met the age and tenure requirements set forth under
Article 300 of the Labor Code to be entitled to the retirement benefits provided therein.
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.
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Grace Christian High School vs. Lavandera
GR No. 177845, August 20, 2014
Facts:
Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher
since June1977, with a monthly salary of 18,662.00 as of May 31, 2001.
On August 30, 2001, Filipinas filed a complaint for illegal (constructive) dismissal, non-payment
of service incentive leave (SIL) pay, separation pay, service allowance, damages, and
attorney’s fees against GCHS and/or its principal, Dr. James Tan. She alleged that on May 11,
2001, she was informed that her services were to be terminated effective May 31, 2001, pursuant
to GCHS’ 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 (½)
month for every year of service. At that time, Filipinas was only 58 years old and still physically fit
to work. She pleaded with GCHS to allow her to continue teaching but her services were
terminated, contrary to the provisions of Republic Act No. (RA) 7641, otherwise known as the
“Retirement Pay Law.”
LA dismissed the illegal dismissal case but found the retirement benefits payable under GCHS
plan to be deficient. NLRC reversed LA’s award and held that retirement pay should be
computed based on her monthly salary at the time of her retirement. CA modified NLRC’s
decision and ruled that the computation of “one-half month salary” by equating it to”22.5
days”.
Issue:
Whether or not the multiplier “22.5 days” is to be used in computing the retirement pay
differentials of Filipinas.
Ruling:
Yes. RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor
Code, providing for the rules on retirement pay to qualified private sector employees in the
absence of any retirement plan in the establishment. The said law states that “an employee’s
retirement benefits under any collective bargaining agreement (CBA)]and other agreements
shall not be less than those provided” under the same – that is, 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 – and that “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.” Applicability of the
½ month salary provision
1. There is no CBA or other applicable agreement providing for retirement benefits to

employees, or
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2. There is a CBA or other applicable agreement providing for retirement benefits but it is below
the requirement set by law.
Verily, the determining factor in choosing which retirement scheme to apply is still superiority in
terms of benefits provided.
In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which
gives it 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 (1/2) month for every year of service. Considering,
however, that GCHS computed Filipinas’ retirement pay without including one-twelfth (1/12) of
her 13th month pay and the cash equivalent of her five (5) days SIL, both the NLRC and the CA
correctly ruled that Filipinas’ retirement benefits should be computed in accordance with Article
287 of the Labor Code, as amended by RA 7641, being the more beneficent retirement scheme.
They differ, however, in the resulting benefit differentials due to divergent interpretations of the
term “one-half (1/2) month salary” as used under the law.Elegir v. Philippine Airlines, Inc.: “one-
half (1/2) month salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12)
of the 13th month pay and the remaining 5 days for SIL.”
The Court sees no reason to depart from this interpretation. GCHS’ argument therefore that the
5 days SIL should be likewise pro-rated to their 1/12 equivalent must fail.
Moreover, the Court held that the award of legal interest at the rate of 6% per annum on the
amount of P68,150.00 representing the retirement pay differentials due Filipinas should be
reckoned from the rendition of the LA’s Decision on March 26, 2002 and not from the filing of
the illegal dismissal complaint.
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GOODYEAR PHILIPPINES, INC. and REMEGIO M. RAMOS, petitioners, vs . MARINA L.
ANGUS, respondent.
G.R. No. 185449. November 12, 2015
Facts:
Angus was employed by Goodyear occupying the position of Secretary to the Manager of
Quality and Technology. In order to maintain the viability of its operations in the midst of
economic reversals, Goodyear implemented cost-saving measures which included the
streamlining of it’s workforce. Meanwhile and in connection with the retrenchment of Angus, an
Establishment Termination Report 8 was fled by Goodyear with the Department of Labor and
Employment (DOLE). Angus accepted the checks which covered payment of her retirement
benefits computed at 47 days' pay per year of service and other company benefits. However,
she put the following annotation in the acknowledgement receipt: Received under protest —
amount is not acceptable. Acceptance is on condition that I will be given a premium of
additional 3 days for every year of service. And because of Angus’ refusal to sign a Release and
Quitclaim, petitioners took back the checks.
In response to Angus’ protest, Ramos wrote her a letter explaining that the company has already
offered her the most favorable separation benefits due to redundancy, that is 47 days’ pay per
year of service instead of the applicable rate of 45 days’ pay per year of service. When she
finally accepted a check in the amount of P1,958,927.89 purportedly inclusive of all termination
computed at 47 days’ pay per year of service, she executed a Release and Quitclaim in favor
of Good year then filed with the Labor Arbiter a complaint for illegal dismissal with claims for
separation pay, damages and attorney’s fees against petitioners. She contends that she is
entitled by law is entirely different from the retirement benefits that she received. However,
petitioners asseverated that Angus was validly dismissed for an authorized cause and voluntarily
accepted her termination benefits and freely executed the corresponding quitclaim. They also
reiterate that her retirement benefits is higher than the regular separation pay which barred her
from recovering separation pay due to redundancy.
The Labor Arbiter upheld the validity of Angus’ termination from employment and declared that
the amount she received from the company was actually payment of separation pay due to
redundancy, only that it was computed under the CBA’s retirement plan since the same was
more advantageous to her. NLRC affirmed the ruling of the Labor Arbiter.
The CA ruled that Angus is entitled to the payment of both retirement benefit and separation
pay in view of the absence of any provision in the CBA prohibiting the payment of both. It also
concluded that Angus did not voluntarily sign the release and quitclaim as under its terms, she
would receive less than what she is legally entitled to.
Issue:
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Whether the payment of separation pay to respondent on top of the retirement pay despite
the fact that it is very clear in the Collective Bargaining Agreement that respondent is entitled
to only one type of benefit, either separation pay or retirement benefit, whichever is higher
Ruling:
Yes
Angus is entitled to both separation pay and early retirement benefit due to the absence of a
specific provision in the CBA prohibiting recovery of both.
In Aquino v. National Labor Relations Commission , citing Batangas Laguna Tayabas Bus
Company v. Court of Appeals and University of the East v. Hon. Minister of Labor, 35 the Court
held that an employee is entitled to recover both separation pay and retirement benefits in the
absence of a specific prohibition in the Retirement Plan or CBA.
The CA, thus, committed no error in reversing the Decisions of the labor tribunals when it ruled in
favor of Angus' entitlement to both retirement benefits and separation pay. Moreover, the
Court agrees with the CA that the amount Angus received from petitioners represented only
her retirement pay and not separation pay.
It is worthy to mention at this point that retirement benefits and separation pay are not mutually
exclusive. Retirement benefits are a form of reward for an employee's loyalty and service to an
employer and are earned under existing laws, CBAs, employment contracts and company
policies. On the other hand, separation pay is that amount which an employee receives at the
time of his severance from employment, designed to provide the employee with the
wherewithal during the period that he is looking for another employment and is recoverable
only in instances enumerated under Articles 283 and 284 of the Labor Code or in illegal dismissal
cases when reinstatement is not feasible. In the case at bar, Article 283 clearly entitles Angus to
separation pay apart from the retirement benefits she received from petitioners.
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0
Banco De Oro Unibank v. Sagaysay
G.R. No. 214961, September 16, 2015
Facts:
In 2006, Sagaysay was hired by BDO as a result of a merger with United Overseas Bank. In
January 2010, BDO informed Sagaysay that pursuant to the retirement policy of the bank,
implemented on July 1, 1994, which mandated its retirement age to be 60, he would be formally
retired effective September 2010. In his emails, Sagaysay requested for an extention of his
services, BDO denied. Sagaysay appealed to BDO to extend for at least 8.5 months so he could
render at least 5 years of employment, BDO still denied. Sagaysay then signed the Quitclaim in
October 2010 for and in consideration of Php98,376.14.
In January 2011, Sagaysay filed a complaint for illegal dismissal with prayer for reinstatement
and payment of backwages.
Labor Arbiter ruled in favour of Sagaysay because he was forced to avail of an optional
retirement at the age of 60 which was contrary to the provisions of Article 287 of the Labor Code.
NLRC reversed the ruling of LA explaining that BDO’s retirement plan was effective June 1994.
Sagaysay was employed on May 2006, the retirement plan was already in full force and effect.
CA reversed the NLRC ruling saying that the retirement plan was not a result of a mutual
agreement of employer and employee. In BDO Memorandum in 2009, the retirement plan was
to be implemented in the merger bank. CA ruled that a retirement plan with no voluntary
acquiescence on the part of the employee was ineffective. CA stated Sagaysay was forced to
participate in the retirement plan.
Issues:
WON the Retirement Plan is valid and effective and, consequently, the mandatory retirement
age of 60 years old is also binding.
WON respondents were illegally terminated on account of compulsory retirement or the same
voluntarily retired.
Ruling:
Retirement Plan of BDO is valid and effective against Sagaysay.
his or her employment with the former.
Art 287 of the Labor Code states that—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 60 years or more, but not beyond 65 years which is hereby declared the
compulsory retirement age, who has served at least 5 years in the said establishment, may retire
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and shall be entitled to retirement pay equivalent to at least ½ month salary for every year of
service, a fraction of at least 6 months being considered as one whole year.
Under the provision, the retirement age is primarily determined by the existing agreement or
employment contract. Only in the absence of such an agreement shall the retirement age be
fixed by law, which provides for a compulsory retirement age at 65 years, while the minimum
age for optional retirement is set 60 years.
Sagaysay was undeniably informed and had consented tot the retirement plan of BDO before
his compulsory retirement in September 2010.
Retirement plan was established as early as July 1994, he was employed 12 years after the
adoption of the retirement plan. It was an established policy.
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. The retirement
plan was not forced upon him, he had the free will whether to undertake the employment and
accept the bank’s corresponding policies or look for a job elsewhere.
In 2009, when BDO issued a memorandum regarding the implementation of its retirement
program, reiterating the normal retirement date, Sagaysay was already an employee and he
did not deny being informed of such memorandum. For 4 years of being employed with BDO,
Sagaysay had every opportunity to question the retirement plan, but he did not express his
dissent.
In his e-mails, he never opposed the company’s compulsory age of retirement in fact he has
recognized such that he even requested that his services be extended. It was only when his
request for late retirement was denied that he suddenly became oblivious to the said plan.
Extension of Service- BDO had the management prerogative to deny the extension of service.
The matter of extension of service of such employee or official is addressed to the sound
discretion of the employer.
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PEREZ vs. COMPARTS INDUSTRIES, INC.
G.R. No. 197557. October 5, 2016.
Facts:
Petitioner, Perez, was an employee of the respondent, Comparts Industries, Inc. (CII). She was
appointed as Marketing Manager from 1998 up to 10 January 2009, the date when she resigned
from her work.
CII has a retirement program for its managerial employees or officers covered by "Comparts
Industries, Inc. Employees Retirement Plan" (Retirement Plan) which took effect on 01 June 1999
and was amended on 25 January 2001. Included therein are provisions relating to optional or
early retirement and optional retirement benefits.
Prior to her resignation, Perez manifested to CIIfor several attempts her intention to avail of the
optional retirement program since she was already qualified to retire under it. However, all of
her applications were denied by CII which justified its denial by saying that, under the Retirement
Plan, it has the option to grant or deny her application for optional retirement. Considering
further that it is experiencing financial crisis, it has no choice but to disallow her intention.
In December 2008, when she again applied for optional retirement, she was informed by CII
that it could only give her Php100,000.00 as gratuity for her twenty years of service as this was
the only amount it could afford. Perez refused the offer. Hence, she filed a Complaint with the
NLRC-RAB No. VII against CII praying for separation pay in the form of optional retirement
benefits, under the Retirement Plan for CII officers or under the Collective Bargaining Agreement
(CBA) for rank-and-file employees.
Petitioner’s Arguments (Maureen Perez– Lost)
Perez maintains that she is entitled to separation pay: (1) primarily through the optional
retirement program under the Retirement Plan having rendered more than twenty (20) years of
service to CII, (2) through a similar optional retirement program under the CBAwhich has been
likewise extended to other managerial/middle management employees in several instances, or
(3) a retrenchment program undertaken by CII because of the global financial crisis.
She contends that as she had already completed the minimum number of years to avail of the
optional retirement, she has acquired a vested right to her optional retirement benefits. Further,
she alternatively argues that she is entitled to payment of optional/early retirement benefits
based on company practice.
Respondent’s Argument’s (Comparts Industries, Inc.- Won)
CII contends that under the CII Retirement Plan which is the plan applicable to Perez as a
managerial employee, the allowance and grant of optional retirement benefits to Perez must
be with the consent of CII.
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3
It therefore has the authority to grant or dent applications for optional retirement benefits.
Further, CII contends that it has been so affected by the global crisis and has been suffering
financial losses which leave them with no choice but to deny Perez’s application.
Issue:
Whether or not Perez is entitled to optional retirement benefits
Ruling:
The petition for review was denied
Rule: ART. 287 (Retirement) of the Labor Code providesthat the age of retirement is primarily
determined by the existing agreement or employment contract. In the absence of such
agreement, the retirement age shall be fixed by law. Under theaforecited law, the mandated
compulsory retirement age is set at 65 years, while the minimum age for optional retirement is
set at 60 years.
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.
In the cases of Eastern Shipping Lines, Inc. v. Ferrer D. Antonioand Eastern Shipping Lines, Inc. v.
Sedan,the Supreme Court upheld a stipulation on optional retirement that it is the employer's
exclusive prerogative and sole option to retire any covered employee.
Further, to counter petitioner’s argument on entitlement of optional/early retirement benefits

based on company practice, the Supreme Court used as basis the case ofMetropolitan Bank
and Trust Company v. NLRC, which provides that, “to be considered a company practice, the
giving of the benefits should have been done over a long period of time, and must be shown
to have been consistent and deliberate.”
Application:
As stipulated in the Retirement Plan, it is not enough that an employee of CII who wants to
optionally retire meets the conditions for optional retirement. CII has to give its consent for the
optional retirement to operate. In this case, Perez's application for optional retirement was
denied several times as CII still needs her services. Perez's unilateral act of retiring without the
consent of CII does not bind the latter with the provisions of the Retirement Plan. Therefore, CII
is not liable to give Perez the optional retirement benefits provided therein.
Further, Perez’sargument that she is entitled to optional retirement benefits based on company
practice is defeated because of her own assertions: she admits that four (4) of the employees
were approved optional retirement benefits based on the CBA prior to the effectivity of the
Retirement Plan in 1999, and four (4) other employees actually received separation pay caused
by their retrenchment. These isolated and random payments to managerial employees of either
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4
optional retirement benefits under the CBA or separation pay due to retrenchment cannot be
deemed as company practice that would render the withholding of the benefit to Perez as a
diminution of benefits.
Conclusion:
(1) Perez is not entitled to optional retirement benefits without the consent thereto of CII to the
grant under the Retirement Plan; (2) neither is she entitled to the same benefits under the CBA
where there is no established company practice on such benefit.
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DE LA SALLE ARANETA UNIVERSITY (DLS-AU) v. JUANITO C. BERNARDO
G.R. No. 190809, February 13, 2017
Facts:
Bernardo taught as a part-time professional lecturer at DLS-AU since 1974. On November 8, 2003,
DLS-AU informed him that he could not teach anymore due to the retirement age limit. Bernardo
was 75 years old at the time and was being paid P246.50 per hour. DOLE informed him that he
was entitled to receive benefits under RA 7641, also known as the "New Retirement Law.”
a.) Petitioner’s Arguments
DLS-AU argued that Bernardo was not covered by the law since he was a part-time employee
and that Bernardo was not entitled to any kind of separation pay or benefits. Dr. Bautista
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
preceeding 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.The school further averred that Bernardo’s employment bond
was severed when he reached the mandatory retirement age of 65. 10 years have passed since
then.
His claim for retirement benefits should have prescribed, because under Article 291 of the Labor
Code, all money claims shall be filed within three years from the time the cause of action
accrues.
b.) Respondent’s Arguments
Bernardo alleged that he started working as a part-time professional lecturer at DLS-AU on June
1, 1974 for an hourly rate of P20.00. Bernardo taught for two semesters and the summer for the
school year 1974-1975. Bernardo then took a leave of absence from June 1, 1975 to October
31, 1977 when he was assigned by the Philippine Government to work in Papua New Guinea.
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. At the time of his retirement, Bernardo was being paid
P246.50 per hour.
NLRC: The Labor Arbiter dismissed Bernardo’s complaint on the ground of prescription. This was
reversed by the NLRC. It held that the school is estopped from claiming prescription because it
permitted Bernardo to work beyond the mandatory retirement age. Furthermore, part-time
employees are covered under RA 7641.
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6
Under Republic Act No. 7641, part-time workers are entitled to retirement pay of one-half month
salary for every years of service, provided that the following conditions are present: (a) there is
no retirement plan between the employer and employees; (b) the employee has reached the
age of 60 years old for optional retirement or 65 years old for compulsory retirement; and (c) the
employee should have rendered at least five years of service with the employer.
Bernardo avowed that all these conditions were extant in his case.
CA: The CA affirmed in toto the NLRC judgment.
Issue:
1. W/N part-time employees receive retirement benefits despite a lack of CBA
2. W/N Bernardo’s claim has prescribed
3. W/N the doctrine of equitable estoppel applies
Ruling:
1. YES.
Based on RA 7641, its Implementing Rules, and the October 24, 1996 Labor Advisory, the only
employees exempted from retirement pay are: (1) those 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) those of retail, service and
agricultural establishments or operations regularly employing not more than 10 employees.
Under expressiouniusestexclusioalterius , Since part-time employees are not among those

specifically exempted, Bernardo’s claim stands. Being 75 years old at the time of his retirement,
having served DLS-AU for a total of 27 years, and not being covered by the grant of retirement
benefits in the CBA - is unquestionably qualified to avail himself of retirement benefits under said
statutory provision, i.e. , equivalent to one-half month salary for every year of service, a fraction
of at least six months being considered as one whole year.
2. NO.
Art. 306 [291]. Money claims. - All money claims arising from employer-employee relations
accruing during the effectivity of this Code shall be filed within three years from the time the
cause of action accrued; otherwise they shall be forever barred.
A cause of action has three elements: (a) a right in favor of the plaintiff; (b) an obligation on the
part of the defendant to respect or not to violate such right; and (c) 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. The third element occurred when DLS-AU refused to
pay Bernardo's retirement benefits. Only then did the period of prescription begin to run.
Bernardo's right to retirement benefits and the obligation of DLS-AU to pay such benefits are
already established under Article 302 [287] of the Labor Code, as amended by Republic Act
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7
No. 7641. However, there was a violation of Bernardo's right only after DLS-AU informed him on
November 8, 2003 that the university no longer intended to offer him another contract of
employment, and already accepting his separation from service, Bernardo sought his retirement
benefits, but was denied by DLS AU. 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, filed with the NLRC on
February 26, 2004, was filed within the three-year prescriptive period provided under Article 291
of the Labor Code.
Even granting arguendo that Bernardo's cause of action already accrued when he reached 65
years old, we cannot simply overlook the fact that DLS-AU had repeatedly extended Bernardo's
employment even when he already reached 65 years old. DLS-AU still knowingly offered
Bernardo, and Bernardo willingly accepted, contracts of employment to teach for semesters
and summers in the succeeding 10 years. Since DLS-AU was still continuously engaging his
services even beyond his retirement age, Bernardo deemed himself still employed and deferred
his claim for retirement benefits, under the impression that he could avail himself of the same
upon the actual termination of his employment. The equitable doctrine of estoppel is thus
applicable against DLS-AU.
3. YES.
For the principle of equitable estoppel to apply, there must be (a) conduct amounting to false
representation or concealment of material facts or at least calculated to convey the impression
that the facts are otherwise than, and inconsistent with, those which the party subsequently
attempts to assert; (b) intent, or at least expectation that this conduct shall be acted upon, or
at least influenced by the other party; and (c) knowledge, actual or constructive, of the actual
facts.
In this case, DLS-AU, kept its silence that Bernardo had already reached the compulsory
retirement age of 65 years old. It even continuously offered him contracts of employment for
the next 10 years. It should not be allowed to escape its obligation to pay Bernardo's retirement
benefits. Conclusion:
The instant Petition is DISMISSED for lack of merit. The Decision dated June 29, 2009 and
Resolution dated January 4, 2010 of the Court of Appeals in CA-G.R. SP No. 106399 are
AFFIRMED.
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8
Catotocan vs. Lourdes School of Quezon City
GR No.: 213486. April 26, 2017
Facts:
In 1971, Editha Catotocan (Catotocan) started her employment in Lourdes School of Quezon
City (LSQC) as music teacher with a monthly salary of Thirty Thousand and Eighty-One Philippine
Pesos (Php30,081.00). 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
Administrative Order No. 2003-004 for all employees which is an addendum on its retirement
policy. The portion on Normal Retirement reads, as follows:
xxxx
NORMAL RETIREMENT:
1. 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;
xxx5
In March 23, 2004, Catotocan and seven (7) other co-employees assailed said order and
contested that they do not deserve to be retired and be rehired when they are, in fact, very
much capable of doing their duties and responsibilities. LSQC retired Catotocan sometime in
June 2006 after completing thirty-five (35) years of service. Full retirement benefits were given,
sixty percent (60%) of her retirement benefit was paid in lump sum by the trustee bank (BDO),
which she opened in accordance with the policy, and the balance was to be paid in equal
monthly pensions over the next three (3) years.
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. LSQC appointed Catotocan as a Grade School Guidance Counselor for two years.
Catotocan re-applied for the third time, but LSQC no longer considered her application for the
position.
Catotocan filed a complaint for illegal dismissal and monetary claims. The Labor Arbiter
dismissed Catotocan's complaint for lack of merit. On appeal, the NLRC affirmed the Labor
Arbiter's decision. Catotocan moved for reconsideration, but the same was denied. Dissatisfied,
Catotocan filed a petition for certiorari before the Court of Appeals. The Court of Appeals
dismissed the petition for lack of merit.
Issue:
Whether the Court of Appeals committed grave abuse of discretion on the issue of forced
retirement before the age of sixty (60).
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9
Ruling:
We deny the petition.
Retirement plans, as in LSQC's retirement plan, allowing employers to retire employees who have
not yet reached the compulsory retirement age of 65 years are not per se repugnant to the
constitutional guaranty of security of tenure. By its express language, the Labor Code permits
employers and employees to fix the applicable retirement age at 60 years or below, provided
that the employees' retirement benefits under any CBA and other agreements shall not be less
than those provided therein. Acceptance by the employees of an early retirement age option
must be explicit, voluntary, free, and uncompelled.
Here, 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.
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0
Philippine Airlines, Inc. vs Arjan T. Hassaram
G.R. No. 217730. June 5, 2017.
Facts:
Respondent applied for retirement from PAL in August 2000 after rendering 24 years of service
as a pilot but his application was denied. PAL informed the respondent that he had lost his
employment in the company as of June 9, 1998 due to failure to comply with the Return to Work
Order issued by the Secretary of Labor against members of the Airline Pilots Association of the
Philippines (ALPAP) on 7 June 1998. Before the Labor Arbiter (LA), Hassaram argued that he was
not covered by the Secretary's Return to Work Order, hence PAL had no valid ground for his
dismissal. PAL contended that if at all, Hassaram was entitled only to retirement benefits of
P5,000 for every year of service pursuant to the Collective Bargaining Agreement (CBA)
between PAL and ALPAP.
The LA ruled in favor of Hassaran that he did not defy the Return to Work Order, as he was in
fact already on leave when the order was implemented. As to the computation of benefits,
the LA ruled that Article 287 of the Labor Code should be applied since it provide better benefits
than the PAL-ALPAP CBA.
PAL appealed to the NLRC. It contended that the LA's Decision contradicted the ruling in PAL
v. ALPAP, in which this Court awarded retirement benefits to qualified PAL pilots under the
company's own retirement plans, instead of the Labor Code. PAL also cited Hassaram's
purported receipt of retirement benefits in the amount of P4,456,817.75 pursuant to the Plan and
that as a consequence of this newly discovered payment, any claim made by Hassaram for
retirement benefits should be deemed extinguished. NLRC set aside the ruling of the LA on
account of Hassaram's receipt of retirement benefits under the Plan. This payment, according
to the NLRC, was sufficient to discharge his claim for retirement pay.
Hassaram then elevated the matter to CA. He admitted that he received P4,456,817.75 under
the Plan but maintained that his receipt of that sum did not preclude him from claiming
retirement benefits from PAL, since that amount represented only a return of his share in a distinct
and separate provident fund established for PAL pilots. CA reversed the NLRC decision and
declared that Hassaram was still entitled to receive retirement benefits pursuant to Article 287
of the Labor Code. Hence, this petition.
Issues:
1. Whether or not the amount received by Hassaram under the Plan should be deemed part of
his retirement pay.
2. Whether or not Hassaram is entitled to receive retirement benefits under Article 287 of the
Labor Code.
Ruling:
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1
The Court grant the petition. the amount received by Hassaram under the Plan must be
considered part of his retirement pay. Combined with the retirement benefits under the CBA
between PAL and ALPAP, this scheme would allow Hassaram to receive superior retirement
benefits, thereby rendering Article 287 of the Labor Code inapplicable.
1. The amount received by Hassaram under the PAL Pilots' Retirement Benefit Plan must be
considered part of his retirement pay. It is clear from the provisions of the Plan that it is the
company that contributes to a "retirement fund" for the account of the pilots. The PAL Pilots'
Retirement Benefit Plan is a retirement fund raised from contributions exclusively from PAL of
amounts equivalent to 20% of each pilot's gross monthly pay which is equivalent to 240% of his
gross monthly income for every year of service he rendered to petitioner. This is in addition to
the amount of not less than P100,000.00 that he shall receive under the 1967 Retirement Plan.
2. Hassaram's retirement pay should be computed on the basis of the retirement plans provided
by PAL, and not under Article 287 of the Labor Code. Article 287 is applicable only to a situation
where (1) there is no CBA or other applicable 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.
Clearly, the determining factor in choosing which retirement scheme to apply is still superiority
in terms of benefits provided. Comparing the benefits under the (2) retirement scheme it can
readily be perceived that the 22.5 days worth of salary for every year of service provided under
Article 287 of the Labor Code cannot match the 240% of salary or almost two and a half worth
of monthly salary per year of service provided under the PAL Pilots' Retirement Bene􏰁􏰁t Plan,
which will be further added to the P125,000.00 to which the petitioner is entitled under the PAL-
ALPAP Retirement Plan.
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2
Laya vs. Court of Appeals
GR No. 205813, January 10, 2018, En banc
Facts:
On 1 June 2001, petitioner Alfredo F. Laya, Jr. was hired by respondent Philippine Veterans Bank
as its Chief Legal Counsel with a rank of Vice President.
On 14 June, 2007, petitioner was informed thru letter by the private respondent of his retirement
effective on 1 July 2007.
On 21 June 2007 petitioner wrote Col. Emmanuel V. De Ocampo, Chairman of respondent

bank, requesting for an extension of his tenure for two (2) more years pursuant to the Bank's
Retirement Plan (Late Retirement).
On 26 June 2008, private respondent issued a memorandum directing the petitioner to continue
to discharge his official duties and functions as chief legal counsel pending his request. However
on 18 July 2007, petitioner was informed thru its president Ricardo A. Balbido Jr. that his request
for an extension of tenure was denied.
According to the petitioner, he was made aware of the retirement plan of respondent Philippine
Veterans Bank (PVB) only after he had long been employed and was shown a photocopy of
the Retirement Plan Rules and Regulations, but PVB's President Ricardo A. Balbido, Jr. had told
him then that his request for extension of his service would be denied "to avoid precedence."
He sought the reconsideration of the denial of the request for the extension of his retirement,
but PVB certified his retirement from the service as of July 1, 2007 on March 6, 2008.
On December 24, 2008, the petitioner filed his complaint for illegal dismissal against PVB and
Balbido, Jr. in the NLRC to protest his unexpected retirement.
Ruling of the Labor Arbiter
Labor Arbiter rendered a decision dismissing the complaint for illegal dismissal and money claims
raised by the complainant, together with the counterclaim raised by the respondents for lack
of merit.
Ruling of the NLRC
The NLRC affirmed the dismissal of the petitioner's complaint, and deleted the indemnity
imposed by the Labor Arbiter.
The petitioner assailed the ruling to the CA through certiorari
Ruling of the CA
Petitioner's acceptance of his appointment as Chief Legal Officer of PVB signified his conformity
to the retirement program; that he could not have been unaware of the retirement program
which had been in effect since January 1, 1996; that the lowering of the retirement age through
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3
the retirement plan was a recognized exception under the provisions of Article 287 of the Labor
Code; that considering his failure to adduce evidence showing that PVB had acted maliciously
in applying the provisions of the retirement plan to him and in denying his request for the
extension of his service, PVB's implementation of the retirement plan was a valid exercise of its
management prerogative.
CA denied petitioner’s motion for Reconsideration
On April 8, 2013, the Supreme Court (First Division) denied the petition for review on certiorari.
In his motion for reconsideration, the petitioner not only prayed for the reconsideration of the
denial but also sought the referral of his petition to the Court En Banc, arguing that the CA and
the NLRC had erroneously applied laws and legal principles intended for corporations in the
private sector to a public instrumentality like PVB; and that to allow the adverse rulings to stand
would be to condone the creation of a private corporation by Congress other than by a general
law on incorporation.
In its resolution promulgated on August 28, 2013, the Court (First Division) denied the petitioner's
motion for reconsideration, as well as his prayer to refer the case to the Court En Banc.
The petitioner filed a second motion for reconsideration on December 18, 2013, whereby he
expounded on the issues he was raising in his first motion for reconsideration.
On March 25, 2014, the Court En Banc accepted the referral of this case by the First Division.
Issue:
W/N the petitioner was validly retired by PVB at age 60.
Ruling:
Petitioner Alfredo Laya was not validly retired at age 60
The retirement of employees in the private sector is governed by Article 287 of the Labor Code:
Art. 287. Retirement. Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he
may have earned under existing laws and any collective bargaining agreement and other
agreements: Provided, however, that an employee's retirement benefits under any collective
bargaining and other agreements shall not be less than those provided therein.
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
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4
x x x.
The CA concluded that the petitioner had agreed to be bound by the retirement plan of PVB
when he accepted the letter of appointment as its Chief Legal Counsel. We disagree with the
conclusion. We declare that based on the clear circumstances herein the CA erred in so
concluding.
The petitioner's letter of appointment pertinently stated:
3. As a Senior Officer of the Bank, you are entitled to the following executive benefits:
• Car Plan limit of P700,000.00, without equity on your part; a gasoline subsidy of 300 liters per
month and subject further to The Car Plan Policy of the Bank.
• Membership in a professional organization in relation to your profession and/or assigned

functions in the Bank.
• Membership in the Provident Fund Program/Retirement Program.
• Entitlement to any and all other basic and fringe benefits enjoyed by the officers; core of the
Bank relative to Insurance covers, Healthcare Insurance, vacation and sick leaves, among
others.
The mere mention of the retirement plan in the letter of appointment did not sufficiently inform
the petitioner of the contents or details of the retirement program. To construe from the
petitioner's acceptance of his appointment that he had acquiesced to be retired earlier than
the compulsory age of 65 years would, therefore, not be warranted. This is because retirement
should be the result of the bilateral act of both the employer and the employee based on their
voluntary agreement that the employee agrees to sever his employment upon reaching a
certain age.
That the petitioner might be well aware of the existence of the retirement program at the time
of his engagement did not suffice. His implied knowledge, regardless of duration, did not equate
to the voluntary acceptance required by law in granting an early retirement age option to the
employee. The law demanded more than a passive acquiescence on the part of the
employee, considering that his early retirement age option involved conceding the
constitutional right to security of tenure.
In Cercado v. Uniprom, Inc., Supreme Court underscored the character of the employee's
consent in agreeing to the early retirement policy of the employer, viz:
“Acceptance by the employees of an early retirement age option must be explicit, voluntary,
free, and uncompelled. While an employer may unilaterally retire an employee earlier than the
legally permissible ages under the Labor Code, this prerogative must be exercised pursuant to
a mutually instituted early retirement plan. In other words, only the implementation and
execution of the option may be unilateral, but not the adoption and institution of the retirement
plan containing such option. For the option to be valid, the retirement plan containing it must
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5
be voluntarily assented to by the employees or at least by a majority of them through a
bargaining representative.”
Petitioner's membership in the retirement plan could not be justifiably attributed to his signing of
the letter of appointment that only listed the minimum benefits provided to PVB's employees.
Indeed, in Cercado case, the court declared that the employee's consent to the retirement
plan that came into being two years after the hiring could not be inferred from her signature on
the personnel action forms accepting the terms of her job description, and compliance with the
company policies, rules and regulations, to wit:
“It should be noted that the personnel action forms relate to the increase in petitioner's salary
at various periodic intervals. To conclude that her acceptance of the salary increases was also,
simultaneously, a concurrence to the retirement plan would be tantamount to compelling her
to agree to the latter. Moreover, voluntary and equivocal acceptance by an employee of an
early retirement age option in a retirement plan necessarily connotes that her consent
specifically refers to the plan or that she has at least read the same when she affixed her
conformity thereto.”
A perusal of PVB's retirement plan shows that under its Article III all the regular employees of PVB
were automatically admitted into membership, thus:
ARTICLE III
MEMBERSHIP IN THE PLAN
xx
Section 2. Eligibility after Effective Date. Any person who becomes an Employee after January
1, 1996 shall automatically become a Member of the Plan on the date he becomes a regular
permanent Employee, provided he is less than 55 years old as of such date.
xx
Having thus automatically become a member of the retirement plan through his acceptance
of employment as Chief Legal Officer of PVB, the petitioner could not withdraw from the plan
except upon his termination from employment. The retirement plan had been in existence since
January 1, 1996, or more than five years prior to the petitioner's employment by PVB. The plan
was established solely by the PVB, and approved by its president. As such, the plan was in the
nature of a contract of adhesion, in respect to which the petitioner was reduced to mere
submission by accepting his employment, and automatically became a member of the plan.
With the plan being a contract of adhesion, to consider him to have voluntarily and freely given
his consent to the terms thereof as to warrant his being compulsorily retired at the age of 60
years is factually unwarranted.
The Court disagrees with the view tendered by Justice Leonen to the effect that the petitioner,
because of his legal expertise and educational attainment, could not now validly claim that he
was not informed of the provisions of the retirement program. The pertinent rule on retirement
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6
plans does not presume consent or acquiescence from the high educational attainment or
legal knowledge of the employee. In fact, the rule provides that the acquiescence by the
employee cannot be lightly inferred from his acceptance of employment. It was incumbent
upon PVB to prove that the petitioner had been fully apprised of the terms of the retirement
program at the time of his acceptance of the offer of employment.
PVB did not discharge its burden, for the petitioner's appointment letter apparently enumerated
only the minimum benefits that he would enjoy during his employment by PVB, and contained
no indication of PVB having given him a copy of the program itself in order to fully apprise him
of the contents and details thereof. Nonetheless, even assuming that he subsequently obtained
information about the program in the course of his employment, he still could not opt to simply
withdraw from the program due to his membership therein being automatic for the regular
employees of PVB.
Company retirement plans must not only comply with the standards set by the prevailing labor
laws but must also be accepted by the employees as commensurate to their faithful services to
the employer within the requisite period. Although the employer could be free to impose a
retirement age lower than 65 years for as long its employees consented, the retirement of the
employee whose intent to retire was not clearly established, or whose retirement was involuntary
is to be treated as a discharge.
With the petitioner having been thus dismissed pursuant to the retirement provision that he had
not knowingly and voluntarily agreed to, PVB was guilty of illegal dismissal as to him. Considering
that the petitioner's reinstatement is no longer feasible because of his having meanwhile
reached the compulsory retirement age of 65 years by June 11, 2012, he should be granted
separation pay. In this regard, retirement benefits and separation pay are not mutually
exclusive. The basis for computing the separation pay should accord with Section 4, Article III of
PVB's retirement plan. Hence, his full backwages should be computed from July 18, 2007 — the
date when he was illegally dismissed — until his compulsory retirement age of 65 years on June
11, 2012.
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MARIA DE LEON TRANSPORTATION, INC. VS DANIEL M. MACURAY
G.R 214940. June 6, 2018
Facts:
On November 21, 2011, respondent Daniel M. Macuray filed a Complaint for illegal dismissal
against petitioner Maria De Leon Transportation.
Respondent:
In April, 1991, he was employed as a bus driver of petitioner, a company engaged in paid public
transportation; that he plied the Laoag-Manila-Laoag route; that he received a monthly
pay/commission of P20,000.00;
In November 2009, petitioner's dispatcher did not assign a bus to him, for no apparent reason;
that for a period of one month, he continually returned to follow up if a bus had already been
assigned to him; that finally, when he returned to the company premises, the bus dispatcher
informed him that he was already considered AWOL (absent without leave), without giving any
reason therefor.
He went back to follow up his status for about six months in 2010, but nobody attended to him;
that he was not given any notice or explanation regarding his employment status; that he felt
betrayed by the petitioner, after having served the latter for 18 years;
He considered himself illegally dismissed; that during this time, he was already 62 years old, but
he received no benefits for his service; that he was being charged for the cost of gasoline for
the bus he would drive; and that petitioner owed him three months' salary for the year 2009.
Thus, he prayed that he be awarded backwages, separation pay, retirement pay, 13th month
pay, damages, attorney's fees, and costs of suit.
Petitioner:
Respondent was hired on commission basis, on a "no work, no pay" and "per travel, per trip" basis
and that respondent was paid an average of P10,000.00 commission per month without salary.
Contrary to his claim of illegal dismissal, respondent permanently abandoned his employment
effective March 31, 2009, after he failed to report for work; that it received information later on
that respondent was already engaged in driving his family truck and was seen doing so at public
roads and highways; that respondent's claim of illegal dismissal was not true, as there was no
dismissal or termination of his services, and no instructions to do so were given and the bus
dispatcher from whom respondent inquired about his status had no power to terminate or
declare him AWOL;
Respondent had not actually approached management to inquire about his employment
status. And that respondent's witnesses had an axe to grind against petitioner, which accounts
for their false testimonies- based on respondent's Complaint, he claimed to have been illegally
dismissed in January, 2009, which was contrary to the documentary evidence which showed
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that he continued to work until March, 2009, after which he completely abandoned his
employment; that per Joint Affidavit of petitioner's bus dispatchers, it is not true that respondent
ever made inquiries and follow-ups about his employment until mid-2010;
There was no illegal dismissal, and thus respondent was not entitled to his monetary claims; that
respondent never refuted the claim that he abandoned his employment with petitioner
because he took on a new job as driver for his family's trucking business and was seen doing so
in public roads and highways; that it was common practice for bus drivers of the petitioner to
simply stop reporting for work for short periods of time, or even years, after which they would
return and ask to be allowed to drive petitioner's buses once more, which management allowed
after the absentee drivers gave satisfactory and reasonable explanations for their absences;
This practice was impliedly sanctioned in order to give the drivers the opportunity to take time
off from the stress and boredom of driving on long trips; that respondent's allegations were not
true, particularly his claim that he was told by a bus dispatcher that he was considered AWOL,
since he refused to divulge the identity of the bus dispatcher who gave such information to him;
and that there was no truth to respondent's allegations that the cost of gasoline for every bus
trip was charged to him, as it was shouldered by the petitioner. Petitioner prayed for the dismissal
of the case.
Ruling of the Labor Arbiter:
Dismissed the case for lack of merit.
In his pro forma complaint sheet, he mentioned that he was already 61 at the time that he filed
his complaint on 23 November 2011. Yet in his position paper he mentioned that he was already
62 years old after he rendered service for 18 years.
On the issue of constructive dismissal, seemingly Rudy Compañero and Loreto Casil presented
a story that showed they were aware that Daniel Macuray was poorly treated by respondent
when he was still employed between 2007 and 2009. But the records [did] not show that the
complainant had shown any sign of whimper or protest. Therefore, x x x the claim is unfounded.
The alleged unpaid fuel expenses that were incurred by unidentified drivers for respondent's bus
with Body No. 1 was not supported by substantial evidence which a reasonable mind might
accept to justify a conclusion. He did not present a single accounting of his purchases for diesel
fuel and how much. The complainant did not even claim that the unpaid gasoline expenses
were charged to him.
The complainant failed to present evidence that the treatment he received from respondent
was unreasonable or oppressive and unbearable that would amount to a constructive dismissal.
Ruling of the NLRC:
On the other hand, respondents-appellees stress that complainant-appellant did not report for
work anymore from March 31, 2009 and in support thereof submitted folders showing the
particulars of the trips where complainant-appellant served as assistant driver for the period 3
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January to 30 March 2009; that neither did complainant-appellant file any leave of absence.
Thus, respondents-appellees concluded that by his failure to report for work beginning 31 March
2009, complainant-appellant permanently abandoned and severed his employment effective
31 March 2009.
Although absence without valid or justifiable reason is an element of abandonment, settled is

the rule, however, that mere absence or failure to report for work is not tantamount to
abandonment of work.
We note that complainant-appellant is already sixty-two years old and he may not be apt for
the job as bus driver considering the long hours of travel from Laoag City to Manila. Hence, his
reinstatement may no longer be possible. Separation pay however cannot also be awarded to
complainant-appellant because he was not dismissed by respondent-appellee. In cases where
there was no dismissal at all, separation pay should not be awarded.
Ruling of the CA:
Undoubtedly, herein petitioner Daniel Macuray was performing a job that has an intimate
connection to the business of respondent company as he worked as a driver of respondent
Maria de Leon Transportation, a public transportation business company, for eighteen (18)
years. As a regular employee who has been constructively dismissed, petitioner is entitled to
separation pay equivalent to one (1) month salary for every year of service.
Under the above-mentioned twin remedies, there is likewise basis for the grant of backwages.
In this case, petitioner was illegally dismissed in November of 2009 when he was no longer
assigned any bus without cause or reason. Thus, his backwages may be computed from
November of 2009 until December 28, 2012, when the NLRC held that 'reinstatement may no
longer be possible.'
Reinstatement being no longer possible and petitioner being 62 years old, petitioner is entitled
to retirement pay, having worked for respondent company for eighteen (18) years. It is herein
noted that the required length of service, to be entitled to retirement pay under the law, is only
five (5) years. The applicable law is Article 287 of the Labor Code.
In view thereof, petitioner is entitled to one-half (1/2) of his monthly commission for every year
of service. Thus, for having been illegally dismissed, petitioner therein was entitled not only to
separation pay and full backwages, but additionally, to his retirement benefits pursuant to any
collective bargaining agreement in the workplace or, in the absence thereof, as provided in
Section 14, Book VI-8 of the Implementing Rules of the Labor Code.
Issues:
Whether or not private respondent was constructively or illegally dismissed by petitioner
Whether or not private respondent is entitled to separation pay, backwages, retirement pay,
service incentive leave pay, moral damages, exemplary damages, nominal damages and
attorney's fees.
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Held:
The Court is inclined to believe petitioner's allegations: respondent left his work as bus driver to
work for his family's trucking business. There is no truth to the allegation that respondent was
dismissed, actually or constructively. He claims that the dispatcher informed him that he was
AWOL; however, a mere bus dispatcher does not possess the power to fire him from work — this
is a prerogative belonging to management.
At any rate, even assuming that respondent was indeed told by respondent's bus dispatcher
Roger Pasion that he was AWOL, this was not tantamount to dismissal, actual or constructive.
An ordinary bus dispatcher has no power to dismiss an employee. It cannot therefore be said
that an ordinary dispatcher is superior to a bus driver; at most, they are equal in rank.
Respondent availed of petitioner's company practice and unwritten policy — of allowing its bus
drivers to take needed breaks or sabbaticals to enable them to recover from the monotony of
driving the same route for long periods — and obtained work elsewhere. It appears that what
matters to respondent is that when he did this, he was already approaching retirement age —
he was 58 years old in April, 2009, when he took a break from being a bus driver — and when
he filed the labor case in November, 2011, he was already 60.
Thus, since respondent was not dismissed from work, petitioner may not be held liable for his
monetary claims, except those that were actually owing to him by way of unpaid
salary/commission, and retirement benefits, which are due to him for the reason that he
reached the age of retirement while under petitioner's employ.
As for retirement benefits, respondent is entitled to them considering that he was never dismissed
from work, either for cause or by resignation or abandonment. As far as petitioner is concerned,
he merely went on a company-sanctioned sabbatical. It just so happened that during this
sabbatical, he reached the retirement age of 60; by this time, he is already 67 years old.
As for attorney's fees, the Court finds that respondent is entitled thereto. Under paragraphs 7
and 11, respectively, of Article 2208 of the Civil Code, attorney's fees and expenses of litigation,
other than judicial costs, may be recovered "in actions for the recovery of wages of household
helpers, laborers and skilled workers" and "in any other case where the court deems it just and
equitable that attorney's fees and expenses of litigation should be recovered." The CA award
of P20,000.00 is thus reasonable and just under the circumstances
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Lockheed Detective & Watchman Agency,
G.R. No. 185918, April 18, 2012
Facts:
Petitioner Lockheed Detective and Watchman Agency, Inc. (Lockheed) entered into a
contract for security services with respondent University of the Philippines (UP). In 1998, several
security guards assigned to UP filed separate complaints against Lockheed and UP for payment
of underpaid wages, 25% overtime pay, premium pay for rest days and special holidays, holiday
pay, service incentive leave pay, night shift differentials, 13th month pay, refund of cash bond,
refund of deductions for the Mutual Benefits Aids System (MBAS), unpaid wages from December
16-31, 1998, and attorney's fees.
On February 16, 2000, the Labor Arbiter rendered a decision

respondents Lockheed Detective and Watchman Agency, Inc. and UP as job contractor and
principal, respectively, are hereby declared to be solidarily liable to complainants for the
following claims of the latter which are found meritorious. Both Lockheed and UP appealed the
Labor Arbiter's decision. The NLRC held 1. Complainants' claims for premium pay for work on rest
day and special holiday, and 5 days service incentive leave pay, are hereby dismissed for lack
of basis. 2. The respondent University of the Philippines is still solidarily liable with Lockheed in the
payment of the rest of the claims covering the period of their service contract.
The complaining security guards and UP filed their respective motions for reconsideration. On
August 14, 2002, however, the NLRC denied said motions. As the parties did not appeal the
NLRC decision, the same became final. UP moved to reconsider the NLRC resolution. On August
16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being
subjected to garnishment at PNB are government/public funds.
On March 12, 2008, the CA rendered a decision dismissing UP's petition for certiorari.
Citing Republic v. COCOFED, which defines public funds as moneys belonging to the State or
to any political subdivisions of the State, more specifically taxes, customs, duties and moneys
raised by operation of law for the support of the government or the discharge of its obligations,
the appellate court ruled that the funds sought to be garnished do not seem to fall within the
stated definition.
On reconsideration, however, the CA issued the assailed Amended Decision. It held that without
departing from its findings that the funds covered in the savings account sought to be garnished
do not fall within the classification of public funds, it reconsiders the dismissal of the petition in
light of the ruling in the case of National Electrification Administration v. Morales which
mandates that all money claims against the government must first be filed with the Commission
on Audit (COA). The CA cited Manila International Airport Authority v. Court of Appeals which
held that UP ranks with MIAA, a government instrumentality exercising corporate powers but not
organized as a stock or non-stock corporation. While said corporations are government
instrumentalities, they are loosely called government corporate entities but not government-
owned and controlled corporations in the strict sense.
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Lockheed contends that UP has its own separate and distinct juridical entity from the national
government and has its own charter. Thus, it can be sued and be held liable. Lockheed likewise
argues that UP is not similarly situated with NEA because the jurisdiction of COA over the
accounts of UP is only on a post-audit basis. As to the MIAA case, the liability of MIAA pertains
to the real estate taxes imposed by the City of Parañaque while the obligation of UP in this case
involves a private contractual obligation.
For its part, UP contends that it did not invoke the doctrine of state immunity from suit in the
proceedings a quo and in fact, it did not object to being sued before the labor department. It
maintains, however, that suability does not necessarily mean liability. UP argues that the CA
correctly applied the NEA ruling when it held that all money claims must be filed with the COA.
UP reiterates that it consented to be sued and even participated in the proceedings below.
Ruling:
The petition has no merit. Clearly, UP consented to be sued when it participated in the
proceedings below. What UP questions is the hasty garnishment of its funds in its PNB account.
This Court finds that the CA correctly applied the NEA case. Like NEA, UP is a juridical personality
separate and distinct from the government and has the capacity to sue and be sued. Thus, also
like NEA, it cannot evade execution, and its funds may be subject to garnishment or levy.
However, before execution may be had, a claim for payment of the judgment award must first
be filed with the COA.
We cannot subscribe to Lockheed's argument that NEA is not similarly situated with UP because
the COA's jurisdiction over the latter is only on post-audit basis. A reading of the pertinent
Commonwealth Act provision clearly shows that it does not make any distinction as to which of
the government subdivisions, agencies and instrumentalities, including government-owned or
controlled corporations and their subsidiaries whose debts should be filed before the COA.
Petitioner Lockheed Detective and Watchman Agency, Inc. is ordered to

REIMBURSE respondent University of the Philippines the amount of P12,062,398.71 plus interest of
6% per annum, to be computed from September 12, 2005 up to the finality of this Decision, and
12% interest on the entire amount from date of finality of this Decision until fully paid.
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Portillo v. Rudolf Lietz, Inc. et.al
G.R. No. 196539. October 10, 2012
Facts:
Potillo was hired by Rudolf in Lietz Co. under the condition that Potillo will not engage in any
other gainful employment by himself or with any other company either directly or indirectly
without written consent of Lietz Inc., otherwise Potillo will be liable for liquidated damages.
Upon his promotion, Potillo signed another letter agreement containing a “Goodwill Clause”
stating that:
“…on the termination of his employment and for a period of three (3) years thereafter, he shall
not engage directly or indirectly as employee, manager, proprietor, or solicitor for himself or
others in a similar or competitive business or the same character of work which he was employed
by Lietz Inc. to do and perform. Should he breach this good will clause of this Contract, he shall
pay Lietz Inc. as liquidated damages the amount of 100% of his gross compensation over the
last 12 months.”
Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc. During her exit
interview, Portillo declared that she intended to engage in businessa rice dealership, selling rice
in wholesale.
On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her of the "Goodwill
Clause" in the last letter agreement she had signed.
Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines, Limited to
head its Pharma Raw Material Department. Ed Keller Limited is purportedly a direct competitor
of Lietz Inc.
Meanwhile, Portillos demands from Lietz Inc. for the payment of her remaining salaries and
commissions went unheeded. Lietz Inc. gave Portillo the run around, on the pretext that her
salaries and commissions were still being computed.
Subsequently, Portillo filed a complaint with the National Labor Relations Commission (NLRC) for
non-payment of 1 months salary, two (2) months commission, 13th month pay, plus moral,
exemplary and actual damages and attorneys fees.
In its position paper, Lietz Inc. admitted liability for Portillos money claims in the total amount of
P110,662.16. However, Lietz Inc. raised the defense of legal compensation: Portillos money
claims should be offset against her liability to Lietz Inc. for liquidated damages for Portillos
alleged breach of the "Goodwill Clause" in the employment contract when she became
employed with Ed Keller Philippines, Limited.
Issue:
Who has jurisdiction over the present controversy?
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5
Whether Portillos money claims for unpaid salaries may be offset against respondents claim for
liquidated damages.
Ruling:
On first issue, jurisdiction belongs to the Civil Courts.
Petitioner seeks protection under the civil laws and claims no benefits under the Labor Code.
The primary relief sought is for liquidated damages for breach of a contractual obligation. The
other items demanded are not labor benefits demanded by workers generally taken
cognizance of in labor disputes, such as payment of wages, overtime compensation or
separation pay. The items claimed are the natural consequences flowing from breach of an
obligation, intrinsically a civil dispute.
Furthermore, non-compete clause, as in the "Goodwill Clause" refers to post-employment

relations of the parties. The "Goodwill Clause" or the "Non-Compete Clause" is a contractual
undertaking effective after the cessation of the employment relationship between the parties.
In accordance with jurisprudence, breach of the undertaking is a civil law dispute, not a labor
law case.
As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks to recover
damages based on the parties contract of employment as redress for respondents breach
thereof. Such cause of action is within the realm of Civil Law, and jurisdiction over the
controversy belongs to the regular courts. More so must this be in the present case, what with
the reality that the stipulation refers to the postemployment relations of the parties.
On Second Issue, no, it may not be.
Indeed, the application of compensation in this case is effectively barred by Article 113 of the
Labor Code which prohibits wage deductions except in three circumstances:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make
any deduction from wages of his employees, except:
In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
For union dues, in cases where the right of the worker or his union to check-off has been
In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.
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Building Care Corp. vs. Macaraeg
G.R. No. 198357, December 10, 2012
Facts:
Petitioners are in the business of providing security services to their clients. They hired respondent
as a security guard and assigning her at Genato Building in Caloocan City. However, on March
9, 2008, respondent was relieved of her post. She was re-assigned to Bayview Park Hotel from
March 9-13, 2008, but after said period, she was allegedly no longer given any assignment for
more than 9 months. Thus respondent filed a complaint against petitioners for illegal dismissal,
underpayment of salaries, non-payment of separation pay and refund of cash bond.
Petitioners alleged in their position paper that respondent was relieved from her post as
requested by the client because of her habitual tardiness, persistent borrowing of money from
employees and tenants of the client, and sleeping on the job.
Respondent then filed an administrative complaint for illegal dismissal with the PNP-Security
Agencies and Guard Supervision Division but she did not attend the conference hearings for
said case. Petitioners brought to the conference hearings a new assignment order detailing
respondent at the Ateneo de Manila University but, due to her absence, petitioners failed to
personally serve respondent said assignment order. Respondent filed a complaint for illegal
dismissal with the Labor Arbiter (LA) but it was dismissed. Respondent then filed a Notice of
Appeal with the National Labor Relations Commission (NLRC), but the NLRC also dismissed the
appeal for having been filed out of time, thereby declaring that the Labor Arbiter's Decision had
become final and executory . Respondent elevated the case to the CA via a petition for
certiorari in which the CA reversed NLRC’s ruling.
Issue:
Did the Court of Appeals erred in liberally applying the rules of procedure and ruling that
respondent's appeal should be allowed and resolved on the merits despite having been filed
out of time.
Ruling:
It should be emphasized that the resort to a liberal application, or suspension of the application
of procedural rules, must remain as the exception to the well-settled principle that rules must be
complied with for the orderly administration of justice. In Marohomsalic v. Cole, the Court stated
that while procedural rules may be relaxed in the interest of justice, it is well-settled that these
are tools designed to facilitate the adjudication of cases. The relaxation of procedural rules in
the interest of justice was never intended to be a license for erring litigants to violate the rules
with impunity. Liberality in the interpretation and application of the rules can be invoked only in
proper cases and under justifiable causes and circumstances.
In the case at hand, neither respondent nor her former counsel gave any explanation or reason
citing extraordinary circumstances for her lawyer's failure to abide by the rules for filing an
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appeal. Respondent merely insisted that she had not been remiss in following up her case with
said lawyer.
It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the
client. A departure from this rule would bring about never-ending suits, so long as lawyers could
allege their own fault or negligence to support the client’s case and obtain remedies and reliefs
already lost by the operation of law. The only exception would be where the lawyer's gross
negligence would result in the grave injustice of depriving his client of the due process of law.
In this case, there was no such deprivation of due process. Respondent was able to fully present
and argue her case before the Labor Arbiter. She was accorded the opportunity to be heard.
Her failure to appeal the Labor Arbiter's Decision cannot, therefore, be deemed as a deprivation
of her right to due process.
The right to appeal is not a natural right or part of due process; it is merely a statutory privilege
and may be exercised only in the manner and in accordance with the provisions of law. Thus,
one who seeks to avail of the right to appeal must strictly comply with the requirements of the
rules, and failure to do so leads to the loss of the right to appeal.
The Court will not override the finality and immutability of a judgment based only on the
negligence of a party’s counsel in timely taking all the proper recourses from the judgment. To
justify an override, the counsel’s negligence must not only be gross but must also be shown to
have deprived the party the right to due process.
In sum, the Court cannot countenance relaxation of the rules absent the showing of
extraordinary circumstances to justify the same. In this case, no compelling reasons can be
found to convince this Court that the CA acted correctly by according respondent such
liberality.
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Andrew James Mcburnie Vs. Eulalio Ganzon, Egi-Managers, Inc. and E. Ganzon, Inc
GR No. 178034/1718117, October 17, 2013, En Banc
Facts:
McBurnie, an Australian national, instituted a complaint for illegal dismissal and other monetary
claims against the respondents. McBurnie signed an employment agreement with EGI as an
Executive Vice-President who shall oversee the management of the company’s hotels and
resorts within the Philippines.
He performed work for the company he got into an accident that compelled him to go back
to Australia while recuperating from his injuries. While in Australia, he was informed by
respondent Ganzon that his services were no longer needed because their intended project
would no longer push through.
The respondents opposed the complaint, contending that their agreement with McBurnie was
to jointly invest in and establish a company for the management of hotels. They did not intend
to create an employer-employee relationship, and the execution of the employment contract
that was being invoked by McBurnie was solely for the purpose of allowing McBurnie to obtain
an alien work permit in the Philippines. When McBurnie left for Australia, he had not yet obtained
a work permit.
LA declared McBurnie as illegally dismissed from employment and entitled to receive: (a)
US$985,162.00 as salary and benefits for the unexpired term of their employment contract, (b)
₱2,000,000.00 as moral and exemplary damages, and (c) attorney’s fees equivalent to 10% of
the total monetary award.
Respondents appealed the LA’s Decision to the NLRC. They filed their Memorandum of Appeal
and Motion to Reduce Bond, and posted an appeal bond in the amount of ₱100,000.00. The
respondents contended in their Motion to Reduce Bond that the monetary awards of the LA
were null and excessive, allegedly with the intention of rendering them incapable of posting the
necessary appeal bond.
NLRC denied the motion to reduce bond.
ISSUE:
WON the appeal bond that was posted by the respondents was sufficient
RULING:
YES. The motion to reduce appeal bond shall be entertained by the NLRC subject to conditions
RATIONALE:
The rule on appeal bonds
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No motion to reduce bond shall be entertained except on meritorious grounds and upon the
posting of a bond in a reasonable amount in relation to the monetary award. The filing of the
motion to reduce bond without compliance with the requisites in the preceding paragraph shall
not stop the running of the period to perfect an appeal.
The posting of a bond is indispensable to the perfection of an appeal in cases involving

monetary awards from the decision of the LA. Non-compliance therewith renders the decision
of the Labor Arbiter final and executory.
While the bond may be reduced upon motion by the employer, this is subject to the conditions
that (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a
reasonable amount in relation to the monetary award is posted by the appellant, otherwise the
filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal.
The qualification effectively requires that unless the NLRC grants the reduction of the cash bond
within the 10-day reglementary period, the employer is still expected to post the cash or surety
bond securing the full amount within the said 10-day period. If the NLRC does eventually grant
the motion for reduction after the reglementary period has elapsed, the correct relief would be
to reduce the cash or surety bond already posted by the employer within the 10-day period.
The suspension of the period to perfect the appeal upon the filing of a motion to reduce bond
The filing of a motion to reduce bond, with compliance with the two conditions for the grant of
such motion shall suffice to suspend the running of the period to perfect an appeal from the
labor arbiter’s decision to the NLRC.
The NLRC has full discretion to grant or deny the motion to reduce bond, and it may rule on the
motion beyond the 10-day period within which to perfect an appeal. If the NLRC grants the
motion and rules that there is indeed meritorious ground and that the amount of the bond
posted is reasonable, then the appeal is perfected. If the NLRC denies the motion, the appellant
may still file a motion for reconsideration as provided under Section 15, Rule VII of the Rules. If
the NLRC grants the motion for reconsideration and rules that there is indeed meritorious ground
and that the amount of the bond posted is reasonable, then the appeal is perfected. If the
NLRC denies the motion, then the decision of the labor arbiter becomes final and executory.
An error of the NLRC was its outright denial of the motion to reduce the bond, without even
considering the respondents’ arguments and totally unmindful of the rules and jurisprudence
that allow the bond’s reduction. Instead of resolving the motion to reduce the bond on its merits,
NLRC insisted on an amount that was equivalent to the monetary award, merely explaining:
When the respondents sought to reconsider, NLRC still refused to fully decide on the motion. It
refused to at least make a preliminary determination of the merits of the appeal.
Prevailing rules and jurisprudence allow the reduction of appeal bonds.
The rule that the filing of a motion to reduce bond shall not stop the running of the period to
perfect an appeal is not absolute. The Court may relax the rule. The general rule provides that
an appeal in labor cases from a decision involving a monetary award may be perfected only
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upon the posting of a cash or surety bond, the Court has relaxed this requirement under certain
exceptional circumstances in order to resolve controversies on their merits.
To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties
the chance to seek a reduction of the appeal bond are effectively carried out all motions to
reduce bond that are to be filed with the NLRC shall be accompanied by the posting of a cash
or surety bond equivalent to 10% of the monetary award that is subject of the appeal, which
shall provisionally be deemed the reasonable amount of the bond in the meantime that an
appellant’s motion is pending resolution by the Commission. In conformity with the NLRC Rules,
the monetary award, for the purpose of computing the necessary appeal bond, shall exclude
damages and attorney’s fees. Only after the posting of a bond in the required percentage shall
an appellant’s period to perfect an appeal under the NLRC Rules be deemed suspended.
The foregoing shall not unduly hinder the NLRC’s exercise of its discretion, given that the
percentage of bond that is set by this guideline shall be merely provisional. The NLRC retains its
authority and duty to resolve the motion and determine the final amount of bond that shall be
posted by the appellant, still in accordance with the standards of "meritorious grounds" and
"reasonable amount". The appellant shall be given a period of 10 days from notice of the NLRC
order within which to perfect the appeal by posting the required appeal bond.
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1
INDOPHIL TEXTILE MILLS, INC. vs. ENGR. SALVADOR ADVIENTO
GR No. 171212, August 4, 2014
Doctrine:
Where the resolution of the dispute requires expertise, not in labor management relations nor in
wage structures and other terms and conditions of employment, but rather in the application
of the general civil law, such claim falls outside the area of competence of expertise ordinarily
ascribed to the LA and the NLRC.
Facts:
Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the business of
manufacturing thread for weaving, hired respondent Engr. Salvador Adviento as Civil Engineer
to maintain its facilities.
Respondent consulted a physician due to recurring weakness and dizziness. He was diagnosed
with Chronic Poly Sinusitis, and thereafter, with moderate, severe and persistent Allergic Rhinitis.
Respondent was advised by his doctor to totally avoid house dust mite and textile dust as it will
transmute into health problems.
Distressed, respondent filed a complaint against petitioner with the National Labor Relations
Commission (NLRC), San Fernando, Pampanga, for alleged illegal dismissal and for the payment
of backwages, separation pay, actual damages and attorney's fees. Respondent filed another
Complaint with the Regional Trial Court (RTC) of Aparri, Cagayan, alleging that he contracted
such occupational disease by reason of the gross negligence of petitioner to provide him with
a safe, healthy and workable environment.
Respondent alleged that as part of his job description, he conducts regular maintenance check
on petitioner's facilities including its dye house area, which is very hot and emits foul chemical
odor with no adequate safety measures introduced by petitioner. According to respondent, the
air washer dampers and all roof exhaust vests are blown into open air, carrying dust thereto.
Respondent recommended to management to place roof insulation to minimize, if not,

eradicate the health hazards attendant in the work place. However, said recommendation was
turned down by management due to high cost. Respondent further suggested to petitioner's
management that the engineering office be relocated because of its dent prone location, such
that even if the door of the office is sealed, accumulated dust creeps in outside the office.
However, no action was taken by management.
Health hazards have been the persistent complaints of most, if not all, workers of petitioner.
Nevertheless, said complaints fell on deaf ears as petitioner callously ignored the health
problems of its workers and even tended to be apathetic to their plight, including respondent.
Respondent averred that, being the only breadwinner in the family, he made several attempts
to apply for a new job, but to his dismay and frustration, employers who knew of his present
health condition discriminated against him and turned down his application.
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Petitioner filed a Motion to Dismiss on the ground that: (1) the RTC has no jurisdiction over the
subject matter of the complaint because the same falls under the original and exclusive
jurisdiction of the Labor Arbiter (LA) under Article 217 (a) (4) of the Labor Code.
RTC issued a Resolution denying the aforesaid Motion and sustaining its jurisdiction over the
instant case. It held that petitioner's alleged failure to provide its employees with a safe, healthy
and workable environment is an act of negligence, a case of quasi-delict. As such, it is not within
the jurisdiction of the LA under Article 217 of the Labor Code.
Petitioner then filed a Petition for Certiorari with the CA on the ground that the RTC committed
grave abuse of discretion amounting to lack or excess of jurisdiction.
CA rendered a decision dismissing petitioner's Petition for lack of merit.
Issue:
Whether or not the RTC has jurisdiction over the subject matter of respondent's complaint
praying for moral damages, exemplary damages, compensatory damages, anchored on
petitioner's alleged gross negligence in failing to provide a safe and healthy working
environment for respondent.
Ruling:
RTC has the jurisdiction over the subject matter
The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code as amended
by Section 9 of Republic Act (R.A.) No. 6715, to wit:
ART. 217. Jurisdiction of Labor Arbiters and the Commission — (a) Except as otherwise provided
under this Code the Labor Arbiter shall have original and exclusive jurisdiction to hear and
decide, within thirty (30) calendar days after the submission of the case by the parties for
decision without extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or non-agricultural:
xx
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;
Xx
While the court upholds the present trend to refer worker-employer controversies to labor courts
in light of the aforequoted provision, the court also recognized that not all claims involving
employees can be resolved solely by our labor courts, specifically when the law provides
otherwise. For this reason, they formulated the "reasonable causal connection rule", wherein if
there is a reasonable causal connection between the claim asserted and the employer-
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3
employee relations, then the case is within the jurisdiction of the labor courts; and in the absence
thereof, it is the regular courts that have jurisdiction.
Supreme Court ruled in the recent case of Portillo v. Rudolf Lietz, Inc. that:
“Not all disputes between an employer and his employees fall within the jurisdiction of the labor
tribunals such that when the claim for damages is grounded on the "wanton failure and refusal"
without just cause of an employee to report for duty despite repeated notices served upon him
of the disapproval of his application for leave of absence, the same falls within the purview of
Civil Law.”
In the case at bench, the court finds that such connection is nil.
Respondent's claim for damages is specifically grounded on petitioner's gross negligence to

provide a safe, healthy and workable environment for its employees — a case of quasi-delict.
In addition, respondent alleged that despite his earnest efforts to suggest to management to
place roof insulation to minimize, if not, eradicate the health hazards attendant in the
workplace, the same was not heeded.
In the case at bar, respondent alleges that due to the continued and prolonged exposure to
textile dust seriously inimical to his health, he suffered work-contracted disease which is now
irreversible and incurable, and deprived him of job opportunities. Clearly, injury and damages
were allegedly suffered by respondent, an element of quasidelict. Secondly, the previous
contract of employment between petitioner and respondent cannot be used to counter the
element of "no pre-existing contractual relation" since petitioner's alleged gross negligence in
maintaining a hazardous work environment cannot be considered a mere breach of such
contract of employment, but falls squarely within the elements of quasi-delict under Article 2176
of the Civil Code since the negligence is direct, substantive and independent.
It also bears stressing that respondent is not praying for any relief under the Labor Code of the
Philippines. He neither claims for reinstatement nor backwages or separation pay resulting from
an illegal termination. The cause of action herein pertains to the consequence of petitioner's
omission which led to a work-related disease suffered by respondent, causing harm or damage
to his person. Such cause of action is within the realm of Civil Law, and jurisdiction over the
controversy belongs to the regular courts .Further, it cannot be gainsaid that the claim for
damages occurred after the employer-employee relationship of petitioner and respondent has
ceased. Given that respondent no longer demands for any relief under the Labor Code as well
as the rules and regulations pertinent thereto, Article 217 (a) (4) of the Labor Code is
inapplicable to the instant case.
RTC has jurisdiction over the subject matter of respondent's complaint praying for moral
damages, exemplary damages, compensatory damages, anchored on petitioner's alleged
gross negligence in failing to provide a safe and healthy working environment for respondent.
WHEREFORE, the petition is DENIED.
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4
138 MANILA MINING CORPORATION vs. LOWITO AMOR, ET. AL.
G.R. No. 182800. April 20, 2015, citing 2015 Mcburnie
Facts:
Respondents Lowito Amor, Rollybie Ceredon, Julius Cesar, Ronito Martinez and Fermin Tabili, Jr.
were regular employees of petitioner Manila Mining Corporation, a domestic corporation which
operated a mining claim in Placer, Surigao del Norte,
In compliance with existing environmental laws, petitioner maintained a tailing pond, a tailings
containment facility required for the storage of waste materials generated by its mining
operations. When the mine tailings being pumped into the tailing pond reached the maximum
level in, petitioner temporarily shut down its mining operations pending approval of its
application to increase said facilty’s capacity by the Department of Environment and Natural
Resources-Environment Management Bureau (DENR-EMB).
Although the DENR-EMB issued a temporary authority for it to be able to continue operating the
tailing pond for another six (6) months and to increase its capacity, petitioner failed to secure
an extension permit when said temporary authority eventually lapsed.
Petitioner served a notice, informing its employees and the Department of Labor and
Employment Regional Office No. XII (DOLE) of the temporary suspension of its operations for six
months and the temporary lay-off of two-thirds of its employees. After the lapse of said period,
petitioner notified the DOLE that it was extending the temporary shutdown of its operations for
another six months.
Adversely affected by petitioner’s continued failure to resume its operations, respondents filed
the complaint for constructive dismissal and monetary claims before the Regional Arbitration
Branch of the National Labor Relations Commission (NLRC).
Executive Labor Arbiter Benjamin E. Pelaez held petitioner liable for constructive dismissal in view
of the suspension of its operations beyond the six-month period allowed under Article 2867 of
the Labor Code of the Philippines - finding that the cause of suspension of petitioner’s business
was not beyond its control. The labor arbiter awarded, among others, separation pay to
respondents.
The NLRC reversed the appealed decision. Finding that the continued suspension of petitioner’s
operations was due to circumstances beyond its control, the NLRC ruled that, under Article 283
of the Labor Code, respondents were not even entitled to separation pay considering the
eventual closure of their employer’s business due to serious business losses or financial reverses.
Respondents filed the Rule 65 petition for certiorari before the CA. Aside from the fact that the
Labor Arbiter decision had already attained finality, respondents faulted the NLRC for applying
Article 283 of the Labor Code absent allegation and proof of compliance with the requirements
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5
for the closure of an employer’s business due to serious business losses. On the other hand,
petitioner insist that the cessation of its operations was due to causes beyond its control,
petitioner argued that the subsequent closure of its business due to business losses exempted it
from paying separation pay.
The CA rendered the herein assailed decision, granting respondents’ petition and decreed that
the Labor Arbiter’s Decision had already attained finality and, for said reason, had been placed
beyond the NLRC’s power of review.
Petitioner seeks the reversal of the CA’s resolution.
Issue:
Whether or not petitioner’s cessation of its operations was due to causes beyond its control,
hence, the closure of its business due to business losses exempted it from paying separation pay.
Held:
NO. Closure of petitioner’s business was not beyond its control. Petitioner is liable for separation
pay to respondents.
Without necessarily resulting to a termination of employment, an employer may at any rate,

bona fide suspend the operation of its business for a period of not exceeding six months under
Article 286 of the Labor Code. While the employer is, on the one hand, duty bound to reinstate
his employees to their former positions without loss of seniority rights if the operation of the
business is resumed within six months, employment is deemed terminated where the suspension
exceeds said period.
Not having resumed its operations within six months from the time it suspended its operations on
27 July 2001, it necessarily follows that petitioner is liable to pay respondents’ separation
pay computed at one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher as well as the damages and attorney’s fees adjudicated by the
Labor Arbiter. Without proof of the serious business losses it allegedly sustained and/or
compliance with the reportorial requirements under Article 283 of the Labor Code, petitioner
cannot expediently plead exemption from said liabilities due to the supposed financial reverses
which led to the eventual closure of its business.
It is essentially required that the alleged losses in business operations must be proven for,
otherwise, said ground for termination would be susceptible to abuse by scheming employers
who might be merely feigning business losses or reverses in their business ventures in order to
ease out employees. The condition of business losses justifying retrenchment is normally shown
by audited financial documents like yearly balance sheets and profit and loss statements as
well as annual income tax returns which were not presented in this case.
Neither can petitioner evade said liabilities on the strength of the 28 July 2005 Decision rendered
by the CA's Twenty-Second Division in CAG.R. SP No. 00072, entitled Rosita Asumen, et al. v.
National Labor Relations Commission, et al., where its employees' claim for separation pay was
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6
denied on account of the subsequent closure of its business due to serious business losses and
financial reverses. Although the employees Rule 45 petition for review on certiorari had been
the ruling in said case can hardly be considered binding on respondents who were not parties
thereto.
As for the inequality in benefits which would supposedly result if the CA's assailed decision and
resolution were not reversed, suffice it to say that this Court had sustained the claim for
separation pay of petitioner's employees in the case of Manila Mining Corp Employees
Association-Federation of Free Workers Chapter, et al. v. Manila Mining Corporation, et al. Stare
decisis is inapplicable; the matter of separation pay for petitioner's employees has been
decided case to case.
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7
Toyota Alabang Inc vs. Games
GR No. 206612, Aug 17, 2015
Facts:
Games, who worked as a foreman for Toyota Alabang (petitioner), allegedly stole its vehicle
lubricants. Subsequently, it charged him with qualified theft before the trial court. Two years
thereafter, Games filed a Complaint for illegal dismissal, nonpayment of benefits, and damages
against petitioner. The latter, through counsel, failed to file its Position Paper on the date set on
15 November 2007.
Several resettings of the hearings ensued. Toyota Alabang (petitioner) manifested that it had
failed to file its Position Paper because its handling lawyer was no longer connected with the
company. On 5 February 2008, the LA ruled against petitioner and ordered the latter to pay
Games P535,553.07 for his separation pay, back wages, service incentive leave pay and
attorney's fees resulting from his illegal dismissal. Petitioner no longer filed a motion for
reconsideration. As a result, the LA's ruling became final and executory.
The LA issued a Writ of Execution, which petitioner sought to quash. It prayed that the
proceedings be reopened, explaining that it had failed to present evidence because of its
counsel's negligence in filing the appropriate pleadings. The LA denied the claims of petitioner.
Aggrieved, the latter appealed before the NLRC. The appeal of petitioner was denied due
course because it had failed to show proof of its security deposit for the appeal bond under
Section 6, Rule VI of the 2005 NLRC Rules of Procedure. According to the NLRC, the bonding
company's mere declaration in the Certification of Security Deposit that the bond was fully
secure was not tantamount to a faithful compliance with the rule, because there must first be
an accompanying assignment of the employer's bank deposit.
For the NLRC, petitioner's failure to appeal the LA Decision already made the ruling final and
executory. Petitioner elevated the case to the CA via a Petition for Certiorari, but the action
was dismissed. Firstly, the CA ruled that the NLRC did not gravely abuse its discretion in denying
the appeal, given that petitioner had failed to comply faithfully with the bond requirement.
Secondly, it echoed the ruling of the NLRC that a final judgment is no longer appealable. Thirdly,
the CA found that petitioner's own negligence had caused it to lose its right to appeal.
Aggrieved, petitioner filed a Petition for Review on Certiorari with Urgent Prayer for Injunctive
Relief before this Court. It disputed the finding that it did not show proof of its security deposit for
the appeal bond. It also insisted that its counsel's gross negligence justified the reopening of the
proceedings below. By way of a minute Resolution, this Court denied the petition.
Issue:
Whether or not the CA committed a reversible error in refusing to reopen the proceedings
below.
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8
Ruling:
The LA's decision finding that petitioner illegally dismissed respondent was already final and
executory because of petitioner's failure to file a timely appeal. Therefore, the labor dispute
between the parties should have been considered a closed case by then, and no longer
subject to appeal. At that point, Games should have already reaped the benefits of a favorable
judgment. Still, petitioner sought the reopening of the case, which the tribunals a quo denied.
This Court maintains that the CA correctly refused to reopen the proceedings below. There must
be good cause on the movant's part before it can be granted.
No appeal may be taken from an order of execution of a final and executory judgment. An
appeal is not a matter of right, but is a mere statutory privilege. It may be availed of only in the
manner provided by law and the rules. Thus, a party who seeks to elevate an action must
comply with the requirements of the 2011 NLRC Rules of Procedure as regards the period,
grounds, venue, fees, bonds, and other requisites for a proper appeal before the NLRC; and in
Section 6, Rule VI, the aforesaid rules prohibit appeals from final and executory decisions of the
Labor Arbiter.
In this case, petitioner elevated to the NLRC an already final and executory decision of the LA.
To recall, after petitioner learned of its former counsel's negligence in filing a Position Paper
before the LA, it nonetheless failed to file a motion reconsideration to question the ruling of the
LA that it illegally dismissed Games. At that point, the Decision was already final and executory,
so the LA dutifully issued a Writ of Execution. Petitioner sought the quashal of the writ of execution
and the reopening of its case only at that stage; and only after it was rebuffed by the LA did
petitioner appeal before the NLRC. Consequently, the NLRC dismissed the appeal based on its
clear prohibition under Section 5, Rule V of the 2011 NLRC Rules of Procedure.
As correctly ruled by the CA, the reopening of a case is, by default, not allowed merely on the
ground that the counsel has been negligent in taking the required steps to protect the interest
of the client, such as timely filing a pleading, appearing during hearings, and perfecting
appeals. An exception arises only when there is good cause and excusable negligence on the
client's part. Both the explanation of the CA and the records undeniably show no good cause
or excusable negligence on the part of the client — petitioner Toyota Alabang, Inc. — given
the totality of the instances of the latter's own negligence in these proceedings, viz.: (1) despite
being informed, during the mandatory conference hearing, of the necessity to file a Position
Paper, petitioner reneged on its duty to timely submit its Position Paper to the LA on 15 November
2007; (2) after manifesting that it no longer had a counsel, petitioner was still absent on 11
January 2008, the date when it could still have submitted its belated Position Paper; (3)
thereafter, it altogether absented itself from all the proceedings before the LA; (4) at no point
before the LA's resolution of the case on 5 February 2008 did petitioner file a Position Paper; and
(5) after allowing the LA Decision to attain finality as a result of its non-submission of an appeal
or a motion for reconsideration, petitioner belatedly sought the quashal of the execution of the
LA Decision granting compensation to respondent.
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9
More importantly, this Court cannot give special treatment to petitioner. In our past cases, this
Court already held that the failure of the counsel to file the required position papers before the
LA is not a ground to declare that petitioner had been deprived of due process; and is not a
cause to conclude that the proceedings a quo had been null and void. We have consistently
held that the requirements of due process are satisfied when the parties are given the
opportunity to submit position papers wherein they are supposed to attach all the documents
that would prove their claim in case it be decided that no hearing should be conducted or was
necessary. Here, petitioner, despite being given several chances to pass its position paper, did
not at all comply. Worse, petitioner also had other instances of negligence. Consequently, this
Court cannot redo the whole proceedings of the Labor Arbiter who had already afforded due
process to the former.
WHEREFORE, the Petition for Review with Urgent Prayer for Injunctive Relief filed
by Toyota Alabang, Inc. is DENIED with FINALITY. No further pleadings shall be entertained in this
case. Let an Entry of Judgment be issued in due course.
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0
Social Security System v. Ubana
GR No. 200114, August 25, 2015
Facts:
In her complaint for damages against the Social Security System (SSS), the DBP Service
Corporation, and the SSS Retirees Association, Debbie alleged that in July 1995 she applied for
employment with the SSS. Despite passing all the examinations and submitting the
requirements, she was referred to the DBP Service Corporation, passed the pre-employment
examination and was referred to SSS Naga for training and immediate deployment to SSS
Daet. She was made to sign a six-month Service Contract in May, 1996; and when she reported
to the SSS Daet Branch, she was assigned to various sections and divisions as Processor and Data
Encoder. Her salary was only P229.00 daily compared to a regular SSS Processor who receives
P846.45 daily. While her service contract with the DBP Service Corporation was never renewed,
she continued to be employed by the SSS; she was continually assured of being absorbed into
the SSS; in fact she was qualified for the position as she passed the required training. Because
of the oppressive and prejudicial treatment of the SSS, she was forced to resign in August 2002
as she could not stand anymore the exploitation, the agony of dissatisfaction, anxiety,
demoralization, and injustice. The defendants conspired to exploit her and violate civil service
rules and regulations and Civil Code provisions on Human relations, specifically Articles 19, 20
and 21. She prayed for actual damages by way of unrealized income, moral and exemplary
damages, and attorney’s fees.
The defendants filed a motion to dismiss for lack of jurisdiction, averring that the complaint was
predicated on the claims that arose out of employer-employee relations, thus cognizable by
the NLRC. At first, the RTC granted the motion to dismiss, but on motion for reconsideration by
Debbie, the RTC reversed itself and denied the motion to dismiss. It held that a perusal of the
complaint filed by Debbie substantially alleges that the case is for Damages. Having denied
the existence of employer-employee relationship between it and Debbie, and the case is for
damages, the regular trial courts, not the CSC has jurisdiction over the case.
SSS moved to reconsider, but the RTC denied, hence it filed a petition for certiorari with the
CA. The appellate court dismissed the petition, stating:
“It is the character of the principal relief sought that appears essential in this connection. Where
such principal relief is to be granted under labor legislation or a collective bargaining
agreement, the case should fall within the jurisdiction of the Labor Arbiter and the NLRC, even
though a claim for damages might be asserted as an incident to such claim.
The pivotal question is whether the Labor Code has any relevance to the principal relief sought
in the complaint. As pointed out earlier, Ubaña did not seek refuge from the Labor Code in
asking for the award of damages. It was the transgression of Article[s] 19 and 20 of the New Civil
Code that she was insisting in wagering this case. The primary relief sought herein is for moral
and exemplary damages for the abuse of rights. The claims for actual damages for unrealized
income are the natural consequence for abuse of such rights.”
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1
Issue:
Whether or not the RTC has jurisdiction over the complaint filed by Debbie.
Ruling:
The Court denies the Petition.
In Home Development Mutual Fund v. Commission on Audit,it was held that while they
performed the work of regular government employees, DBP Service Corporation personnel are
not government personnel, but employees of DBP Service Corporation acting as an
independent contractor. Applying the foregoing pronouncement to the present case, it can
be said that during respondent’s stint with petitioner, she never became an SSS employee, as
she remained an employee of DBP Service Corporation and SSS Retirees Association – the two
being independent contractors with legitimate service contracts with SSS.
Indeed, “[i]n legitimate job contracting, no employer-employee relation exists between the
principal and the job contractor’s employees. The principal is responsible to the job contractor’s
employees only for the proper payment of wages.”
In her Complaint, respondent acknowledges that she is not petitioner’s employee, but that
precisely she was promised that she would be absorbed into the SSS plantilla after all her years
of service with SSS; and that as SSS 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. In its pleadings, petitioner denied the existence of an employer-employee relationship
between it and respondent; in fact, it insists on the validity of its service agreements with DBP
Service Corporation and SSS Retirees Association – meaning that the latter, and not SSS, are
respondent’s true employers. Since both parties admit that there is no employment relation
between them, then there is no dispute cognizable by the NLRC. Thus, respondent’s case is
premised on the claim that in paying her only P229.00 daily – or P5,038.00 monthly – as against
a monthly salary of P18,622.00, or P846.45 daily wage, paid to a regular SSS Processor at the
time, petitioner exploited her, treated her unfairly, and unjustly enriched itself at her expense.
For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to acquire
jurisdiction over a dispute, there must be an employer-employee relation between the parties
thereto.
x x x It is well settled in law and jurisprudence that where no employer-employee relationship

exists between the parties and no issue is involved which may be resolved by reference to the
Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial
Court that has jurisdiction, x x x The action is within the realm of civil law hence jurisdiction over
the case belongs to the regular courts. While the resolution of the issue involves the application
of labor laws, reference to the labor code was only for the determination of the solidary liability
of the petitioner to the respondent where no employer-employee relation exists. Article 217 of
the Labor Code as amended vests upon the labor arbiters exclusive original jurisdiction only over
the following:
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2
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

xxx
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. At
first glance, it is indeed unfair and unjust that as, Processor who has worked with petitioner for six
long years, she was paid only P5,038.00 monthly, or P229.00 daily, while a regular SSS employee
with the same designation and who performs identical functions is paid a monthly salary of
P18,622.00, or P846.45 daily wage. Petitioner may not hide under its service contracts to deprive
respondent of what is justly due her. As a vital government entity charged with ensuring social
security, it should lead in setting the example by treating everyone with justice and fairness. If it
cannot guarantee the security of those who work for it, it is doubtful that it can even discharge
its directive to promote the social security of its members in line with the fundamental mandate
to promote social justice and to insure the well-being and economic security of the Filipino
people.
In this jurisdiction, the “long honored legal truism of ‘equal pay for equal work'” has been
“impregnably institutionalized;” “[p]ersons who work with substantially equal qualifications, skill,
effort and responsibility, under similar conditions, should be paid similar salaries.” “That public
policy abhors inequality and discrimination is beyond contention. Our Constitution and laws
reflect the policy against these evils. The Constitution in the Article on Social Justice and Human
Rights exhorts Congress to ‘give highest priority to the enactment of measures that protect and
enhance the right of all people to human dignity, reduce social, economic, and political
inequalities.’ The very broad Article 19 of the Civil Code requires every person, ‘in the exercise
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3
of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and
observe honesty and good faith’.”
ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE PHILIPPINES, INC. CHAPTER (ICE CREAM
AND CHILLED PRODUCTS DIVISION), ITS OFFICERS, MEMBERS BONIFACIO T. FLORENDO,
EMILIANO B. PALANAS and GENEROSO P. LAXAMANA vs. NESTLE PHILIPPINES, INC.
GR No. 198675, Sept 23, 2015
Facts:
Petitioner union staged a strike against herein respondent company's Ice Cream and Chilled
Products Division, citing, as grounds, respondent's alleged violation of the collective bargaining
agreement (CBA), dismissal of union officers and members, discrimination and other unfair labor
practice (ULP) acts.
Respondent filed with the National Labor Relations Commission (NLRC) a Petition for Injunction
with Prayer for Issuance of Temporary Restraining Order.
After a series of conciliation meetings and discussions between the parties, they agreed to
resolve their differences and came up with a compromise which was embodied in a
Memorandum of Agreement (MOA).
They are no longer interested in pursuing the petition for injunction filed by respondent as a
consequence of the settlement of their dispute.
After a lapse of more than eleven (11) years from the time of execution of the subject MOA,
petitioners filed with the NLRC a Motion for Writ of Execution contending that they have not
been paid the amounts they are entitled to in accordance with the MOA.
Respondent filed its Opposition to the Motion for Writ of Execution contending that petitioners'
remedy is already barred by prescription because, under the 2005 Revised Rules of the NLRC, a
decision or order may be executed on motion within five (5) years from the date it becomes
final and executory and that the same decision or order may only be enforced by independent
action within a period of ten (10) years from the date of its finality.
Reconsideration but the NLRC, in its Resolution dated February 14, 2011, dismissed.
CA denied it in its second questioned Resolution.
Ruling:
It is settled that when a compromise agreement is given judicial approval, it becomes more
than a contract binding upon the parties. Having been sanctioned by the court, it is entered as
a determination of a controversy and has the force and effect of a judgment. It is immediately
executory and not appealable, except for vices of consent or forgery. The non-fulfillment of its
terms and conditions justifies the issuance of a writ of execution; in such an instance, execution
becomes a ministerial duty of the court. Stated differently, a decision on a compromise
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CARMEL JO ANGELI HO
4
agreement is final and executory. Such agreement has the force of law and is conclusive
between the parties. It transcends its identity as a mere contract binding only upon the parties
thereto, asit becomes a judgment that is subject to execution in accordance with the Rules.
Article 1144 of the Civil Code may, likewise be applied, as it provides that an action upon a
written contract must be brought within ten years from the time the right of action accrues.
It is clear from the above law and rules that a judgment may be executed on motion within five
years from the date of its entry or from the date it becomes final and executory. After the lapse
of such time, and before it is barred by the statute of limitations, a judgment may be enforced
by action. If the prevailing party fails to have the decision enforced by a mere motion after the
lapse of five years from the date of its entry (or from the date it becomes final and executory),
the said judgment is reduced to a mere right of action in favor of the person whom it favors and
must be enforced, as are all ordinary actions, by the institution of a complaint in a regular form.
In the present case, the five-and ten-year periods provided by law and the rules are more than
sufficient to enable petitioners to enforce their right under the subject MOA. In this case, it is
clear that the judgment of the NLRC, having been based on a compromise embodied in a
written contract, was immediately executory upon its issuance on October 12, 1998. Thus, it
could have been executed by motion within five (5) years. It was not. Nonetheless, it could have
been enforced by an independent action within the next five (5) years, or within ten (10) years
from the time the NLRC Decision was promulgated. It was not. Therefore, petitioners' right to
have the NLRC judgment executed by mere motion as well as their right of action to enforce
the same judgment had prescribed by the time they filed their Motion for Writ of Execution on
January 25, 2010.
Even if our laws endeavor to give life to the constitutional policy on social justice and on the
protection of labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also entitled to respect
and enforcement in the interest of fair play. Stated otherwise, while the Court fully recognizes
the special protection which the Constitution, labor laws, and social legislation accord the
workingman, the Court cannot, however, alter or amend the law on prescription to relieve
petitioners of the consequences of their inaction. Vigilantibus, non dormientibus, jura subveniunt
— Laws come to the assistance of the vigilant, not of the sleeping.
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5
Quantum Foods, Inc. vs Marcelino Esloyo and Glen Magsila
G.R. No. 213696. December 9, 2015
Facts:
Petitioner Quantum Foods, Inc. (QFI) is a domestic corporation engaged in the distribution and
selling of food products nationwide. It hired Esloyo as the Regional Sales Manager for Visayas
and Mindanao. On the other hand, Magsila was hired as Key Accounts representative. In 2006,
QFI reorganize its sales force and Magsila was among those retrenched. Meanwhile, Esloyo was
terminated on the ground of loss of trust and confidence due to his numerous violations of the
company rules and regulations. Esloyo and Mgasila filed separate complaints for illegal dismissal
with money claims against QFI which was subsequently consolidated. QFI maintained that the
respondent’s dismissal were valid and, hence, it is not liable for their money claims.
The Labor Arbiter (LA) found respondents to have been illegally dismissed. QFI, in return, filed its
Notice of Appeal and Memorandum of Appeal before the NLRC accompanied by (a) A Motion
to Reduce Bond averring that it was encountering difficulty in raising the amount of the bond
and finding an insurance company that can cover said amount during the short period of time
allotted for an appeal; and (b) a cash bond in the amount of P400,000.00 (partial bond).
Respondents filed a motion to dismiss the appeal for QFI's failure: (a) to attach a Verification
and Certification of Non-Forum Shopping as required by the New Rules and Procedure of the
NLRC; and (b) to post a bond in an amount equivalent to the monetary judgment as mandated
by law. In this case, CA reversed and set aside the NLRC's ruling and reinstated the LA's Decision.
It ruled that QFI's failure to post the required bond in an amount equivalent to the monetary
judgment impeded the perfection of its appeal, and rendered the LA's Decision final and
executory.
Issue:
Whether or not the CA erred in ascribing grave abuse of discretion on the part of the NLRC in
giving due course to QFI's appeal.
Ruling:
Petition is granted. In labor cases, the law governing appeals from the LA's ruling to the NLRC is
Article 229 of the Labor Code in relation to Section 4, Rule VI of the 2005 Revised Rules of
Procedure of the NLRC which enumerates the requisites for the perfection of appeal. The Court
said that the submission of the certification requirement, under justifiable circumstances, can be
relaxed considering that although it is obligatory, it is not jurisdictional. Concerning the posting
of cash or surety bond, it has been settled that it is indispensable to the perfection of an appeal
in cases involving monetary awards from the decision of the LA, however in several cases, the
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CARMEL JO ANGELI HO
6
Court has relaxed this stringent requirement whenever justified. The 2005 Revised Rules of
Procedure of the NLRC — specifically Section 6, Rule VI — thereof, allow the reduction of the
appeal bond upon a showing of: (a) the existence of a meritorious ground for reduction, and
(b) the posting of a bond in a reasonable amount in relation to the monetary award. The merit
referred to may pertain to (a) an appellant's lack of financial capability to pay the full amount
of the bond, or (b) the merits of the main appeal such as when there is a valid claim that there
was no illegal dismissal to justify the award, the absence of an employer-employee relationship,
prescription of claims, and other similarly valid issues that are raised in the appeal. As to what
constitutes "a reasonable amount of bond" that must accompany the motion to reduce bond
in order to suspend the period to perfect an appeal, the Court, in McBurnie v. Ganzon,
pronounced that it must be equivalent to 10% of the monetary award that is subject of the
appeal.
Hence, the posting of a P400,000.00 cash bond equivalent to more than 20% of the monetary
judgment, together with the Motion to Reduce Bond within the reglementary period was
sufficient to suspend the period to perfect the appeal. The posting of the said partial bond
coupled with the subsequent posting of a surety bond in an amount equivalent to the monetary
judgment also signified QFI's good faith and willingness to recognize the final outcome of its
appeal.
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7
DELA ROSA LINER INC ET VS. BORELA, et.al
GR No. 207286, July 29, 2016
Key Lesson:
The elements of forum shopping are: (1) identity of parties; (2) identity of rights asserted and
relief prayed for, the relief being founded on the same facts; and (3) identity of the two
preceding particulars such that any judgment rendered in the other action will, regardless of
which party is successful, amount to res judicata in the action under consideration.
Facts:
On September 23, 2011, respondents Calixto Borela, bus driver, and Estelo Amarille, conductor,
filed separate complaints against petitioners Dela Rosa Liner, Inc., a public transport company,
Rosauro Dela Rosa, Sr., and Nora Dela Rosa, for underpayment/non-payment of salaries,
holiday pay, overtime pay, service incentive leave pay, 13th month pay, sick leave and
vacation leave, night shift differential, illegal deductions, and violation of Wage Order Nos. 13,
14, 15 and 16.
Petitioners asked the labor arbiter to dismiss the case for forum shopping. They alleged that on
September 28, 2011, the CA 13th Division disposed of a similar case between the parties after
they entered into a compromise agreement which covered all claims and causes of action
they had against each other in relation to the respondents' employment.
Labor Arbiter upheld the petitioners' position and dismissed the complaint on grounds of forum
shopping. Respondents appealed the LA's ruling, and the NLRC 1st Division granted the appeal.
The NLRC held that the respondents could not have committed forum shopping as there was
no identity of causes of action between the two cases. The first complaint, the NLRC pointed
out, charged the petitioners with illegal dismissal and unfair labor practice while the second
complaint was based on the petitioners' alleged nonpayment/underpayment of their salaries
and monetary benefits, and violation of several wage orders. The petitioners moved for
reconsideration, but the NLRC denied their motion, prompting them to file with the CA a petition
for certiorari.
CA 15th Division denied the petition. The NLRC likewise held that neither was the case barred
by res judicata arising from the CA judgment in the first case. The appeals court explained that
the first case involved the issues of whether respondents had been illegally dismissed and
whether petitioners should be liable for unfair labor practice. The labor arbiter dismissed the first
complaint for lack of merit in his decision of November 6, 2008. On the respondents' appeal
against the LA ruling in this first case, the NLRC 6th Division reversed the dismissal of the
complaint. It awarded respondents back wages (P442,550.00) for Borela and P215,775.00 for
Amarille), damages (P10,000.00 each in moral and exemplary damages for Borela), and moral
and exemplary damages (P25,000.00 each for Amarille), plus 10% attorney's fees for each of
them.
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CARMEL JO ANGELI HO
8
On the petitioners' motion for reconsideration, NLRC issued a new ruling that followed the LA's
ruling, with modification. It awarded the respondents financial assistance of P10,000.00 each, in
consideration of their long years of service to the company.
The respondents sought relief from the CA through a petition for certiorari (CA-G.R. SP No.
118038). Thereafter, the parties settled the case (involving the first complaint) amicably through
the compromise agreement. Under the terms of this agreement, "the parties agreed to
terminate the case now pending before the Court of Appeals and that both parties further
agree that no further action based on the same grounds be brought against each other, and
this Agreement applies to all claims and damages or losses either party may have against each
other whether those damages or losses are known or unknown, foreseen or unforeseen."
Based on this agreement, Borela and Amarille received from respondents P350,000.00 and
P150,000.00, respectively, and executed a quitclaim. In this manner, the parties resolved the first
case.
To go back to the present case CA-G.R. SP No. 128188, which arose from the second complaint
the respondents subsequently filed), the CA 15th Division upheld the NLRC's (1st Division)
decision and ruled out the presence of forum shopping and res judicata as bars to the
respondents' subsequent money claims against the petitioners. The petitioners moved for
reconsideration, but the CA denied the motion.
Respondents contend that their second complaint involved two causes of action: (1) their claim
for sick leave, vacation leave, and 13th-month pay under the collective bargaining agreement
of the company; and (2) the petitioners' noncompliance with wage orders since the year 2000
until the present.
Issue:
Whether or not the appellate court erred in upholding the NLRC ruling that there was no forum
shopping nor res judicata that would bar the second complaint
Ruling:
The petition is dismissed for lack of merit.
The CA 15th Division committed no reversible error when it affirmed the NLRC ruling that the
second complaint is not barred by the rule on forum shopping nor by the principle of res
judicata. In other words, no grave abuse of discretion could be attributed to the NLRC when it
reinstated the second complaint.
Contrary to the petitioners' submission, respondents' second complaint (CA-G.R. SP No. 128188),
a money claim, is not a "similar case" to the first complaint (CA-G.R. SP No. 118038). Thus, the
filing of the second complaint did not constitute forum shopping and the judgment in the first
case is not a res judicata ruling that bars the second complaint.
The elements of forum shopping are: (1) identity of parties; (2) identity of rights asserted and
relief prayed for, the relief being founded on the same facts; and (3) identity of the two
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CARMEL JO ANGELI HO
9
preceding particulars such that any judgment rendered in the other action will, regardless of
which party is successful, amount to res judicata in the action under consideration.
Forum shopping and res judicata are not applicable in the present case. There is no identity of
rights asserted and reliefs prayed for, and the judgment rendered in the previous action will not
amount to res judicata in the action now under consideration. There is also no identity of causes
of action in the first complaint and in the second complaint.
The NLRC's and CA's conclusion that there is no identity of causes of action between the
respondents' two complaints against the petitioners is sufficient. The first complaint involved
illegal dismissal/suspension, unfair labor practice with prayer for damages and attorney's fees;
while the second complaint (the subject of the present appeal) involves claims for labor
standards benefits — the petitioners' alleged violation of Wage Orders Nos. 13, 14, 15 and 16;
nonpayment of respondents' sick and vacation leave pays, 13th-month pay, service incentive
leave benefit, overtime pay, and night shift differential.
The same facts or evidence would not support both action, that is, the facts or the evidence
that would determine whether respondents were illegally dismissed, illegally suspended, or had
been the subject of an unfair labor practice act by the petitioners are not the same facts or
evidence that would support the charge of non-compliance with labor standards benefits and
several wage orders. Thus, there is no basis for petitioners' claim that "the same action had been
settled . . . .” and the petitioners' argument that "The Compromise Agreement covered all claims
and causes of action that the parties may have against each other in relation to the private
respondents' employment."
While the parties agreed that no further action shall be brought by the parties against each
other, they pointedly stated that they referred to actions on the same grounds. The phrase can
only refer to the grounds raised in the first complaint and not to any other grounds. The
compromise agreement's application "to all claims and damages or losses either party may
have against each other whether those damages or losses are known or unknown, foreseen or
unforeseen,” is also too sweeping and effectively excludes any claims by the respondents
against the petitioners, including those that by law and jurisprudence cannot be waived without
appropriate consideration such as nonpayment or underpayment of overtime pay and wages.
In labor law, respondents' claim for 13th-month pay, overtime pay, and statutory wages (under
Wages Orders 13, 14, 15 and 16), among others, cannot simply be generally waived as they are
granted for workers' protection and welfare.
It is reasonable to regard the amounts they received as a fair compromise in the settlement of
the first complaint in relation with the initial NLRC award, indicated above, before its
reconsideration. The parties, especially the respondents, could not have considered the P10,
000.00 financial assistance or their labor standards claims, particularly the alleged violation of
the wage orders, as a factor in their effort to settle the case amicably. The compromise
agreement, it should be emphasized, was executed on September 8, 2011, while the labor
standards complaint was filed only on September 23, 2011.
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CARMEL JO ANGELI HO
0
FONTANA DEVELOPMENT CORP., DENNIS PAK as General Manager, PASTOR ISAAC as
Director of Human Resources, CHRIS CHENG* as Deputy Group Financial Controller,
JESUS CHUA, Representative MICHAEL FELICIANO, ALMA EREDIANO, LEILANI VALIENTE,
MAN CHOI as Group Financial Controller, and JAIME VILLAREAL as Chief Engineer vs.
SASCHA VUKASINOVIC
GR No. 222424, September 21, 2016
Facts:
Sasha Vukasinovic was hired by petitioner Fontana Development Corporation (FDC) as its
Director for Business Development for one year and renewed for another year at the end of his
first contract. He allegedly received a text message from one Jenny Mallari (Mallari) informing
him that Nestor Dischoso (Dischoso) and Chief Hotel Engineer Jaime Villareal (Engr. Villareal),
both officers of petitioner FDC, were receiving commissions from company transactions. Mallari
handed over to respondent a photocopy of check issued to Engr. Villareal, in exchange for the
money offered by the respondent. The check, however, had an alteration so respondent asked
Mallari to execute an affidavit and provide more proof; Mallari eventually gave respondent two
invoices issued by one of the suppliers of petitioner FDC as proof of her allegations. Respondent
then paid Mallari a total of fourteen thousand pesos (P14,000) on different occasions.
FDC’s Safety and Security Department brought Engr. Villareal and Mallari to the National Bureau
of Investigation (NBI) Office for questioning where Mallari denied that Engr. Villareal asked for
commissions from her and revealed that she merely fabricated the story against Engr. Villareal
so that she can ask money from respondent. Petitioner FDC received a complaint from Engr.
Villareal claiming that respondent paid Mallari a substantial amount of money to concoct a
story depicting Engr. Villareal as a corrupt employee. Responder admitted that he gave money
to Mallari because “it is a common practice in Fontana to give money to informants for vital
information.” After FDC terminated respondent’s employment after finding him guilty of acts of
dishonesty in the form of “bribery in any form or manner” under Rule 1, Sec. 4 of petitioner FDC’s
Code of Conduct, which carries the maximum penalty of dismissal but respondent refused to
acknowledge its receipt and instead filed a complaint for illegal dismissal, illegal suspension,
regularization, non-payment of salaries, service incentive leave, 13th month pay, actual, moral
and exemplary damages, attorney’s fees and demands for his reinstatement with full
backwages against petitioner FDC and its officers.
The Labor Arbiter dismissed the complaint for lack of factual or legal basis, and ruled that
respondent cannot be regularized as he is an employee with a legal and valid fixed-term
employment and that his dismissal was for a just cause.
The NLRC then dismissed the appeal, affirming the Decision of Labor Arbiter. In the ruling, NLR
noted that respondent previously filed another complaint before the same branch of the NLRC
in San Fernando, Pampanga, involving the same facts, issues, and prayer.
26
CARMEL JO ANGELI HO
1
The CA agreed with the NLRC when it ruled that herein respondent’s employment had not
ripened into regular employment and that he was validly dismissed. Being a managerial
employee, the respondent can be terminated on the ground of loss of trust and confidence.
Issue:
Whether the CA gravely erred in not dismissing the petition in CA-GR SP No. 125945 for deliberate
forum shopping
Ruling:
Yes.
Respondent is guilty of forum shopping. forum shopping when a party repetitively avails of
several judicial remedies in different courts, simultaneously or successively, all substantially
founded on the same transactions and the same essential facts and circumstances, and all
raising substantially the same issues either pending in or already resolved adversely by some
other court. Forum shopping is an act of malpractice that is prohibited and condemned
because it trifles with the courts and abuses their processes.
The test for determining the existence of forum shopping is whether a final judgment in one case
amounts to res judicata in another or whether the following elements of litis pendentia are
present:
 identity of parties, or at least such parties as representing the same interests in both
actions;
 identity of rights asserted and reliefs prayed for, the relief being founded on the same
facts; and
 the identity of the two preceding particulars, such that any judgment rendered in the
other action will, regardless of which party is successful, amount to res judicata in the
action under consideration.
What is truly important to consider in determining whether forum shopping exists or not is the
vexation caused the courts and parties-litigants by a party who asks different courts and/or
administrative agencies to rule on the same or related causes and/or grant the same or
substantially the same reliefs, in the process creating the possibility of conflicting decisions being
rendered by the different fora upon the same issues.
In this case, it is undisputed that respondent filed two labor complaints: first, NLRC Case No. RAB
III-11-16967-10-P entitled "Sascha Vukasinovic v. Fontana Development Corporation, Dennis Pak,
Pastor Isaac, Chris Cheng, Jesus Chua, Michael Feliciano, Alma Erediano, Leilani Valiente, Man
Choi and Jaime Villareal" for illegal dismissal, illegal suspension, regularization, non-payment of
salaries, service incentive leave pay, 13th month pay, as well as actual, moral and exemplary
damages and attorney's fees, with prayer for reinstatement and full back wages; and second,
NLRC Case No. RAB III-09-18113-11 entitled "Sascha Vukasinovic v. National Labor Relations
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CARMEL JO ANGELI HO
2
Commission, Labor Arbiter Reynaldo B. Abdon, Jimei S. International, Ltd. (JSIL), Mr. Suk Man
Choi in his capacity as Group Financial Comptroller of JSIL, Chris Cheng in his capacity as
Deputy Group Financial Comptroller of JSIL" , for constructive (illegal) dismissal, regularization,
non-payment of salaries, premium pay for holiday and rest days, service incentive leave pay,
13th month pay, as well as damages and attorney's fees and other monetary claims including
bonuses and travel expenses (repatriation expenses). It is also undisputed that the causes of
action (illegal dismissal and constructive dismissal) in the respective complaints in the two (2)
cases stemmed from the adverse decision in the administrative case filed against respondent
that resulted to his dismissal from employment.
It is well-settled that once there is a finding of forum shopping, the penalty is summary dismissal
not only of the petition pending before this Court, but also of the other case that is pending in
a lower court. This is so because twin dismissal is the punitive measure to those who trifle with the
orderly administration of justice.
The rule essentially penalizes the forum shopper by dismissing all pending actions on the same
claim filed in any court. Because of the severity of the penalty of the rule, an examination must
first be made on the purpose of the rule.
Consequently, the CA should have dismissed the case outright without rendering a decision on
the merits of the case. Respondent should be penalized for willfully and deliberately trifling with
court processes. The purpose of the law will be defeated if respondent will be granted the relief
prayed for despite his act of deliberately committing forum shopping.
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CARMEL JO ANGELI HO
3

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UNIVERSITY OF SAN CARLOS

School of Law and Governance

P. Del Rosario St. Cebu City

of the Requirements for the course

BASIC PRINCIPLES .................................................................................................................................................... 9

Whether an employer-employee relationship exists.

Philippine Global Communications inc. is a corporation engaged in the business of

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

ABS-CBN employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production

Petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining

WON the respondents are regular employees?

REGULAR AND CASUAL EMPLOYMENT.—The provisions of written agreement to the contrary

Whether or not there was an employer-employee relationship.

There can be no other conclusion that petitioner is an employee of respondent Kasei

In general, a hospital is not liable for the negligence of an independent contractor-physician.

Dr. Dean Climaco(respondent), a medical doctor, was hired by Coca-cola Bottlers

The CA held it in this wise:

Hence, this petition filed by Coca-cola company

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

Moreover, respondents were made subject to petitioner-hospital's Code of Ethics,the provisions

Whether or not there exists an employer-employee relationship between Shangri-la and

In the Agreement, it is provided that:

The CA upheld the NLRC decision.

The Court of Appeals denied the motion for reconsideration.

Whether petitioner is an employee of respondents, which in turn determines whether petitioner

The existence of an employer-employee relationship is ultimately a question of fact. As a general

To determine the existence of an employer-employee relationship, case law has consistently

I am a CPA (Certified Public Accountant) by profession but presently associated with, or

In determining the presence or absence of an employer-employee relationship, the Court has

Whether there exists an employer-employee relationship

He could not choose the place of his performance;

Aggrieved, petitioners filed a complaint for constructive dismissal, non–payment of wages,

This is not the “control” contemplated in employer–employee relationships. Control in such

Whether Alcantara was an independent contractor or an employee of Royale Homes.

Alcantara was an independent contractor.

In determining the existence of an employer-employee relationship, this Court has generally

Whether Arlene was a regular employee with a fixed-term contract.

Yes. Arlene was a regular employee with a fixed-term contract.

In determining whether an employment should be considered regular or non-regular, the

In determining whether an employment should be considered regular or non-regular, the

1) WON there is valid retrenchment.

PCPPIs financial statements are substantial evidence.

Notice requirement were complied

Absent any clear showing of abuse, arbitrariness or capriciousness

Employees had already been paid the requisite separation pay.

Respondent ABS-CBN Corporation (formerly ABS-CBN Broadcasting Corporation) is a television

Claiming that they were regular employees of ABS-CBN, petitioners

Whether or not the petitioners were regular employees.

Yes. The petitioners were regular employees.

The Court denies the Petition.

x x x It is well settled in law and jurisprudence that where no employer-employee relationship

1 Unfair labor practices;

6 Except claims for Employees Compensation, Social Security, Medicare and

In all these cases, an employer-employee relationship is an indispensable jurisdictional requisite

Whether or not an employer-employee relationship exist between petitioner and respondents.

The Court denied the petition. In determining the existence of an employer-employee

Whether or not discrimination merely by reason of the marriage of a female employee is

Under American jurisprudence, job requirements which establish employer preference or

The prohibition against personal or marital relationships with employees of competitor

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

Whether or not the dismissal was illegal?

Whether or not the petitioner was illegally dismissed.