SAN MIGUEL CORPORATION v.

PROSPERO ABALLA
G.R. No. 149011 June 28, 2005

Ponente: CARPIO-MORALES, J.:

FACTS: Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose Cooperative
(Sunflower) entered into a one-year Contract of Service and such contract is renewed on a
monthly basis until terminated. Pursuant to this, respondent Prospero Aballa rendered services
to SMC.

After one year of service, Aballa filed a complaint before NLRC praying that they be declared as
regular employees of SMC. On the other hand, SMC filed before the DOLE a Notice of Closure
due to serious business losses. Hence, the labor arbiter dismissed the complaint and ruled in
favor of SMC. Aballa then appealed before the NLRC. The NLRC dismissed the appeal finding
that Sunflower is an independent contractor.

On appeal, the Court of Appeals reversed NLRC·s decision on the ground that the agreement
between SMC and Sunflower showed a clear intent to abstain from establishing an employer-
employee relationship.

ISSUE: Whether or not Aballa and other employees of Sunflower are employees of SMC?

HELD: The test to determine the existence of independent contractorship is whether one
claiming to be an independent contractor has contracted to do the work according to his own
methods and without being subject to the control of the employer, except only as to the results
of the work. In legitimate labor contracting, the law creates an employer-employee relationship
for a limited purpose, to ensure that the employees are paid their wages. The principal employer
becomes jointly and severally liable with the job contractor, only for the payment of the
employees wages whenever the contractor fails to pay the same. Other than that, the principal
employer is not responsible for any claim made by the employees. In labor-only contracting, the
statute creates an employer-employee relationship for a comprehensive purpose: to prevent a
circumvention of labor laws. The contractor is considered merely an agent of the principal
employer and the latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer.
The Contract of Services between SMC and Sunflower shows that the parties clearly disavowed
the existence of an employer-employee relationship between SMC and private respondents.
The language of a contract is not, however, determinative of the parties· relationship; rather it is
the totality of the facts and surrounding circumstances of the case. A party cannot dictate, by the
mere expedient of a unilateral declaration in a contract, the character of its business, whether as
labor-only contractor or job contractor, it being crucial that its character be measured in terms of
and determined by the criteria set by statute. What appears is that Sunflower does not have
substantial capitalization or investment in the form of tools, equipment, machineries, work
premises and other materials to qualify it as an independent contractor. On the other hand, it is
gathered that the lot, building, machineries and all other working tools utilized by Aballa et al. in
carrying out their tasks were owned and provided by SMC.
And from the job description provided by SMC itself, the work assigned to Aballa et al. was
directly related to the aquaculture operations of SMC. As for janitorial and messengerial
services, that they are considered directly related to the principal business of the employer has
been jurisprudentially recognized. Furthermore, Sunflower did not carry on an independent

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business or undertake the performance of its service contract according to its own manner and
method, free from the control and supervision of its principal, SMC, its apparent role having
been merely to recruit persons to work for SMC.

All the foregoing considerations affirm by more than substantial evidence the existence of an
employer- employee relationship between SMC and Aballa. Since Aballa who were engaged in
shrimp processing performed tasks usually necessary or desirable in the aquaculture business
of SMC, they should be deemed regular employees of the latter and as such are entitled to all
the benefits and rights appurtenant to regular employment. They should thus be awarded
differential pay corresponding to the difference between the wages and benefits given them and
those accorded SMC·s other regular employees.

239
 Philippines Bank of Communications vs. NLRC
{G.R. No. L-66598, December 19, 1986

Facts: Petitioner Philippine Bank of Communications and the Corporate Executive Search Inc.
(CESI) entered into a letter agreement dated January 1976 under which (CESI) undertook to
provide "Tempo[rary] Services" to petitioner Consisting of the "temporary services" of eleven
(11) messengers. The contract period is described as being "from January 1976—." The
petitioner in truth undertook to pay a "daily service rate of P18, " on a per person basis.
Attached to the letter agreement was a "List of Messengers assigned at Philippine Bank of
Communications" which list included, as item No. 5 thereof, the name of private respondent
Ricardo Orpiada.
Ricardo Orpiada was thus assigned to work with the petitioner bank. As such, he rendered
services to the bank, within the premises of the bank and alongside other people also rendering
services to the bank. There was some question as to when Ricardo Orpiada commenced
rendering services to the bank. As noted above, the letter agreement was dated January 1976.
However, the position paper submitted by (CESI) to the National Labor Relations Commission
stated that (CESI) hired Ricardo Orpiada on 25 June 1975 as a Tempo Service employee, and
assigned him to work with the petitioner bank "as evidenced by the appointment memo issued
to him on 25 June 1975. " Be that as it may, on or about October 1976, the petitioner requested
(CESI) to withdraw Orpiada's assignment because, in the allegation of the bank, Orpiada's
services "were no longer needed."
On 29 October 1976, Orpiada instituted a complaint in the Department of Labor (now Ministry of
Labor and Employment) against the petitioner for illegal dismissal and failure to pay the 13th
month pay provided for in Presidential Decree No. 851. This complaint was docketed as Case
No. R04-1010184-76-E. After investigation, the Office of the Regional Director, Regional Office
No. IV of the Department of Labor, issued an order dismissing Orpiada's complaint for failure of
Mr. Orpiada to show the existence of an employer-employee relationship between the bank and
himself.
Accordingly, on 2 April 1984, the bank filed the present petition for certiorari with this Court
seeking to annul and set aside (a) the decision of respondent Labor Arbiter Dogelio dated 12
September 1977 in Labor Case No. RB-IV-1118-77 and (b) the decision of the NLRC
promulgated on 29 December 1983 affirming with some modifications the decision of the Labor
Arbiter. This Court granted a temporary restraining order on 11 April 1984. The main issue as
litigated by the parties in this case relates to whether or not an employer-employee relationship
existed between the petitioner bank and private respondent Ricardo Orpiada. The petitioner
bank maintains that no employer-employee relationship was established between itself and
Ricardo Orpiada and that Ricardo Orpiada was an employee of (CESI) and not of the bank.
Issue: Whether or not Orpiada is an employee of the bank or the Agency?

Decision: Turning to the power to control Orpiada's conduct, it should be noted immediately
that Orpiada performed his sections within the bank's premises, and not within the office
premises of (CESI) As such, Orpiada must have been subject to at least the same control and
supervision that the bank exercises over any other person physically within its premises and
rendering services to or for the bank, in other words, any employee or staff member of the bank.
It seems unreasonable to suppose that the bank would have allowed Orpiada and the other
persons assigned to the bank by CE SI to remain within the bank's premises and there render
services to the bank, without subjecting them to a substantial measure of control and

240
supervision, whether in respect of the manner in which they discharged their functions, or in
respect of the end results of their functions or activities, or both.

Under the general rule set out in the first and second paragraphs of Article 106, an employer
who enters into a contract with a contractor for the performance of work for the employer, does
not thereby create an employer-employes relationship between himself and the employees of
the contractor. Thus, the employees of the contractor remain the contractor's employees and his
alone. Nonetheless when a contractor fails to pay the wages of his employees in accordance
with the Labor Code, the employer who contracted out the job to the contractor becomes jointly
and severally liable with his contractor to the employees of the latter "to the extent of the work
performed under the contract" as such employer were the employer of the contractor's
employees. The law itself, in other words, establishes an employer-employee relationship
between the employer and the job contractor's employees for a limited purpose, i.e., in order to
ensure that the latter get paid the wages due to them.

The definition of "labor-only" contracting in Rule VIII, Book III of the Implementing Rules must be
read in conjunction with the definition of job contracting given in Section 8 of the same Rules.
The undertaking given by CESI in favor of the bank was not the performance of a specific — job
for instance, the carriage and delivery of documents and parcels to the addresses thereof.
There appear to be many companies today which perform this discrete service, companies with
their own personnel who pick up documents and packages from the offices of a client or
customer, and who deliver such materials utilizing their own delivery vans or motorcycles to the
addresses. In the present case, the undertaking of (CESI) was to provide its client-thebank-with
a certain number of persons able to carry out the work of messengers. Such undertaking of
CESI was complied with when the requisite number of persons were assigned or seconded to
the petitioner bank. Orpiada utilized the premises and office equipment of the bank and not
those of (CESI) Messengerial work-the delivery of documents to designated persons whether
within or without the bank premises — is of course directly related to the day-to-day operations
of the bank. Section 9(2) quoted above does not require for its applicability that the petitioner
must be engaged in the delivery of items as a distinct and separate line of business.

WHEREFORE, the petition for certiorari is DENIED and the decision promulgated on 29
December 1983 of the National Labor Relations Commission is AFFIRMED. The Temporary
Restraining Order issued by this Court on 11 April 1984 is hereby lifted. Costs against petitioner.
SO ORDERED.

241
 Tabas et al VS. California Manufacturing Company

G.R. No. L-80680 January 26, 1989

Facts:

Petitioners filed a petition in the NLRC for reinstatement and payment of various benefits
against California Manufacturing Company. The respondent company then denied the existence
of an employer-employee relationship between the company and the petitioners.

Pursuant to a manpower supply agreement, it appears that the petitioners prior their
involvement with California Manufacturing Company were employees of Livi Manpower service,
an independent contractor, which assigned them to work as "promotional merchandisers." The
agreement provides that:

California "has no control or supervisions whatsoever over [Livi's] workers with respect
to how they accomplish their work or perform [Californias] obligation" It was further expressly
stipulated that the assignment of workers to California shall be on a "seasonal and contractual
basis"; that "[c]ost of living allowance and the 10 legal holidays will be charged directly to
[California] at cost "; and that "[p]ayroll for the preceeding [sic] week [shall] be delivered by [Livi]
at [California's] premises."

Issue:
Whether the petitioners are California's or Livi's employees?

Held:

There is no doubt that in the case at bar, Livi performs "manpower services", meaning to say, it
contracts out labor in favor of clients. We hold that it is one notwithstanding its vehement claims
to the contrary, and notwithstanding the provision of the contract that it is "an independent
contractor." The nature of one's business is not determined by self-serving appellations one
attaches thereto but by the tests provided by statute and prevailing case law. The bare fact that
Livi maintains a separate line of business does not extinguish the equal fact that it has provided
California with workers to pursue the latter's own business. In this connection, we do not agree
that the petitioners had been made to perform activities 'which are not directly related to the
general business of manufacturing," California's purported "principal operation activity. " The
petitioner's had been charged with "merchandizing [sic] promotion or sale of the products of
[California] in the different sales outlets in Metro Manila including task and occational [sic] price
tagging," an activity that is doubtless, an integral part of the manufacturing business. It is not,
then, as if Livi had served as its (California's) promotions or sales arm or agent, or otherwise,
rendered a piece of work it (California) could not have itself done; Livi, as a placement agency,
had simply supplied it with the manpower necessary to carry out its (California's) merchandising
activities, using its (California's) premises and equipment.

Neither Livi nor California can therefore escape liability, that is, assuming one exists.

Petition granted.

242
Mafinco Trading Corporation vs. Hon Blas F. Ople in his Capacity as Secretary of Labor ,
The National Labor Relations Commission, Rodrigo Repomanta and Rey Moralde
G.R. No. L 37790, March 25, 1976

Facts:
Rodrigo Repomanta and Mafinco Trading Corp. sole distributor of Cosmos Soft drinks ,
executed a peddling Contract whereby Repomanta agreed to buy and sell “ Cosmos Soft drinks,
Rey Moralde entered into a similar Contract the Contracts Provide that such were to remain in
force for one year unless sooner terminated by either party upon 5 days notice to the other.
Pursuant to said Mafinco terminated the Peddling Contract .
Repomanta and Moralde filed a complaint with the NLRC . Mafinco filed a Motion to
dismiss on the ground that the NLRC had no jurisdiction because Repomanta and Moralde
were not its employees but were independent Contractor.
The NLRC sustained the Motion and dismissed the Complaint on Appeal to the
Secretary of Labor the decision was reversed.
Ruling: A Contract whereby one engage to purchase and sell soft drinks on trucks supplied by
manufacturer but providing that the other party (peddler) shall have the right to employ his own
workers. Shall post a bond to protect the manufacturer against losses, shall be responsible for
damages caused to third person, shall obtain the necessary licenses and permits and bear the
expenses incurred in the sale of soft drinks is not a contract employment.

Issue:
Whether the work is part of the employer’s general business supplier of soft drinks.

Ruling:
A Contract whereby one engage to purchase and sell soft drinks on trucks supplied by
manufacturer but providing that the other party (peddler) shall have the right to employ his own
workers. Shall post a bond to protect the manufacturer against losses, shall be responsible for
damages caused to third person, shall obtain the necessary licenses and permits and bear the
expenses incurred in the sale of soft drinks is not a contract employment.

Decision:
In the Mafinco Trading the court explain that an independent employment and contractor
is one who exercise independent employment and contractor to do a price of work according to
his methods without being subject to control of his employer except as to the result of work.

243
 INSULAR LIFE ASSURANCE CO., LTD.
vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO,
G.R. No. 84484 November 15, 1989

FACTS : Petitioner entered contract with Basiao for insurance policies and annuities in
accordance with the existing rules and regulations" of the Company; he would receive
"compensation, in the form of commissions ... as provided in the Schedule of Commissions" of
the contract to "constitute a part of the consideration of ... (said) agreement;" and the "rules in ...
(the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and those
which may from time to time be promulgated by it.
Some four years later, in April 1972, the parties entered into another contract — an Agency
Manager's Contract — and to implement his end of it Basiao organized an agency or office to
which he gave the name M. Basiao and Associates, while concurrently fulfilling his commitments
under the first contract with the Company.
In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a
reconsideration, Basiao sued the Company in a civil action and this, he was later to claim,
prompted the latter to terminate also his engagement under the first contract and to stop
payment of his commissions starting April 1, 1980.
Basiao thereafter filed with the then Ministry of Labor a complaint against the Company and its
president. Without contesting the termination of the first contract, the complaint sought to
recover commissions allegedly unpaid there under, plus attorney's fees. The respondents
disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's
employee, but an independent contractor and that the Company had no obligation to him for
unpaid commissions under the terms and conditions of his contract.
The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the
underwriting agreement had established an employer-employee relationship between him and
the Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim.
Said official's decision directed payment of his unpaid commissions "... equivalent to the
balance of the first year's premium remaining unpaid, at the time of his termination, of all the
insurance policies solicited by ... (him) in favor of the respondent company ..." plus 10%
attorney's fees.
This decision was, on appeal by the Company, affirmed by the National Labor Relations
Commission. Hence, the present petition for certiorari and prohibition

ISSUE:
Whether, as Basiao asserts, he had become the Company's employee by virtue of
the contract invoked by him, thereby placing his claim for unpaid commissions within
the original and exclusive jurisdiction of the Labor Arbiter under the provisions of
Section 217 of the Labor Code, or, contrarily, as the Company would have it, that under
said contract Basiao's status was that of an independent contractor whose claim was
thus cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an
ordinary civil action.

HELD:
The Court, therefore, rules that under the contract invoked by him, Basiao was not an
employee of the petitioner, but a commission agent, an independent contractor whose claim for
unpaid commissions should have been litigated in an ordinary civil action. The Labor Arbiter
erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as
did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it
unnecessary and premature to consider Basiao's claim for commissions on its merits.

244
 WHEREFORE, the appealed Resolution of the National Labor Relations Commission is
set aside, and that complaint of private respondent Melecio T. Basiao in RAB Case No. VI-0010-
83 is dismissed. No pronouncement as to costs.

245
 G.R. No. 80039 April 18, 1989

ERNESTO M. APODACA, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS.,
INC., respondents.

FACTS : Petitioner was employed in respondent corporation. On August 28, 1985, respondent
Jose M. Mirasol persuaded petitioner to subscribe to 1,500 shares of respondent corporation at
P100.00 per share or a total of P150,000.00. He made an initial payment of P37,500.00. On
September 1, 1975, petitioner was appointed President and General Manager of the respondent
corporation. However, on January 2, 1986, he resigned.

On December 19, 1986, petitioner instituted with the NLRC a complaint against private
respondents for the payment of his unpaid wages, his cost of living allowance, the balance of
his gasoline and representation expenses and his bonus compensation for 1986. Petitioner and
private respondents submitted their position papers to the labor arbiter. Private respondents
admitted that there is due to petitioner the amount of P17,060.07 but this was applied to the
unpaid balance of his subscription in the amount of P95,439.93. Petitioner questioned the set-
off alleging that there was no call or notice for the payment of the unpaid subscription and that,
accordingly, the alleged obligation is not enforceable.

In a decision dated April 28, 1987, the labor arbiter sustained the claim of petitioner for
P17,060.07 on the ground that the employer has no right to withhold payment of wages already
earned under Article 103 of the Labor Code. Upon the appeal of the private respondents to
public respondent NLRC, the decision of the labor arbiter was reversed in a decision dated
September 18, 1987. The NLRC held that a stockholder who fails to pay his unpaid subscription
on call becomes a debtor of the corporation and that the set-off of said obligation against the
wages and others due to petitioner is not contrary to law, morals and public policy.

ISSUE : Does the National Labor Relations Commission (NLRC) have jurisdiction to resolve a
claim for non-payment of stock subscriptions to a corporation? Assuming that it has, can an
obligation arising therefrom be offset against a money claim of an employee against the
employer?

HELD : Firstly, the NLRC has no jurisdiction to determine such intra-corporate dispute between
the stockholder and the corporation as in the matter of unpaid subscriptions. This controversy is
within the exclusive jurisdiction of the Securities and Exchange Commission. 1

Secondly, assuming arguendo that the NLRC may exercise jurisdiction over the said subject
matter under the circumstances of this case, the unpaid subscriptions are not due and payable
until a call is made by the corporation for payment. 2 Private respondents have not presented a
resolution of the board of directors of respondent corporation calling for the payment of the
unpaid subscriptions. It does not even appear that a notice of such call has been sent to
petitioner by the respondent corporation.

What the records show is that the respondent corporation deducted the amount due to petitioner
from the amount receivable from him for the unpaid subscriptions. 3 No doubt such set-off was
without lawful basis, if not premature. As there was no notice or call for the payment of unpaid
subscriptions, the same is not yet due and payable.

246
Lastly, assuming further that there was a call for payment of the unpaid subscription, the NLRC
cannot validly set it off against the wages and other benefits due petitioner. Article 113 of the
Labor Code allows such a deduction from the wages of the employees by the employer, only in
three instances, to wit:

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

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

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

(c) In cases where the employer is authorized by law or regulations issued by the Secretary of
Labor. 4

WHEREFORE, the petition is GRANTED and the questioned decision of the NLRC dated
September 18, 1987 is hereby set aside and another judgment is hereby rendered ordering
private respondents to pay petitioner the amount of P17,060.07 plus legal interest computed
from the time of the filing of the complaint on December 19, 1986, with costs against private
respondents.
An obligation arising from non-payment of stock subscriptions to a corporation cannot be offset
against a money claim of an EE against an ER

247
 Metrobank Union vs NLRC
G.R. No. 102636
VITUG, J.:p

Facts:
Metrobank entered into a CBA with Petitioner, granting a P900 increase in wages.
Subsequently, a law was passed increasing the minimum wage. Metrobank classified
employees into those receiving less than 100 per day and those receiving more. Those
receiving more were not covered by the implementation of the new law but only the increase as
agreed upon in the CBA. Petitioners argue that the method of implementation created a wage
distortion within the employees of Metrobank because the differences in the salaries of the
employee classifications were substantially reduced.
Issue:
Whether or not there was wage distortion?
Held:
There was wage distortion.
Ratio Decidendi:
Wage Distortion means a situation where an increase in prescribed wage rates results in
the elimination or severe contradiction of intentional quantitative differences in wage or salary
rates between and among employee groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical
bases of differentiation.

248
 National Federation of Labor vs. NLRC
G.R. No. 103586 July 21, 1994

THIRD DIVISION, FELICIANO, J.:

Facts:

Between 1 November 1983 and 1 November 1984, Wage Orders Nos. 3, 4, 5 and 6 were
promulgated increasing the statutory minimum wages of workers with differing increases being
specified for agricultural plantation and non-agricultural workers. As a result of the
implementation of such wage orders and the increases brought about by the effectivity of the
CBA, there was no more significant differential between regular and non-regular/newly
regularized employees.

Meantime, while the above wage developments were unfolding, the Company experienced a
work output slow down. The Company directed some 205 workers to explain the reduction in
their work output. The workers failed to comply and they were accordingly issued notices of
dismissal by the Company. As a response to its decreasing productivity levels, the Company
suspended operations on 16 August 1984. Operations were resumed on 14 September 1984;
the Company, however, refused to take back the 205 dismissed employees. Petitioner Union
then went on strike alleging a lock-out on the part of the Company and demanding rectification
of the wage distortion. The case was certified by the Secretary of Labor to the National Labor
Relations Commission ("NLRC") for compulsory conciliation.

On 19 June 1985, the Union and the Company reached an agreement with respect to the lock-
out issue. The agreement, which was approved by the NLRC En Banc, granted the 205
employees "financial assistance" equivalent to thirty (30) days' separation pay. This left
unresolved only the wage distortion issue.

On 11 November 1987, the NLRC En Banc rendered a decision which in effect found the
existence of wage distortion and required the Company to pay a P1.00 wage increase effective
1 May 1984:

On motion for partial reconsideration filed by the Company, the above quoted portion of the
NLRC En Banc's decision was reconsidered and set aside by the NLRC Fifth Division. 3 The
Fifth Division of the NLRC in effect found that while a wage distortion did exist commencing 16
June 1984, the distortion persisted only for a total of fifteen (15) days and accordingly required
private respondent company to pay "a wage increase of P2.00 per day to all regular workers
effective June 16, 1984 up to June 30, 1984 or a total of fifteen (15) days." 4 The rest of the
decision of 11 November 1987 was left untouched.

Issue:

Whether a wage distortion occur due to the implementation of Wage Orders?

Held:

We believe and so hold that the re-establishment of a significant gap or differential between
regular employees and casual employees by operation of the CBA was more than substantial
compliance with the requirements of the several Wage Orders (and of Article 124 of the Labor

249
Code). That this re-establishment of a significant differential was the result of collective
bargaining negotiations, rather than of a special grievance procedure, is not a legal basis for
ignoring it. The NLRC En Banc was in serious error when it disregarded the differential of P3.60
which had been restored by 1 July 1985 upon the ground that such differential "represent[ed]
negotiated wage increase[s] which should not be considered covered and in compliance with
the Wage Orders." 11 The Wage Orders referred to above had provided for the crediting of
increases in wages or allowances granted or paid by employers within a specified time against
the statutorily prescribed increases in minimum wages.

In relation, NLRC in its Resolution dated 11 November 1987, provided some elaboration of the
notion of wage distortion:

As used herein, a wage distortion shall mean a situation where an increase in

prescribed wage rates results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of service, or other
logical bases of differentiation. 9 (Emphasis supplied)

From the above quoted material, it will be seen that the concept of wage distortion assumes an
existing grouping or classification of employees which establishes distinctions among such
employees on some relevant or legitimate basis. This classification is reflected in a differing
wage rate for each of the existing classes of employees. The wage distortion anticipated in
Wage Orders Nos. 3, 4, 5 and 6 was a "distortion" (or "compression") which ensued from the
impact of those Wage Orders upon the different wage rates of the several classes of
employees. Thus distortion ensued where the result of implementation of one or another of the
several Wage Orders was the total elimination or the severe reduction of the differential or gap
existing between the wage rates of the differing classes of employees.

Decision:

We conclude that petitioner NFL has not shown any grave abuse of discretion amounting to lack
of excess of jurisdiction on the part of the NLRC in rendering its decision (through its Fifth
Division) dated 16 December 1991.

WHEREFORE, the Petition for Certiorari is hereby DISMISSED for lack of merit. No
pronouncement as to costs. SO ORDERED.

250
G.R. No. 108556 November 19, 1996

MANILA MANDARIN EMPLOYEES UNION, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, Second Division, and the MANILA
MANDARIN HOTEL, respondents.

ISSUE:

On October 30, 1986, the Manila Mandarin Employees Union (hereafter UNION), as exclusive
bargaining agent of the rank-and-file employees of the Manila Mandarin Hotel, Inc. (hereafter
MANDARIN), filed with the NLRC Arbitration Branch a complaint in its members' behalf to
compel MANDARIN to pay the salary differentials of the individual employees concerned
because of wage distortions in their salary structure allegedly created by the upward revisions of
the minimum wage pursuant to various Presidential Decrees and Wage Orders, and the failure
of MANDARIN to implement the corresponding increases in the basic salary rate of newly-hired
employees.

The relevant Presidential Decrees and Wage Orders were invoked during the said trial.

On January 15, 1987, the UNION filed its Position Paper amplifying the allegations of its
complaint and setting forth the legal bases of its demands against MANDARIN; and on March
25, 1987, it filed an Amended Complaint presenting an additional claim for payment of salary
differentials to the union members affected, allegedly resulting from underpayment of wages.

The Labor Arbiter eventually ruled in favor of the UNION, however it was later reversed by the
Commission, Hence this petition.

ISSUE:

WHETHER OR NOT WAGE DISTORTION EXIST.

HELD:

There was no wage distortion that existed. Wage distortion is a situation where an increase in
prescribed wage rates results in the elimination or severe contraction of Intentional quantitative
differences in wage or salary rates between and among employee groups in an establishment
as to effectively obliterate the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation.A review of the records convinces this
Court that respondent NLRC committed no grave abuse of discretion in holding that no wage
distortion was demonstrated by the UNION.

251
CAGAYAN SUGAR MILLING COMPANY, petitioner
vs.
SECRETARY OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ, SR.,
and CARSUMCO EMPLOYEES UNION, respondents.
G.R. No. 128399 January 15, 1998

PUNO, J.:

Facts:

On September 12 and 13, 1994, labor inspectors from the DOLE Regional Office examined the
books of petitioner to determine its compliance with the wage order. They found that petitioner
violated the wage order as it did not implement an across the board increase in the salary of its
employees.

At the hearing at the DOLE Regional Office for the alleged violation, petitioner maintained that it
complied with Wage Order No. RO2-02 as it paid the mandated increase in the minimum wage.

In an Order dated December 16, 1994, public respondent Regional Director Ricardo S.
Martinez, Sr. ruled that petitioner violated Wage Order RO2-02 by failing to implement an across
the board increase in the salary of its employees. He ordered petitioner to pay the deficiency in
the salary of its employees in the total amount of P555,133.41.

On January 6, 1995, petitioner appealed to public respondent Labor Secretary Leonardo A.

Quisumbing. On the same date, the Regional Wage Board issued Wage Order No. RO2-02-A, 2
amending the earlier wage order,

On October 8, 1996, the Secretary of Labor dismissed petitioner's appeal and affirmed the
Order of Regional Director Martinez, Sr. Petitioner's motion for reconsideration was likewise
denied. 3

On February 12, 1997, private respondent CARSUMCO EMPLOYEES UNION moved for
execution of the December 16, 1994 Order. Regional Director Martinet, Sr. granted the motion
and issued the writ of execution. On March 4, 1997, petitioner moved for reconsideration to set
aside the writ of execution. On March 5, the DOLE regional sheriff served on petitioner a notice
of garnishment of its account with the Far East Bank and Trust Company. On March 10, the
sheriff seized petitioner's dump truck and scheduled its public sale on March 20, 1997.

Hence, this petition, with a prayer for the issuance of a temporary restraining order (TRO).

On April 3, 1997, this Court issued a TRO enjoining respondents from enforcing the writ of
execution. 4 On July 16, upon petitioner's motion, we amended the TRO by also enjoining
respondents from enforcing the Decision of the Secretary of Labor and conducting further
proceedings until further orders from this Court. 5

In the case at bar, petitioner contends that:

Issue:
WAGE ORDER RO2-02 IS NULL AND VOID FOR HAVING BEEN ISSUED IN VIOLATION OF

252
THE PROCEDURE PROVIDED BY LAW AND IN VIOLATION OF PETITIONER'S RIGHT TO
DUE PROCESS OF LAW.

Art. 123. Wage Order. — Whenever conditions in the region so warrant, the Regional Board
shall investigate and study all pertinent facts, and, based on the standards and criteria herein
prescribed, shall proceed to determine whether a Wage Order should be issued. Any such
Wage Order shall take effect after (15) days from its complete publication in at least one (1)
newspaper of general circulation in the region.

The record shows that there was no prior public consultation or hearings and newspaper
publication insofar as Wage Order No. RO2-02-A is concerned. In fact, these allegations were
not denied by public respondents in their Comment. Public respondents' position is that there
was no need to comply with the legal requirements of consultation and newspaper publication
as Wage order No. RO2-02-A merely clarified the ambiguous provision of the original wage
order.

Public respondents insist that despite the wording of Wage Order RO2-02 providing for a
statutory increase in minimum wage, the real intention of the Regional Board was to provide for
an across the board increase. Hence, they urge that petitioner is liable for merely providing an
increase in the statutory minimum wage rates of its employees.

The contention is absurd. Petitioner clearly complied with Wage Order RO2-02 which provided
for an increase in statutory minimum wage rates for employees in Region II. It is not just to
expect petitioner to interpret Wage RO2-02 to mean that it granted an across the board increase
as such interpretation is not sustained by its text. Indeed, the Regional Wage Board had to
amend Wage Order RO2-02 to clarify this alleged intent.

In sum, we hold that RO2-02-A is invalid for lack of public consultations and hearings and non-
publication in a newspaper of general circulation, in violation of Article 123 of the Labor Code.
We likewise find that public respondent Secretary of Labor committed grave abuse of discretion
in upholding the findings of Regional Director Ricardo S. Martinez, Sr. that petitioner violated
Wage Order RO2-02.

Held:
the petition is GRANTED. The Decision of the Secretary of Labor, dated October 8, 1996, is set
aside for lack of merit.

SO ORDERED.

253
 ECOP vs. NWPC

(G.R. No. 96169 September 24, 1991)

Facts:

On October 15, 1990, the Regional Board of the National Capital Region issued Wage Order
No. NCR-01, increasing the minimum wage by P17.00 daily in the National Capital Region. The
Trade Union Congress of the Philippines (TUCP) moved for reconsideration; so did the
Personnel Management Association of the Philippines (PMAP). ECOP opposed.

On October 23, 1990, the Board issued Wage Order No. NCR-01-A amending Wage Order No.
NCR-01, as follows:

Section 1. Upon the effectivity of this Wage Order, all workers and employees in
the private sector in the National Capital Region already receiving wages above
the statutory minimum wage rates up to one hundred and twenty-five pesos
(P125.00) per day shall also receive an increase of seventeen pesos (P17.00)
per day.

ECOP appealed to the National Wages and Productivity Commission. On November 6, 1990,
the Commission promulgated an Order, dismissing the appeal for lack of merit. On November
14, 1990, the Commission denied reconsideration.

Issue:

The Employers Confederation of the Philippines (ECOP) is questioning the validity of Wage
Order No. NCR-01-A dated October 23, 1990 of the Regional Tripartite Wages and Productivity
Board, National Capital Region, promulgated pursuant to the authority of Republic Act No. 6727.

Held:

The Commission noted that the increasing trend is toward the salary-cap method, which has
reduced disputes arising from wage distortions (brought about, apparently, by the floor-wage
method). Precisely, Republic Act No. 6727 was intended to rationalize wages, first, by providing
for full-time boards to police wages round-the-clock, and second, by giving the boards enough
powers to achieve this objective. The Court is of the opinion that Congress meant the boards to
be creative in resolving the annual question of wages without labor and management knocking
on the legislature's door at every turn.

WHEREFORE, premises considered, the petition is DENIED. No pronouncement as to costs.

254
 MEYCAUAYAN COLLEGE, petitioner,
vs.
HONORABLE FRANKLIN M. DRILON, in his capacity as Secretary of the Department of
Labor and Employment and MEYCAUYAN COLLEGE FACULTY AND PERSONNEL
ASSOCIATION (MCFPA), respondents.

FACTS:

Petitioner is a private educational institution duly organized and existing under Philippine laws,
and operating in Meycauayan, Bulacan. On January 16, 1987, its board of trustees recognized
the Meycauayan College Faculty and Personnel Association as the employees union in the
Meycauayan College.

Prior to said recognition or on July 17, 1983, petitioner and the union, then headed by Mrs.
Teresita V. Lim, entered into a collective bargaining agreement for 1983-1986. Article IV thereof
provides:

SALARY SCALE

IV. 4.0 ANG ANTAS NG PAGPAPASUWELDO SA MGA GURO SA MATAAS NG

PAARALAN AY UMAALINSUNOD SA PARAAN NG PAGRARANGGONG
KALAKIP NITO BILANG "TAKDA" AT AYON PA RIN SA SUMUSUNOD NA
HALAGA NG PAGPAPASUWELDO (IPATUTUPAD SA AÑO-ESCOLAR 1983-
1986):

PAGSUBOK A (1-3 TAON) P51.50

KLASE 1 (4-5 TAON) P52.00

(6-8 TAON) P53.00

KLASE II (9-12 TAON) P54.00

KLASE III (13-14 TAON) P57.00

KLASE IV (15-17 TAON) P60.00

KLASE V (18-21 TAON) P63.00

(22 PATAAS) P70.00

When the collective bargaining agreement was entered into, the following presidential decrees
were in effect:

(a) P.D No. 1389 dated May 29, 1978 adjusting the existing statutory minimum wages;

(b) P.D. No. 1713 dated August 18, 1980 providing for an increase in the minimum daily wage
rates and for additional mandatory living allowances, and ;

255
(c) P.D. No. 1751 dated May 14, 1980 increasing the statutory daily minimum wage at all levels
by P4.00 after integrating the mandatory emergency living allowance under P.D. Nos. 525 and
1123 into the basic pay of all covered workers. Wage Order No. 2 increasing the mandatory
basic minimum wage and living allowance was also issued on July 6, 1983 just before the
collective bargaining agreement herein involved was entered into.

During the lifetime of the collective bargaining agreement, the following were issued:

(a) Wage Order No. 3 dated November 7, 1983 increasing the minimum daily living allowance in
the private sector;

(b) Wage Order No. 4 dated May 1, 1984 integrating as of said date the emergency cost of living
allowances under P.D. Nos. 1614, 1634 and 1713 into the basic pay of covered workers in the
private sector;

(c) Wage Order No. 5 dated June 11, 1984 increasing the cost of living allowance of workers in
the private sector whose basic salary or wage is not more than P1,800 a month; and

(d) Wage Order No. 6 dated October 26, 1984 increasing the daily living allowances.

The union admits herein that its members were paid all these increases in pay mandated by
law. It appears, however, that in 1987, shortly after union president Mrs. Teresita V. Lim, who
held the managerial position of registrar of the college, had turned over the presidency of the
union to Mrs. Fe Villarico, the latter unintentionally got a copy of the collective bargaining
agreement and discovered that Article IV thereof had not been implemented by the petitioner.

Consequently, on March 27, 1987, the union filed with the Department of Labor and
Employment, Regional Office No. III in San Fernando, Pampanga, a notice of strike on the
ground of unfair labor practice alleging therein violation of the collective bargaining agreement
particularly the provisions of Article IV thereof on salary scale.

ISSUE:

1. Whether increases in employees' salaries resulting from the implementation of presidential

decrees and wage orders, which are over and above the agreed salary scale contracted for
between the employer and the employees in a collective bargaining agreement, preclude the
employees from claiming the difference between their old salaries and those provided for under
said salary scale.

RULING:

"Non-compliance with the mandate of a standards law or decree may give rise to an ordinary
action for recovery while violation of a collective bargaining agreement may even give rise to a
criminal action for unfair labor practice. And while the relief sought for violation of a standards
law or decree is primarily for restitution of (an) unpaid benefits, the relief sought for violating a
CBA is ordinarily for compliance and desistance. Moreover, there is no provision in the
aforecited Presidential Decrees providing that compliance thereto is sufficient compliance with a
provision of a collective bargaining agreement and vice-versa." The dispositive portion of the
Secretary's order of September 9, 1987 states:

256
 WHEREFORE, the Management of Meycauayan College is hereby ordered to:

1) Strictly effect the payment of salaries of the union members in accordance

with the provisions of the collective bargaining agreement;

2) Pay the covered union members salary differential computed by subtracting

the salary actually paid and received by them per period provided in the
collective bargaining agreement for school years 1983-1984; 1984-1985 and
1985-1986 including the differential for the 13th month pay for the same period. 5

The petition has no merit.

As correctly ruled by public respondent, a collective bargaining agreement is a contractual

obligation. It is distinct from an obligation imposed by law. The terms and conditions of a
collective bargaining contract constitute the law between the parties. Beneficiaries thereof are
therefore, by right, entitled to the fulfillment of the obligation prescribed therein. Consequently,
to deny binding force to the collective bargaining agreement would place a premium on a refusal
by a party thereto to comply with the terms of the agreement. Such refusal would constitute an
unfair labor practice.

Nevertheless, as the key to the interpretation of contracts, including collective bargaining

agreements, is the intention of the parties, we examined the record and found the undisputed
allegation of private respondent that the collective bargaining agreement herein involved was
entered into by the parties to improve the plight of the teachers by increasing their salary. The
parties increased the teachers' salary or rate per period, by drafting a salary scale "based on the
length of service" of the teachers and eventually came up with Article IV aforequoted. From this
unrebutted allegation, it is clear that the parties wanted to attain one goal — increase the
salaries of the teachers on the basis of their length of service. Hence, it is immaterial that the
means by which said goal is achieved is through the alteration of the salary scale.

On the issue of prescription, Article 291 (now Art. 290) of the Labor Code herein invoked by
petitioner, provides:

Offenses. — Offenses penalized under this Code and the rules and regulations
issued pursuant thereto shall prescribe in three (3) years.

All unfair labor practices arising from Book V shall be filed with the appropriate
agency within one (1) year from accrual of such unfair labor practice; otherwise,
they shall be forever barred.

The one-year prescriptive period is inapplicable in this case because of peculiar factual
circumstances which petitioner has not denied. Although the collective bargaining agreement
covers school years 1983 to 1986, a copy of the agreement was only made available to the
union in 1987. Immediately thereafter, the union sought its implementation. The union members
might have been aware of the existence of the collective bargaining agreement but that fact that
their president was actually a management employee being petitioner's registrar, they must
have been deterred from demanding its implementation earlier. Hence, to apply the provisions
of Article 290 (Art. 291) would be unfair and prejudicial to the union members particularly those
who have served petitioner for a number of years who stand to benefit most from the salary
scale.

257
Article 264(g), now Article 263(g) of the Labor Code is broad enough to give the Secretary of
Labor the power to take jurisdiction over what appears at first blush to be an ordinary money
claim. Claims for pay differentials may have that character but, as earlier stated, if they arise out
of a violation of a collective bargaining agreement, they assume the character of an unfair labor
practice and are, therefore, well within the ambit of the jurisdiction of the Secretary of Labor to
decide.the decision of the Secretary of Labor is hereby AFFIRMED and the temporary
restraining order of February 15,1989 is LIFTED.

This decision is immediately executory. Costs against the petitioner.

258
 G.R. No. 982767 February 15, 1995

COCOFED (Kalamansig) and/or CRISPIN ROSETE, petitioner,

vs.
HON. CRESENCIANO B. TRAJANO, Undersecretary of the Department of Labor and
Employment and HON. MELENCIO Q. BALANAG, Director IV, DOLE, Regional XII,
Cotabato City, respondents.

Facts: Philippine Coconut Producers Federation operates petitioner COCOFED (Kalamansig),

a coconut plantation utilized as a demonstration farm for replanting and/or training area for
coconut farmers, located in Kalamansig, Sultan Kudarat.

On November 15, 1988, a complaint inspection was conducted by the Department of Labor and
Employment, Region XII, Cotabato City in response to complaints filed by two of petitioner's
employees, Alex Edicto and Delia Pahuwayan. The inspection revealed that petitioner was guilty
of underpayment of wages, emergency cost of living allowance (ECOLA) and 13th month pay.
Accordingly, notice of inspection results was issued: requiring petitioner to effect restitution or
correction within five (5) days from notice.

Summary Petitioner submitted its position paper claiming that it should be classified as an
establishment with less than 30 employees and with a paid-up capital of P500,000.00 or less as
evidenced by the assessment of the municipal treasurer. Moreover, complainants worked for
less than eight hours, a minimum of four and maximum of six.

. . . A three (3) year actual payrolls from March 1985 to February 1989 showing the daily
actual payment made by the respondent to involved workers are substantial evidence
against the mere memorandum issued by the respondents on the matter. Further, such
payrolls submitted by respondents are not mere summaries of daily efforts of workers
but these are daily records showing workers actual daily rate.

Issue: Whether or not the petitioner was justified in paying an amount less than the statutory
minimum wage.

Held: Petitioner would have us overturn the factual finding of public respondents that its
employees are daily paid workers. This we are unable to do for the payrolls submitted by it
support the latters' position. Findings of administrative agencies which have acquired expertise
because their jurisdiction is confined to specific matters are generally accorded not only respect
but finality. Moreover, there is absolutely nothing in the records which show that petitioner's
employees worked for less than eight hours. Finally, there would have been no need for
petitioner to make an offer increasing the wage to P45.00 per day if complainants were indeed
piece rate workers, as it claimed and if their wages were not underpaid, as found by public
respondents.

WHEREFORE, the petition is DISMISSED

259
 G.R. No. 82849 August 2, 1989

CEBU OXYGEN & ACETYLENE CO., INC. (COACO) petitioner,

vs.
SECRETARY FRANKLIN M. DRILON OF THE DEPARTMENT OF LABOR AND
EMPLOYMENT, ASSISTANT REGIONAL DIRECTOR CANDIDO CUMBA OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT, REGIONAL OFFICE NO. 7 AND CEBU
OXYGEN-ACETYLENE & CENTRAL VISAYAS EMPLOYEES ASSOCIATION (COACVEA)
respondents..

GANCAYCO, J.;

FACTS:

Petitioner and the union of its rank and file employees, Cebu Oxygen, Acetylene and Central
Visayas Employees Association (COAVEA) entered into a collective bargaining agreement
(CBA) covering the years 1986 to 1988.
1) For the first year which will be paid on January 14, 1986 — P200 to each covered
employee.
2) For the second year which will be paid on January 16, 1987-P 200 to each covered
employee.
3) 3) For the third year which will be paid on January 16, 1988 — P300 to each covered
employee.
On December 14, 1987, Republic Act No. 6640 was passed increasing the minimum wage, in
sum, Section 8 of the implementing rules prohibits the employer from crediting anniversary
wage increases negotiated under a collective bargaining agreement against such wage
increases mandated by Republic Act No. 6640.

On February 22, 1988, a Labor and Employment Development Officer, pursuant to Inspection
Authority No. 058-88, commenced a routine inspection of petitioner's establishment. Upon
completion of the inspection on March 10, 1988, and based on payrolls and other records, he
found that petitioner committed violations of the law as follows:

1. Under payment of Basic Wage per R.A. No. 6640 covering the period of two
(2) months representing 208 employees who are not receiving wages above
P100/day prior to the effectivity of R.A. No. 6640 in the aggregate amount of
EIGHTY THREE THOUSAND AND TWO HUNDRED PESOS (P83,200.00); and

2. Under payment of 13th month pay for the year 1987, representing 208
employees who are not receiving wages above P 100/day prior to the effectivity
of R.A. No. 6640 in the aggregate amount of FORTY EIGHT THOUSAND AND
FORTY EIGHT PESOS (P48,048.00).
ISSUE:

The principal issue raised in this petition is whether or not an Implementing Order of the
Secretary of Labor and Employment (DOLE) can provide for a prohibition not contemplated by
the law it seeks to implement.
HELD:

260
As to the issue of the validity of Section 8 of the rules implementing Republic Act No. 6640,
which prohibits the employer from crediting the anniversary wage increases provided in
collective bargaining agreements, it is a fundamental rule that implementing rules cannot add or
detract from the provisions of law it is designed to implement. The provisions of Republic Act
No. 6640, do not prohibit the crediting of CBA anniversary wage increases for purposes of
compliance with Republic Act No. 6640. The implementing rules cannot provide for such a
prohibition not contemplated by the law. Administrative regulations adopted under legislative
authority by a particular department must be in harmony with the provisions of the law, and
should be for the sole purpose of carrying into effect its general provisions. The law itself cannot
be expanded by such regulations. An administrative agency cannot amend an act of Congress. 3
Thus petitioner's contention that the salary increases granted by it pursuant to the existing CBA
including anniversary wage increases should be considered in determining compliance with the
wage increase mandated by Republic Act No. 6640, is correct. However, the amount that should
only be credited to petitioner is the wage increase for 1987 under the CBA when the law took
effect. The wage increase for 1986 had already accrued in favor of the employees even before
the said law was enacted.
WHEREFORE, the petition is hereby GRANTED. Section 8 of the rules implementing Republic
6640, is hereby declared null and void in so far as it excludes the anniversary wage increases
negotiated under collective bargaining agreements from being credited to the wage increase
provided for under Republic Act No. 6440. This decision is immediately executory.

261
 ODIN SECURITY AGENCY vs. HON. DIONISIO C. DE LA SERNA,
G.R. No. 87439 February 21, 1990
GRIÑO-AQUINO, J.:

FACTS:
On July 8, 1986, a complaint was filed by Sergio Apilado and fifty-five (55) others
charging the petitioner Odin Security Agency (hereafter "OSA"), underpayment of wages, illegal
deductions, non-payment of night shift differential, overtime pay, premium pay for holiday work,
rest days and Sundays, service incentive leaves, vacation and sick leaves, and 13th-month pay.
When conciliation efforts failed, the parties were required to submit their position papers.

Private respondents alleged in their position paper that their latest monthly salary was P1,600;
that from this amount, petitioner deducted P100 as administrative cost and P20 as bond; that
they were not paid their premium pay and overtime pay for working on the eleven (11) legal
holidays per year; and, that since private respondents were relieved or constructively dismissed,
they must also be paid backwages.

Petitioner, on the other hand, contended that on July 21, 1986, some 48 security guards
threatened mass action against it. Alarmed by a possible abandonment of post by the guards
and mindful of its contractual obligations to its clients/principals, petitioner relieved and re-
assigned the complaining guards to other posts in Metro Manila. Those relieved were ordered to
report to the agency's main office for reassignment. Only few complied, so those who failed to
comply were placed on "AWOL" status. Petitioner claimed it complied with the Labor Code
provisions, and in support thereof, it submitted the "Quitclaim and Waiver" of thirty-four (34)
complainants. It further alleged that complainants who rendered over-time work as shown by
their time sheets were paid accordingly; that service incentive leaves not availed of, night shift
differential, rest days, and holidays were paid in cash.

Earlier, on October 21, 1986, seventeen (17) complainants repudiated their quitclaim and
waiver. They alleged that management pressured them to sign documents which they were not
allowed to read and that if such waiver existed, they did not have any intention of waiving their
rights under the law.

Petitioner in its reply argued that complainants were estopped from denying their quitclaims on
the ground of equity; that being high school graduates, complainants fully understood the
document they signed; and that complainant's allegation of coercion or threat was a mere
afterthought.

Later, six (6) of the seventeen (17) complainants who repudiated their quitclaims again executed
quitclaims and waivers.

ISSUE:
Whether or not petitioner was denied due process?

HELD:
The petition has no merit.
The petitioner was not denied due process for several hearings were in fact conducted
by the hearing officer of the Regional Office of the DOLE and the parties submitted position
papers upon which the Regional Director based his decision in the case. There is abundant
jurisprudence to the effect that the requirements of due process are satisfied when the parties
are given an opportunity to submit position papers Parel, 156 SCRA 768; Adamson & Adamson,

262
Inc. vs. Amores, 152 SCRA 237). Since petitioner herein participated in the hearings, submitted
a position paper, and filed a motion for reconsideration of the March 23, 1988 decision of the
Labor Undersecretary, it was not denied due process.

Furthermore, it has also been held that after voluntarily submitting a cause and encountering an
adverse decision on the merits, it is too late for the loser to question the jurisdiction or power of
the Court said that it is not right for a party who has affirmed and invoked the jurisdiction of a
court in a particular matter to secure an affirmative relief, to afterwards deny that same
jurisdiction to escape a penalty.

... Under the present rules, a Regional Director exercises both visitorial and enforcement power
over labor standards cases, and is therefore empowered to adjudicate money claims, provided
there still exists an employer-employee relationship, and the findings of the regional office is not
contested by the employer concerned. (p. 5, Decision.)

WHEREFORE, the petition is dismissed and the orders dated March 23, 1988 and March 13,
1989 of the Undersecretary of Labor are hereby affirmed. The temporary restraining order
earlier issued by this Court is lifted. No costs.

263
 URBANES VS. SEC OF LABOR

FACTS:

Petitioner Placido O. Urbanes, Jr., doing business under the name and style of Catalina Security
Agency, entered into an agreement1 to provide security services to respondent Social Security
System (SSS).

petitioner, by letter of May 16, 1994, requested the SSS for the upward adjustment of their
contract rate in view of Wage Order No. NCR-03 which was issued by the Regional Tripartite
Wages and Productivity Board-NCR pursuant to Republic Act 6727 otherwise known as the
Wage Rationalization Act

On June 24, 1994, petitioner pulled out his agency’s services from the premises of the SSS and
another security agency, Jaguar, took over.

On June 29, 1994, petitioner filed a complaint with the DOLE-NCR against the SSS seeking the
implementation of Wage Order No. NCR-03.

In its position paper,7 the SSS prayed for the dismissal of the complaint on the ground that
petitioner is not the real party in interest and has no legal capacity to file the same. In any event,
it argued that if it had any obligation, it was to the security guards.

The SSS moved to reconsider the September 16, 1994 Order of the Regional Director, praying
that the computation be revised.

By Order of December 9, 1994, the Regional Director modified his September 16, 1994 Order
by reducing the amount payable by the SSS to petitioner.

The Secretary of Labor, by Order of June 22, 1995, set aside the order of the Regional Director
and remanded the records of the case "for recomputation of the wage differentials using P
5,281.00 as the basis of the wage adjustment." And the Secretary held petitioner’s security
agency "JOINTLY AND SEVERALLY liable for wage differentials, the amount of which should be
paid DIRECTLY to the security guards concerned."

Petitioner’s Motion for Reconsideration of the DOLE Secretary’s Order of June 22, 1995 having
been denied by Order of October 10, 1995, the present petition was filed, petitioner contending
that the DOLE Secretary committed grave abuse of discretion

Petitioner thus contends that as the appeal of SSS was filed with the wrong forum, it should
have been dismissed.

The SSS, on the other hand, contends that Article 128, not Article 129, is applicable to the case.
Article 128 provides:

ISSUE:
Whether or not NLRC has jurisdiction over the said case.

HELD:

264
We agree with the respondent that the RTC has jurisdiction over the subject matter of the
present case. 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. In its complaint, private respondent is not seeking
any relief under the Labor Code but seeks payment of a sum of money and damages on
account of petitioner's alleged breach of its obligation under their Guard Service Contract. 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.

265
 ZIALCITA, et al. VS. PAL

Case No. RO4-3-3398-76, February 20, 1977 (Office of the President Decision

FACTS:

Complainant Zialcita, an international flight stewardess of respondent, was discharge from the
service on account of her marriage.

In separating complainant Zialcita, respondent Philippine Air Lines invoked its policy or
regulation as follows:

“D. Flight Attendants.- Flight attendant applicant must be single. Flight attendants will be
automatically separated from employment in the event they subsequently get married..

Which is allegedly in conformity with the following provision of law:

“Art. 132. Facilities for women. – The Secretary of Labor shall establish standards that
will insure the safety and health of women employees. In appropriate cases, he shall be
regulations require any employer to xxx:

“(d) determine appropriate minimum age and other standards for retirement or
termination in special occupations such as those of flight attendants and the like.”

On the other hand, complainant questioned her termination on account of her marriage based
on the policy above quoted, invoking Article 136 of the Labor Code, which reads: x x

ISSUE:

Whether the termination of the services of complainant on account of marriage is legal.

RULING:

Of first impression is the incompatibility of the respondent’s policy or regulation with the codal
provision of law. Respondent is resolute in its contention that Article 136 of the Labor Code
applies only to women employed in ordinary occupations, like flight attendants, is fair and
reasonable, considering the peculiarities of their chosen profession.

We cannot subscribe to the line of reasoning pursued by respondents. All along, it knew that
the converted policy has already met its doom as early as March 13, 1973 when Presidential
Decree No. 148, otherwise known as the Women and Child Labor Law, was promulgated. But
for the timidity of those affected or their labor in challenging the validity of the policy, the same
was able to obtain a momentary reprieve. A close look at section 8 of said decree, which
amended paragraph (c ) of Section 12 of Republic Act No. 679, reveals that it is exactly the
same provision reproduced verbatim in Article 136 of the Labor Code, which was promulgated
on May 1, 1974 to take effect six months later, or on November 1, 1974.

266
It cannot be gainsaid that, with the reiteration of the same provision in the new Labor Code, all
policies and acts against it are deemed illegal and therefore abrogated. True, Article 132
enjoins the Secretary of Labor to establish standards that will ensure the safety and health of
women employees and in appropriate cases shall by regulation require employers to determine
appropriate minimum standards for termination in special occupations, such as those of flight
attendants.

It is logical to presume that, in the absence of said standards or regulations which are as yet to
be established, the policy of respondent against marriage is patently illegal.

267
 Olympia Gualberto, et al vs. Marinduque Mining Industrial Corporation CA
G.R. No. 52753-R June 28, 1978

Facts: Plaintiff, while still single, was employed in 1971 by defendant as company dentist in its
Surigao Nickel Project. In March 1972, she married Gualberto , an electrical engineer in the
same project. In the same month, defendant her that it considered her resigned effective April
15, 1972, invoking a policy of the firm to consider ,due lack of facilities for married women
,female employees in the project at Nocnoc Island Surigao as separated the moment they get
married. Defendant further claimed that plaintiff was employed in the project with oral
understanding that her services would be terminated when she gets married.
Plaintiff and her husband, who alleges he was forced to resign because of his wife’s
illegal dismissal, claims moral , exemplary and other damages.

Ruling: The assignments of error are subsumed in the simple question as to whether the
termination of the employment of Olympia Recreo Gualberto by reason of her marriage was
valid or not.
The efforts of defendants distinguish between a verbal pre -employment agreement of
the project engineer and the plaintiff on the other hand and Company policy on the other do not
impress as at all, Whether pre employment agreement or company policy, the same is void.
And supposed letter of resignation based on the same considerations as the pre-employment
agreement is equally illegal and void.

268
 APEX MINING COMPANY, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA CANDIDO, respondents.

G.R. No. 94951 April 22, 1991

FACTS:

Private respondent Sinclita Candida was employed by petitioner Apex Mining Company, Inc. on
May 18, 1973 to perform laundry services at its staff house located at Masara, Maco, Davao del
Norte. In the beginning, she was paid on a piece rate basis. However, on January 17, 1982, she
was paid on a monthly basis at P250.00 a month which was ultimately increased to P575.00 a
month.

On December 18, 1987, while she was attending to her assigned task and she was hanging her
laundry, she accidentally slipped and hit her back on a stone. She reported the accident to her
immediate supervisor Mila de la Rosa and to the personnel officer, Florendo D. Asirit. As a result
of the accident she was not able to continue with her work. She was permitted to go on leave for
medication. De la Rosa offered her the amount of P 2,000.00 which was eventually increased to
P5,000.00 to persuade her to quit her job, but she refused the offer and preferred to return to
work. Petitioner did not allow her to return to work and dismissed her on February 4, 1988.

On March 11, 1988, private respondent filed a request for assistance with the Department of
Labor and Employment. After the parties submitted their position papers as required by the
labor arbiter assigned to the case on August 24, 1988 the latter rendered a decision, ordering
the respondent, Apex Mining Company, Inc., to pay the complainant a total amount of
P55,161.42.

Not satisfied therewith, petitioner appealed to NLRC. NLRC dismissed the appeal for lack of
merit and affirmed the appealed decision. A subsequent motion for reconsideration was likewise
denied.

Hence, the herein petition for review by certiorari, with the main thrust that private respondent
should be treated as a mere househelper or domestic servant and not as a regular employee of
petitioner.

ISSUE:

Whether or not the househelper in the staff houses of an industrial company a domestic helper
or a regular employee of the said firm.

HELD:

The petition is devoid of merit.

Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms "househelper"
or "domestic servant" are defined as follows:

269
 The term "househelper" as used herein is synonymous to the term "domestic servant"
and shall refer to any person, whether male or female, who renders services in and
about the employer's home and which services are usually necessary or desirable for
the maintenance and enjoyment thereof, and ministers exclusively to the personal
comfort and enjoyment of the employer's family.

The foregoing definition covers family drivers, domestic servants, laundry women, yayas,
gardeners, houseboys and other similar househelps. Hence, the definition cannot be interpreted
to include househelp or laundrywomen working in staffhouses of a company, like petitioner who
attends to the needs of the company's guest and other persons availing of said facilities.

The criteria is the personal comfort and enjoyment of the family of the employer in the home of
said employer. While it may be true that the nature of the work of a househelper, domestic
servant or laundrywoman in a home or in a company staffhouse may be similar in nature, the
difference in their circumstances is that in the former instance they are actually serving the
family while in the latter case, whether it is a corporation or a single proprietorship engaged in
business or industry or any other agricultural or similar pursuit, service is being rendered in the
staffhouses or within the premises of the business of the employer. In such instance, they are
employees of the company or employer in the business concerned entitled to the privileges of a
regular employee.

Private respondent Candida is therefore, entitled to appropriate relief as a regular employee of

petitioner. Inasmuch as private respondent appears not to be interested in returning to her work
for valid reasons, the payment of separation pay to her is in order.

WHEREFORE, the petition is DISMISSED and the appealed decision and resolution of public
respondent NLRC are hereby AFFIRMED. No pronouncement as to costs.

270
 PHILIPPINE GLOBAL COMMUNICATIONS, INC.
vs.
RICARDO DE VERA

Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in

the business of communication services and allied activities, while respondent Ricardo De Vera
is a physician by profession whom petitioner enlisted to attend to the medical needs of its
employees. At the crux of the controversy is Dr. De Vera’s status vis a vis petitioner when the
latter terminated his engagement.
The parties agreed and formalized respondent’s proposal in a document denominated
as Retainership Contract which will be for a period of one year subject to renewal, it being made
clear therein that respondent will cover "the retainership the Company previously had with Dr. K.
Eulau" and that respondent’s "retainer fee" will be at P4,000.00 a month. Said contract was
renewed yearly. The retainership arrangement went on from 1981 to 1994 with changes in the
retainer’s fee. However, for the years 1995 and 1996, renewal of the contract was only made
verbally.
The turning point in the parties’ relationship surfaced in December 1996 when Philcom, thru a
letter bearing on the subject boldly written as "Termination – Retainership Contract", informed
De Vera of its decision to discontinue the latter’s "retainer’s contract with the Company effective
at the close of business hours of December 31, 1996" because management has decided that it
would be more practical to provide medical services to its employees through accredited
hospitals near the company premises.
On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor
Relations Commission (NLRC), alleging that that he had been actually employed by Philcom as
its company physician since 1981 and was dismissed without due process. He averred that he
was designated as a "company physician on retainer basis" for reasons allegedly known only to
Philcom. He likewise professed that since he was not conversant with labor laws, he did not
give much attention to the designation as anyway he worked on a full-time basis and was paid a
basic monthly salary plus fringe benefits, like any other regular employees of Philcom.
On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a
decision dismissing De Vera’s complaint for lack of merit, on the rationale that as a "retained
physician" under a valid contract mutually agreed upon by the parties, De Vera was an
"independent contractor" and that he "was not dismissed but rather his contract with [PHILCOM]
ended when said contract was not renewed after December 31, 1996".
On De Vera’s appeal to the NLRC, the latter, in a decision dated 23 October 2000, reversed that
of the Labor Arbiter, on a finding that De Vera is Philcom’s "regular employee" and accordingly
directed the company to reinstate him to his former position without loss of seniority rights and
privileges and with full backwages from the date of his dismissal until actual reinstatement.
With its motion for reconsideration having been denied by the NLRC in its order of 27 February
2001,9 Philcom then went to the Court of Appeals on a petition for certiorari imputing grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC.
On 12 September 2002, the Court of Appeals rendered a decision, modifying that of the NLRC
by deleting the award of traveling allowance, and ordering payment of separation pay to De
Vera in lieu of reinstatement.

Issue:

271
Whether or not “retainership contracts” could be set as a defense by employees in protecting
their right of security of tenure.

Ruling:
With the recognition of the fact that petitioner consistently engaged the services of respondent
on a retainer basis, as shown by their various "retainership contracts", so can petitioner put an
end, with or without cause, to their retainership agreement as therein provided.27
We note, however, that even as the contracts entered into by the parties invariably provide for a
60-day notice requirement prior to termination, the same was not complied with by petitioner
when it terminated on 17 December 1996 the verbally-renewed retainership agreement,
effective at the close of business hours of 31 December 1996.
Be that as it may, the record shows, and this is admitted by both parties, 28 that execution of the
NLRC decision had already been made at the NLRC despite the pendency of the present
recourse. For sure, accounts of petitioner had already been garnished and released to
respondent despite the previous Status Quo Order29issued by this Court. To all intents and
purposes, therefore, the 60-day notice requirement has become moot and academic if not
waived by the respondent himself.
WHEREFORE, the petition is GRANTED and the challenged decision of the Court of Appeals
REVERSED and SET ASIDE. The 21 December 1998 decision of the labor arbiter is
REINSTATED.

272
 Jose B. Sarmiento vs. Employees’ Compensation Commission & Government Service
Insurance System (National Power Corporation)
May 11, 1988 GR No. L-65680

Gutierrez, Jr., J.:

Facts
The late Flordeliza Sarmiento was employed by the National Power Corporation in
Quezon City as accounting clerk in May 1974. At the time of her death on August 12, 1981 she
was manager of the budget division. The deceased’s illness was a cancer known as “differential
squarrous cell carcinoma”, and sought treatment in various hospitals. And on August 12, 1981,
she succumbed to cardiorespiratory arrest due to parotid carcinoma, and she was 20 years old.
Believing that the deceased’s fatal illness having been contracted during her
employment was service-connected, Jose B. Sarmiento filed a claim for death benefits under
PD 626. On September 9, 1982, the GSIS, through its Medical Services Center, denied the
claim. It was pointed out that the illness of Flordeliza was not caused by employment and
employment conditions. Dissatisfied with the respondent’s decision of denial, Jose Sarmiento
wrote a letter to the GSIS requesting that the records of the claim be elevated to the Employees’
Compensation Commission for review pursuant to the law and the Amended Rules on
Employees’ Compensation. The respondent Commission affirmed the GSIS’ decision, it found
that the deceased’s death is not compensable because she did not contract nor suffer from the
same reason of her work but by reason of embryonic rests and epithelial growth.

Issue
Whether or not the deceased’s illness under PD 626, compensable?

Held
Under PD 626, a compensable illness means illness accepted as an occupational
disease and listed by the Employees’ Compensation Commission, or any illness caused by
employment subject to proof by the employee that the risk of contracting the same is increased
by working conditions.

273
 G.R. No. L-58445 April 27, 1989

ZAIDA G. RARO, petitioner,

vs.
EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT SERVICE INSURANCE
SYSTEM (Bureau of Mines and Geo-Sciences), respondents.

GUTIERREZ, JR., J.:

Facts: The petitioner states that she was in perfect health when employed as a clerk by the
Bureau of Mines and Geo-Sciences at its Daet, Camarines Norte regional office on March 17,
1975. About four years later, she began suffering from severe and recurrent headaches coupled
with blurring of vision. Forced to take sick leaves every now and then, she sought medical
treatment in Manila.

The petitioner was diagnosed at the Makati Medical Center to be suffering from brain tumor. By
that time, her memory, sense of time, vision, and reasoning power had been lost. A claim for
disability benefits filed by her husband with the Government Service Insurance System (GSIS)
was denied. A motion for reconsideration was similarly denied. An appeal to the Employees'
Compensation Commission resulted in the Commission's affirming the GSIS decision.

On January 1, 1975, the Workmen's Compensation Act was replaced by a novel scheme under
the new Labor Code. The new law discarded, among others, the concepts of "presumption of
compensability" and "aggravation" and substituted a system based on social security principles.
The present system is also administered by social insurance agencies — the Government
Service Insurance System and Social Security System — under the Employees' Compensation
Commission. The intent was to restore a sensible equilibrium between the employer's obligation
to pay workmen's compensation and the employee's right to receive reparation for work-
connected death or disability. Instead of an adversarial contest by the worker or his family
against the employer, we now have a social insurance scheme where regular premiums are
paid by employers to a trust fund and claims are paid from the trust fund to those who can prove
entitlement

The list of occupational diseases prepared by the Commission includes some cancers as
compensable, namely —Occupational Diseases Nature of Employment

16. Cancer of stomach and other Woodworkers, wood products lymphatic and blood forming
vessels; industry carpenters, nasal cavity and sinuses and employees in pulp and paper mills
and plywood mills.

17. Cancer of the lungs, liver Vinyl chloride workers, and brain plastic workers.

Issues: 1. Whether brain tumor which causes are unknown but contracted during employment
is compensable under the present compensation laws. 2. Whether the presumption of
compensability is absolutely inapplicable under the present compensation laws when a disease
is not listed as occupational disease.

Held: The Court saw no arbitrariness in the Commission's allowing vinyl chloride workers or
plastic workers to be compensated for brain cancer. What the law requires for others is proof.

274
The law, as it now stands requires the claimant to prove a positive thing – the illness was
caused by employment and the risk of contracting the disease is increased by the working
conditions. To say that since the proof is not available, therefore, the trust fund has the
obligation to pay is contrary to the legal requirement that proof must be adduced. The existence
of otherwise non-existent proof cannot be presumed .The Court has recognized the validity of
the present law and has granted and rejected claims according to its provisions. We find in it no
infringement of the worker's constitutional rights.

WHEREFORE, the petition is hereby DISMISSED The questioned decision of the public
respondents is AFFIRMED. SO ORDERED.

275
 [G.R. No. 128524. April 20, 1999]
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), petitioner, vs. THE HONORABLE
COURT OF APPEALS and FELONILA ALEGRE, respondents.
ROMERO, J.:

FACTS:
Private respondent Felonila Alegre’s deceased husband, SPO2 Florencio A. Alegre, was a
police officer assigned to the Philippine National Police station in the town of Vigan, Ilocos Sur.
On December 6, 1994, he was driving his tricycle and ferrying passengers within the vicinity of
Imelda Commercial Complex when SPO4 Alejandro Tenorio, Jr., Team/Desk Officer of the
Police Assistance Center located at said complex, confronted him regarding his tour of duty.
SPO2 Alegre allegedly snubbed SPO4 Tenorio and even directed curse words upon the latter. A
verbal tussle then ensued between the two which led to the fatal shooting of the deceased
police officer.
On account of her husband’s death, private respondent seasonably filed a claim for death
benefits with petitioner Government Service Insurance System (GSIS) pursuant to Presidential
Decree No. 626. In its decision on August 7, 1995, the GSIS, denied the claim on the ground
that at the time of SPO2 Alegre’s death, he was performing a personal activity which was not
work-connected which was later on affirmed by the Employees’ Compensation Commission
(ECC. Private respondent finally obtained a favorable ruling in the Court of Appeals when it
reversed the ECC’s decision and ruled that SPO2 Alegre’s death was work-connected and,
therefore, compensable.
Hence; GSIS filed a petition for review on certiorari to the Supreme Court; reiterating its
position that SPO2 Alegre’s death lacks the requisite element of compensability which is, that
the activity being performed at the time of death must be work-connected.

ISSUE:
Whether or not the SPO2 Alegre’s death is compensable pursuant to the applicable laws
and regulations.

HELD:
Taking together existing jurisprudence and the pertinent guidelines of the ECC with respect
to claims for death benefits, namely: (a) that the employee must be at the place where his work
requires him to be; (b) that the employee must have been performing his official functions; and
(c) that if the injury is sustained elsewhere, the employee must have been executing an order
for the employer, it is not difficult to understand then why SPO2 Alegre’s widow should be
denied the claims otherwise due her. Obviously, the matter SPO2 Alegre was attending to at
the time he met his death, that of ferrying passengers for a fee, was intrinsically private and
unofficial in nature proceeding as it did from no particular directive or permission of his superior
officer. That he may be called upon at any time to render police work as he is considered to be
on a round-the-clock duty and was not on an approved vacation leave will not change the
conclusion arrived at considering that he was not placed in a situation where he was required to
exercise his authority and duty as a policeman. In fact, he was refusing to render one pointing
out that he already complied with the duty detail. At any rate, the 24-hour duty doctrine, as

276
applied to policemen and soldiers, serves more as an after-the-fact validation of their acts to
place them within the scope of the guidelines rather than a blanket license to benefit them in all
situations that may give rise to their deaths. In other words, the 24-hour duty doctrine should
not be sweepingly applied to all acts and circumstances causing the death of a police officer but
only to those which, although not on official line of duty, are nonetheless basically police service
in character.

277
G.R. No. 136200 June 8, 2000
CELERINO VALERIANO, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION and GOVERNMENT SERVICE INSURANCE
SYSTEM, respondents.

PANGANIBAN, J.:

The Facts:

Celerino S. Valeriano was employed as a fire truck driver assigned at the San Juan Fire Station.
Sometime on the evening of July 3, 1985, petitioner was standing along Santolan Road,
Quezon City, when he met a friend by the name of Alexander Agawin. They decided to proceed
to Bonanza Restaurant in EDSA, Quezon City, for dinner. On their way home at around 9:30
PM, the owner-type jeepney they were riding in figured in a head-on collision with another
vehicle at the intersection of N. Domingo and Broadway streets in Quezon City. Due to the
strong impact of the collision, petitioner was thrown out of the vehicle and was severely injured.
As a result of the mishap, petitioner was brought to several hospitals for treatment.
On September 16, 1985, he filed a claim for income benefits under PD 626, with the
Government Security Insurance Service. His claim for benefits was opposed on the ground that
the injuries he sustained did not directly arise or result from the nature of his work.

Under the present compensation law, injury and the resulting disability or death is compensable
if the injury resulted from an accident arising out of and in the course of employment. It means
that the injury or death must be sustained while the employee is in the performance of his
official duty; that the injury is sustained at the place where his work requires him to be; and if the
injury is sustained elsewhere, that the employee is executing an order for the employer. The
aforementioned conditions are found wanting in the instant case. The accident that the appellant
met in the instant case occurred outside of his time and place of work. Neither was appellant
performing his official duties as a fireman at the time of the accident. In fact, appellant just left
the Bonanza Restaurant where he and his friends had dinner. Apparently, the injuries appellant
sustained from the accident did not arise out of [and] in the course of his employment.
Considering therefore the absence of a causal link between the contingency for which income
benefits [are] being claimed and his occupation as fireman, his claim under PD 626, as
amended, cannot be given due course.

The Issues:
In his Petition, Petitioner Celerino Valeriano urges the Court to resolve the following questions:
WHETHER PETITIONER'S INJURIES ARE WORK-CONNECTED.

HELD:
Injuries and Resulting Disability
Disability benefits are granted an employee who sustains an injury or contracts a sickness
resulting in temporary total, permanent total, or permanent partial, disability. 10 For the injury and
the resulting disability to be compensable, they must have necessarily resulted from an accident
arising out of and in the course of employment.
Were Petitioner's Injuries
Work-Connected?

The two components of the coverage formula — "arising out of" and "in the course of
employment" — are said to be separate tests which must be independently satisfied; however, it

278
should not be forgotten that the basic concept of compensation coverage is unitary, not dual,
and is best expressed in the word, "work-connection, because an uncompromising insistence on
an independent application of each of the two portions of the test can, in certain cases, exclude
clearly work-connected injuries. The words "arising out of" refer to the origin or cause of the
accident, and are descriptive of its character, while the words "in the course of" refer to the time,
place and circumstances under which the accident takes place.
As a matter of general proposition, an injury or accident is said to arise "in the course of
employment" when it takes place within the period of the employment, at a place where the
employee may reasonably . . . be, and while he is fulfilling his duties or is engaged in doing
something incidental thereto.
Thus, for injury to be compensable, the standard of "work connection" must be substantially
satisfied. The injury and the resulting disability sustained by reason of employment are
compensable regardless of the place where the injured occurred, if it can be proven that at the
time of the injury, the employee was acting within the purview of his or her employment and
performing an act reasonably necessary or incidental thereto.
Petitioner Valeriano was not able to demonstrate solidly how his job as a firetruck driver was
related to the injuries he had suffered. That he sustained the injuries after pursuing a purely
personal and social function — having dinner with some friends — is clear from the records of
the case. His injuries were not acquired at his work place; nor were they sustained while he was
performing an act within the scope of his employment or in pursuit of an order of his superior.
Thus, we agree with the conclusion reached by the appellate court that his injuries and
consequent disability were not work-connected and thus not compensable.
WHEREFORE, the Petition is hereby DENIED and the assailed Decision of the Court of
Appeals AFFIRMED. No pronouncement as to costs.

279
 ILOILO DOCK & ENGINEERING CO., vs. WORKMEN'S COMPENSATION

G.R. No. L-26341 November 27, 1968

FACTS:

At about 5:02 o'clock in the afternoon of January 29, 1960, Pablo, who was employed as a
mechanic of the IDECO, while walking on his way home, was shot to death in front of, and
about 20 meters away from, the main IDECO gate, on a private road commonly called the
IDECO road. The slayer, Martin Cordero, was not heard to say anything before or after the
killing. The motive for the crime was and still is unknown as Cordero was himself killed before
he could be tried for Pablo's death. At the time of the killing, Pablo's companion was Rodolfo
Galopez, another employee, who, like Pablo, had finished overtime work at 5:00 p.m. and was
going home. From the main IDECO gate to the spot where Pablo was killed, there were four
"carinderias" on the left side of the road and two "carinderias" and a residential house on the
right side. The entire length of the road is nowhere stated in the record.

According to the IDECO, the Commission erred (1) in holding that Pablo's death occurred in
the course of employment and in presuming that it arose out of the employment; (2) in applying
the "proximity rule;" and (3) in holding that Pablo's death was an accident within the purview of
the Workmen's Compensation Act.

ISSUE:
Whether the injuries are "in the course of" and not "out of" the employment.

RULING:

The general rule in workmen's compensation law known as the "going & coming rule," simply
stated, is that "in the absence of special circumstances, an employee injured in, going to, or
coming from his place of work is excluded from the benefits of workmen's compensation
acts."7 This rule, however, admits of four well-recognized exceptions, to wit: (1) where the
employee is proceeding to or from his work on the premises of his employer; (2) where the
employee is about to enter or about to leave the premises of his employer by way of the
exclusive or customary means of ingress and egress; (3) where the employee is charged, while
on his way to or from his place of employment or at his home, or during his employment, with
some duty or special errand connected with his employment; and (4) where the employer, as an
incident of the employment, provides the means of transportation to and from the place of
employment.8

We address ourselves particularly to an examination and consideration of the second exception,

i.e., injuries sustained off the premises of the employer, but while using a customary means of
ingress and egress.

Some of our states refuse to extend this definition of "in the course of" to include these injuries.
Most of the states will protect the employee from the moment his foot or person reaches
the employer's premises, whether he arrives early or late. These states find something sacred
about the employment premises and define "premises" very broadly, not only to include
premises owned by the employer, but also premises leased, hired, supplied or used by him,

280
even private alleyways merely used by the employer. Adjacent private premises are protected
by many states, and a few protect the employee even on adjacent public sidewalks and streets.
Where a city or any employer owns or controls an island, all its streets are protected premises.

There is no reason in principle why states should not protect employees for a reasonable period
of time prior to or after working hours and for a reasonable distance before reaching or after
leaving the employer's premises. The Supreme Court of the United States has declared that it
will not overturn any state decision that so enlarges the scope of its act. Hence, a deaf worker,
trespassing on railroad tracks adjacent to his employer's brick-making premises (but shown by
his superintendent the specific short crossing over the track), and killed by a train, was held to
be in the course of his employment when hit by an oncoming train fifteen minutes before his day
would have begun. So long as causal relation to the employment is discernible, no federal
question arises.

The narrow rule that a worker is not in the course of his employment until he crosses the
employment threshold is itself subject to many exceptions. Off-premises injuries to or from work,
in both liberal and narrow states, are compensable (1) if the employee is on the way to or from
work in a vehicle owned or supplied by the employer, whether in a public (e.g., the employer's
street car) or private conveyance; (2) if the employee is subject to call at all hours or at the
moment of injury; (3) if the employee is travelling for the employer, i.e., travelling workers; (4) if
the employer pays for the employee's time from the moment he leaves his home to his return
home; (5) if the employee is on his way to do further work at home, even though on a fixed
salary; (6) where the employee is required to bring his automobile to his place of business for
use there. Other exceptions undoubtedly are equally justified, dependent on their own peculiar
circumstances.

281
ALANO vs. EMPLOYEES' COMPENSATION COMMISSION

G.R. No. L-48594 March 16, 1988

FACTS:

Dedicacion de Vera, a government employee during her lifetime, worked as principal of Salinap
Community School in San Carlos City, Pangasinan. Her tour of duty was from 7:30 a.m. to 5:30
p.m. On November 29, 1976, at 7:00 A.M., while she was waiting for a ride at Plaza Jaycee in
San Carlos City on her way to the school, she was bumped and run over by a speeding Toyota
mini-bus which resulted in her instantaneous death. She is survived by her four sons and a
daughter.

On June 27, 1977, Generoso C. Alano, brother of the deceased, filed the instant claim for in
come benefit with the GSIS for and in behalf of the decedent's children. The claim was,
however, denied on the same date on the ground that the "injury upon which compensation is
being claimed is not an employment accident satisfying all the conditions prescribed by law." On
July 19, 1977 appellant requested for a reconsideration of the system's decision, but the same
was denied and the records of the case were elevated to this Commission for review. (Rollo, p.
12)

ISSUE:

Whether or not the death of Dedicacion de Vera can be compensable.

HELD:

In this case, it is not disputed that the deceased died while going to her place of work.
She was at the place where, as the petitioner puts it, her job necessarily required her to be if
she was to reach her place of work on time. There was nothing private or personal about the
school principal's being at the place of the accident. She was there because her employment
required her to be there.

As to the Government Service Insurance System's manifestation, we hold that it is not fatal to
this case that it was not impleaded as a party respondent. As early as the case of La O v.
Employees' Compensation Commission, (97 SCRA 782) up to Cabanero v. Employees'
Compensation Commission (111 SCRA 413) and recently, Clemente v. Government Service
Insurance System (G.R. No. L-47521, August 31,1987), this Court has ruled that the
Government Service Insurance System is a proper party in employees' compensation cases as
the ultimate implementing agency of the Employees' Compensation Commission. We held in the
aforecited cases that "the law and the rules refer to the said System in all aspects of employee
compensation including enforcement of decisions (Article 182 of Implementing Rules)."

282
 SALVADOR LAZO vs. EMPLOYEES' COMPENSATION COMMISSION & GOVERNMENT
SERVICE INSURANCE SYSTEM
G.R. No. 78617 June 18, 1990
PADILLA, J.:

FACTS: Salvador Lazo, is a security guard of the Central Bank of the Philippines
assigned to its main office in Malate, Manila. His regular tour of duty is from 2:00 o'clock in the
afternoon to 10:00 o'clock in the evening. On 18 June 1986, the petitioner rendered duty from
2:00 o'clock in the afternoon to 10:00 o'clock in the evening. But, as the security guard who was
to relieve him failed to arrive, the petitioner rendered overtime duty up to 5:00 o'clock in the
morning of 19 June 1986, when he asked permission from his superior to leave early in order to
take home to Binangonan, Rizal, his sack of rice.

On his way home, at about 6:00 o'clock in the morning of 19 June 1986, the passenger jeepney
the petitioner was riding on turned turtle due to slippery road. As a result, he sustained injuries
and was taken to the Angono Emergency Hospital for treatment. He was later transferred to the
National Orthopedic Hospital where he was confined until 25 July 1986.

For the injuries he sustained, petitioner filed a claim for disability benefits under PD 626, as
amended. His claim, however, was denied by the GSIS for the reason that —

It appears that after performing your regular duties as Security Guard from 2:00 P.M. to 10:00
P.M. on June 18, 1986, you rendered overtime duty from 10:00 P.M. to 5:06 A.M. of the following
day; that at about 5:06 A.M. after asking permission from your superior you were allowed to
leave the Office to do certain personal matter — that of bringing home a sack of rice and that,
while on your way home, you met a vehicular accident that resulted to (sic) your injuries. From
the foregoing informations, it is evident that you were not at your work place performing your
duties when the incident occurred. 1

It was held that the condition for compensability had not been satisfied.

Upon review of the case, the respondent Employees Compensation Commission affirmed the
decision since the accident which involved the petitioner occurred far from his work place and
while he was attending to a personal matter.

Hence, the present recourse.

ISSUE: Whether petitioner's injury comes within the meaning of and intendment of the
phrase 'arising out of and in the course of employment?

HELD: We held that 'where an employee, after working hours, attempted to ride on the platform
of a service truck of the company near his place of work, and, while thus attempting, slipped and
fell to the ground and was run over by the truck, resulting in his death, the accident may be said
to have arisen out of or in the course of employment, for which reason his death is
compensable. The fact standing alone, that the truck was in motion when the employee
boarded, is insufficient to justify the conclusion that he had been notoriously negligent, where it
does not appear that the truck was running at a great speed.'And, in a later case, Iloilo Dock &
Engineering Co. vs. Workmen's Compensation Commission, 26 SCRA 102, 103, We ruled that
'(e)mployment includes not only the actual doing of the work, but a reasonable margin of time
and space necessary to be used in passing to and from the place where the work is to be done.
If the employee be injured while passing, with the express or implied consent of the employer, to

283
or from his work by a way over the employer's premises, or over those of another in such
proximity and relation as to be in practical effect a part of the employer's premises, the injury is
one arising out of and in the course of the employment as much as though it had happened
while the employee was engaged in his work at the place of its performance. (Emphasis
supplied)

In the case at bar, it can be seen that petitioner left his station at the Central Bank several hours
after his regular time off, because the reliever did not arrive, and so petitioner was asked to go
on overtime. After permission to leave was given, he went home. There is no evidence on
record that petitioner deviated from his usual, regular homeward route or that interruptions
occurred in the journey.

There is no reason, in principle, why employees should not be protected for a reasonable period
of time prior to or after working hours and for a reasonable distance before reaching or after
leaving the employer's premises.

WHEREFORE, the decision appealed from is REVERSED and SET ASIDE. Let the case be
remanded to the ECC and the GSIS for disposition in accordance with this decision.

284
 G.R. No. L-48488 April 25, 1980

GLORIA D. MENEZ, petitioner,

vs.
EMPLOYEES' COMPENSATION COMMISSION, GOVERNMENT SERVICE INSURANCE
SYSTEM (DEPARTMENT OF EDUCATION & CULTURE), respondents.

MAKASIAR, J.:

FACTS:

Petition for review on certiorari from the decision en banc dated March 1, 1978 of the
Employees' Compensation Commission in ECC Case No. 0462, affirming the denial by the
Government Service Insurance System of the claim of petitioner for benefits under Presidential
Decree No. 626 (now Title II the New Labor Code) and dismissing said claim.

Petitioner Gloria D. Menez was employed by the Department (now Ministry) of Education
& Culture as a school teacher. She retired on August 31, 1975 under the disability retirement
plan at the age of 54 years after 32 years of teaching, due to rheumatoid arthritis and
pneumonitis. Before her retirement, she was assigned at Raja Soliman High School in Tondo-
Binondo, Manila near a dirty creek.

On October 21, 1976, petitioner filed a claim for disability benefits under Presidential
Decree No. 626, as amended, with respondent Government Service Insurance System.

On October 25, 1976, respondent GSIS denied said claim on the ground that petitioner's
ailments, rheumatoid arthritis and pneumonitis, are not occupational diseases taking into
consideration the nature of her particular work. In denying aforesaid claim, respondent GSIS
thus resolved:

Upon evaluation based on general accepted medical authorities, your ailments are found
to be the least causally related to your duties and conditions of work. We believe that
your ailments are principally traceable to factors which are definitely not work-connected.
Moreover, the evidences you have, submitted have not shown that the said ailments
directly resulted from your occupation as Teacher IV of Raja Soliman High School,
Manila
ISSUE:
Whether or not the petitioner’s ailments are causally related to her duties and conditions of
work, hence, she is entitled to disability benefit from the GSIS.

HELD:

Republic Act 4670, otherwise known as the Magna Charta for Public School Teachers,
recognized the enervating effects of these factors (duties and activities of a school teacher
certainly involve physical, mental and emotional stresses) on the health of school teachers
when it directed in one of its provisions that "Teachers shall be protected against the
consequences of employment injury in accordance with existing laws. The effects of the

285
physical and nervous strain on the teachers's health shall be recognized as compensable
occupational diseases in accordance with laws" (Pantoja vs. Republic, et al.. L-43317,
December 29, 1978).

WHEREFORE, THE DECISION OF THE EMPLOYEES' COMPENSATION

COMMISSION IS HEREBY SET ASIDE AND THE MINISTRY OF EDUCATION
AND CULTURE IS HEREBY ORDERED

1) TO PAY PETITIONER THE SUM OF SIX THOUSAND [P 6,000.00] PESOS

AS DISABILITY INCOME BENEFITS; AND

2) TO REIMBURSE PETITIONER'S MEDICAL AND HOSPITAL EXPENSES

DULY SUPPORTED BY RECEIPTS.

286
 G.R. No. 94167 January 21, 1991

MABUHAY SHIPPING SERVICES, INC. AND SKIPPERS MARITIME CO., LTD., petitioners,
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION) AND CECILIA
SENTINA, respondents.

FACTS:

Romulo Sentina was hired as a 4th Engineer by petitioner Mabuhay Shipping Services, Inc.
(MSSI) for and in behalf of co-petitioner, Skippers Maritime Co., Ltd. to work aboard the M/V
Harmony I for a period of one year. He reported for duty aboard said vessel on July 13, 1987.

On January 16, 1988 at about 3 p.m., while the vessel was docked alongside Drapetona Pier,
Piraeus, Greece, Sentina arrived aboard the ship from shore leave visibly drunk. He went to the
messhall and took a fire axe and challenged those eating therein. He was pacified by his
shipmates who led him to his cabin. However, later he went out of his cabin and proceeded to
the messhall. He became violent. He smashed and threw a cup towards the head of an oiler
Emmanuel Ero, who was then eating. Ero touched his head and noticed blood. This infuriated
Ero which led to a fight between the two. After the shipmates broke the fight, Sentina was taken
to the hospital where he passed away on January 17, 1988. Ero was arrested by the Greek
authorities and was jailed in Piraeus.

On October 26, 1988, private respondents filed a complaint against petitioners

with the Philippine Overseas Employment Administration (POEA) for payment of
death benefits, burial expenses, unpaid salaries on board and overtime pay with
damages docketed as POEA Case No. (M) 88-10-896. POEA rendered a
decision favoring Sentina.

A motion for reconsideration and/or appeal was filed by petitioners which the respondent First
Division of the National Labor Relations Commission (NLRC) disposed of in a resolution dated
March 31, 1990 dismissing the appeal and affirming the appealed decision. Hence, this petition.

ISSUE:

WHETHER OR NOT AN EMPLOYER IS REQUIRED TO PAY DEATH BENEFITS TO AN

EMPLOYEE WHO RAN AMUCK THAT RESULTED TO HIS DEATH.

HELD:

The mere death of the seaman during the term of his employment does not automatically give
rise to compensation. The circumstances which led to the death as well as the provisions of the
contract, and the right and obligation of the employer and seaman must be taken into
consideration, in consonance with the due process and equal protection clauses of the
Constitution. There are limitations to the liability to pay death benefits.

287
When the death of the seaman resulted from a deliberate or willful act on his own life, and it is
directly attributable to the seaman, such death is not compensable. No doubt a case of suicide
is covered by this provision.

By the same token, when as in this case the seaman, in a state of intoxication, ran amuck, or
committed an unlawful aggression against another, inflicting injury on the latter, so that in his
own defense the latter fought back and in the process killed the seaman, the circumstances of
the death of the seaman could be categorized as a deliberate and willful act on his own life
directly attributable to him. First he challenged everyone to a fight with an axe. Thereafter, he
returned to the messhall picked up and broke a cup and hurled it at an oiler Ero who suffered
injury. Thus provoked, the oiler fought back The death of seaman Sentina is attributable to his
unlawful aggression and thus is not compensable.

288
 G.R. No. 115497 September 16, 1996

INTERORIENT MARITIME ENTERPRISES, INC., FIRCROFT SHIPPING CORPORATION and

TIMES SURETY & INSURANCE CO., INC., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and CONSTANCIA PINEDA, respondents.

PANGANIBAN, J.:

FACTS:
The proceedings below originated as a claim for death compensation benefits filed by
Constancia Pineda as heir of her deceased son, seaman Jeremias Pineda, against Interorient
Maritime Enterprises, Inc. and its foreign principal, Fircroft Shipping Corporation and the Times
Surety and Insurance Co., Inc. The following facts were found by the POEA Administrator:
As can be gathered from the records of the case, it was alleged that deceased seaman,
Jeremias Pineda was contracted to work as Oiler on board the vessels, "MV Amazonia", owned
and operated by its foreign principal, Fircroft Shipping Corporation for a period of nine (9)
months with additional three (3) months upon mutual consent of both parties with a monthly
basic salary of US$276.00 plus fixed overtime rate of US$83.00 and a leave pay of 2 1/2 days
per month; that on October 2, 1989, he met his death when he was shot by a Thai Policeman in
Bangkok, Thailand; that considering that the deceased seaman was suffering from mental
disorders aggravated by threats on his life by his fellow seamen, the Ship Captain should not
have allowed him to travel alone.

The instant petition seeks the reversal and/or modification of the Resolution dated March
30, 1994 of public respondent National Labor Relations Commission dismissing the appeals of
petitioners and affirming the decision dated November 16, 1992 of Philippine Overseas
Employment Administration (POEA) Administrator Felicisimo C. Joson, which ordered
that.

WHEREFORE, in view of the foregoing consideration, respondents are hereby

jointly and severally held liable to pay the complainant the following amounts:

1. P130,000.00 as death compensation benefits.

2. P18,000.00 as burial expenses.

ISSUE:
Are the local crewing or manning agent and its foreign principal (the shipowner) liable for the
death of a Filipino seaman-employee who, after having been discharged, was killed in transit
while being repatriated home?

HELD:

Petitioner's reliance on De Jesus is misplaced, as the death and burial benefits being
claimed in this case are not payable by the Employee's Compensation Commission and
chargeable against the State Insurance Fund. These claims arose from the responsibility of the
foreign employer together with the local agency for the safety of the employee during his
repatriation and until his arrival in this country, i.e., the point of hire. Through the termination of

289
the employment contract was duly effected in Dubai, still, the responsibility of the foreign
employer to see to it that Pineda was duly repatriated to the point of hiring subsisted. Section 4,
Rule VIII of the Rules and Regulations Governing Overseas Employment clearly provides for
the duration of the mandatory personal accident and life insurance covering accident death,
dismemberment and disability of overseas workers:

Sec. 4. Duration of Insurance Coverage. — The minimum coverage shall take

effect upon payment of the premium and shall be extended worldwide, on and off
the job, for the duration of the worker's contract plus sixty (60) calendar days
after termination of the contract of employment; provided that in no case shall the
duration of the insurance coverage be less than one year. (Emphasis supplied)

The foreign employer may not have been obligated by its contract to provide a
companion for a returning employee, but it cannot deny that it was expressly tasked by its
agreement to assure the safe return of said worker. The uncaring attitude displayed by
petitioners who, knowing fully well that its employee had been suffering from some mental
disorder, nevertheless still allowed him to travel home alone, is appalling to say the least. Such
attitude harks back to another time when the landed gentry practically owned the serfs, and
disposed of them when the latter had grown old, sick or otherwise lost their usefulness.
WHEREFORE, premises considered, the petition is hereby DISMISSED and the
Decision assailed in this petition is AFFIRMED. Costs against petitioners.

290
 NAESS Shipping Philippines, Inc., vs. NLRC
G.R. No. 73441 September 4, 1987

FIRST DIVISION, NARVASA, J.:

Facts:

On the night of September 3, 1983, while the vessel M/V DYVI PACIFIC was plying the seas
enroute from Santos, Brazil to Port Said, Egypt, Pablo Dublin the vessel's chief steward, fatally
stabbed the second cook, Rodolfo Fernandez, during a quarrel, then ran to the deck from which
he jumped or fell overboard. An alarm was immediately raised, and the vessel turned to comb
the surrounding area for Dublin. After some time his floating body was briefly sighted, but it
disappeared from view even as preparations to retrieve it were being made, and was never
seen again although the search went on through the night and was called off only at 6:00 o'clock
the next morning.

Under a Special Agreement in the employment contract, between the International Workers
Federation (ITF) and NAESS Shipping, NAESS is bound to pay cash benefits for loss of life the
of workers enrolled therein.

For the death of Dublin his widow Zenaida, by whom he had one child, Ivy, born January 22,
1971, collected the amount of P75,000.00 under Clause A of the ITF Collective Bargaining
Agreement. 3 She also filed with the Philippine Overseas Employment Administration (POEA) a
complaint against NAESS 4 for payment of death benefits to US$74,512.00 under both
paragraph 17 of the cited Special Agreement and what she claimed to be the also applicable
Singapore Workmens' Compensation Ordinance.

The POEA rendered judgment for the complainant, holding Dublin's death compensable under
said Special Agreement and ordering NAESS to pay complainant and her child compensation
benefits totalling US$31,962.00 and her attorneys of record fees amounting to US$3,196.00, the
equivalents of said sums in Philippine pesos at prevailing rates of exchange.

NAESS filed a motion for reconsideration but was dismissed by the NLRC for lack of merit, with
an express affirmance of the POEA decision. Hence, this appeal.

Issue:

Whether or not the POEA and the NLRC acted with grave abuse of discretion amounting to lack
or excess of jurisdiction in adjudging that death by suicide is compensable.

Held:

It makes no difference whether Dublin intentionally took his own life, or he killed himself in a
moment of temporary aberration triggered by remorse over the killing of the second cook, or he
accidentally fell overboard while trying to flee from imagined pursuit, which last possibility
cannot be ruled out considering the state of the evidence.

There is no question that NAESS freely bound itself to a contract which on its face makes it
unqualifiedly liable to pay compensation benefits for Dublin's death while in its service,

291
regardless of whether or not it intended to make itself the insurer, in the legal sense, of Dublin's
life. No law or rule has been cited which would make it illegal for an employer to assume such
obligation in favor of his or its employee in their contract of employment.

Thus, contract, ... which are the private laws of the contracting parties, should be fulfilled
according to the literal sense of their stipulations, if their terms are clear and leave no room for
doubt as to the intention of the contracting parties, for contracts are obligatory, no matter what
their form may be, whenever the essential requisites for their validity are present.

To compel payment of death benefits in this case would amount not only to rewarding the act of
murder or homicide, but also inequitably to placing on NAESS the twin burdens of
compensating both the killer and his victim, who allegedly had also been employed under a
contract with a similar death benefits clause. This argument, in confusing the legal implications
and effects of two distinct and independent agreements, carries within itself the seeds of its own
refutation. On Dublin's part, entitlement to death benefits resulted from his death while serving
out his contract of employment; it was not a consequence of his killing of the second cook,
Rodolfo Fernandez. If the latter's death is also compensable, that is due to the solitary fact of
his death while covered by a similar contract, not precisely to the fact that he met death at the
hands of Dublin That both deaths may be related by cause and effect and NAESS is the single
obligor liable for compensation in both cases must, insofar as the factual and legal bases of
such liability is concerned, be regarded as purely accidental circumstances.

Decision:

WHEREFORE, modified only to set aside and vacate the award of US$3,196.00 for attorney's
fees made in the decision of the POEA and affirmed in the Resolution of the National Labor
Relations Commission herein complained of, said Resolution is affirmed, with costs against
petitioner NAESS.

SO ORDERED.

292
 Vicente vs Employees Compensation Commission
G.R. No. 85024
SARMIENTO, J.:p

Facts:
Petitioner was formerly employed. At the age of forty-five, he applied for an optional retirement
giving as reason his inability to continue working is due to his physical disability. Upon his
medical examination with Veterans Medical Center, he was diagnosed as having permanent
total disability. He claimed for income benefits from GSIS. His request was granted but only for
permanent partial disability. Upon further requests of petitioner, extensions were given but no
grant was made as to his permanent total disability claims.
Issue:
Whether or not petitioner was suffering from permanent total disability.
Held:
Petitioner was suffering from permanent total disability.
Ratio Decidendi:
Petitioner availed of optional retirement which requires the proof that one is physically
incapacitated to render sound and efficient service. Permanent total disability does not mean a
state of absolute helplessness, but means the disablement of the employee to earn wages in
the same kind of work, or a work of similar nature, that he was trained for, or accustomed to
perform, or any kind of work which a person of his mentality and attainment could do.
Considering that the petitioner has already availed of benefits for already twenty-three months
shows that he was unable to perform any gainful occupation for more than 120 days.

293
 G.R. No. 85024 January 23, 1991

Parties:
DOMINGO VICENTE, petitioner,
vs.
EMPLOYEES' COMPENSATION COMMISSION, respondent.
Olandesca Law Offices for petitioner.

Sarmiento, J.

Facts:
The petitioner, Domingo Vicente, was formerly employed as a nursing attendant at the Veterans
Memorial Medical Center in Quezon City. On August 5, 1981, at the age of forty-five, and after
having rendered more than twenty-five years of government service, he applied for optional
retirement (effective August 16, 1981) under the provisions of Section 12(c) of Republic Act No.
1616, giving as reason therefor his inability to continue working as a result of his physical
disability. The petitioner likewise filed with the Government Service Insurance System (GSIS) an
application for "income benefits claim for payment" under Presidential Decree (PD) No. 626, as
amended. Both applications were accompanied by the necessary supporting papers, among
them being a "Physician's Certification" issued by the petitioner's attending doctor at the
Veterans Memorial Medical Center, Dr. Avelino A. Lopez, M.D., F.P.C.S., ** F.I.C.S. *** (Section
Chief, General, Thoracic & Peripheral Surgery, Surgical Department, Veterans Medical Center,
Hilaga Avenue, Quezon City), who had diagnosed the petitioner as suffering from:

Osteoarthritis, multiple;
Hypertensive Cardiovascular Disease;
Cardiomegaly; and
Left Ventricular Hypertrophy;

and classified him as being under "permanent total disability."

The petitioner's application for income benefits claim payment was granted but only for
permanent partial disability (PPD) compensation or for a period of nineteen months starting from
August 16, 1981 up to March 1983.

On March 14, 1983, the petitioner requested the General Manager of the GSIS to reconsider the
award given him and prayed that the same be extended beyond nineteen months invoking the
findings of his attending physician, as indicated in the latter's Certification. As a consequence of
his motion for reconsideration, and on the basis of the "Summary of Findings and
Recommendation" of the Medical Services Center of the GSIS, the petitioner was granted the
equivalent of an additional four (4) months benefits. Still unsatisfied, the petitioner again sent a
letter to the GSIS Disability Compensation Department Manager on November 6, 1986, insisting
that he (petitioner) should be compensated no less than for "permanent total disability." On June
30, 1987, the said manager informed the petitioner that his request had been denied.
Undaunted, the petitioner sought reconsideration and as a result of which, on September 10,
1987, his case was elevated to the respondent Employees Compensation Commission (ECC).
Later, or on October 1, 1987, the petitioner notified the respondent Commission that he was
confined at the Veterans Memorial Medical Center for "CVA probably thrombosis of the left
middle cerebral artery."

294
On August 24, 1988, the respondent rendered a decision affirming the ruling of the GSIS
Employees' Disability Compensation and dismissed the petitioner's appeal.

Issues:
The respondent Commission argues that the petitioner only suffers from "permanent partial
disability" and not from "permanent total disability." The findings of the petitioner's attending
physician is not binding on the GSIS, nor on the Commission, as the proper evaluation of an
employee's degree of disability exclusively belongs to the GSIS medical experts who have
specialized on the subject.

Held:
Considering that the petitioner was only 45 years old when he retired and still entitled, under
good behavior, to 20 more years in service, the approval of his optional retirement application
proves that he was no longer fit to continue in his employment. For optional retirement is
allowed only upon proof that the employee-applicant is already physically incapacitated to
render sound and efficient service.

Further, the appropriate physicians of the petitioner's employer, the Veterans Memorial Medical
Center, categorically certified that the petitioner was classified under permanent total disability.
On this score, "the doctor's certification as to the nature of the claimant's disability may be given
credence as he normally would not make a false certification." And, "[N]o physician in his right
mind and who is aware of the far-reaching and serious effect that his statements would cause
on a money claim filed with a government agency, would issue certifications indiscriminately
without even minding his own interests and protection."

The fact that the petitioner was granted benefits amounting to the equivalent of twenty-three
months shows that the petitioner was unable to perform any gainful occupation for a continuous
period exceeding 120 days. This kind of disability is precisely covered by Section 2(b), Rule VII
of the Amended Rules on Employees' Compensability.

There being no showing that the petitioner's disability is "temporary total" as defined by the law,
the inescapable conclusion is that he suffers from permanent total disability.

Decision:
WHEREFORE, the decision of the respondent Employees' Compensation Commission is SET
ASIDE and another one is hereby ENTERED declaring the petitioner to be suffering from
permanent total disability. Respondent Employees' Compensation Commission is accordingly
ORDERED to award the petitioner the benefits corresponding to his permanent total disability.

295
 GSIS vs. Court of Appeals and R. Balais
G.R. No. 117572, January 29, 1998

FACTS:
Private respondent Rosa Balais an employee of National Housing Authority suffered
from Subarachnoid Hemorrhage Secondary to Ruptured Aneurysm, because of this she can no
longer perform efficiently. For this reason, she retired and filed for disability benefits. GSIS
granted her application for temporary total disability and later was changed to permanent partial
disability. She again filed with GSIS an application for permanent total disability, which GSIS
denied on the ground that her condition does not qualify for permanent total disability.

ISSUE:
Whether or not respondent Rosa Balais is entitled of her permanent total disability?

HELD:
“A person’s disability may not manifest fully at one precise moment in time but rather
over a period of time. It is possible that an injury which at first was considered to be temporary
may later on become permanent or one suffers a partial disability becomes totally and
permanently disabled from the same cause” (GSIS vs. CA. G.R. No. 116015, July 31, 1996)

In the case at bar, the denial of the claim for permanent total disability benefit of private
respondent who, for 38 long years during her prime had rendered her best service with an
unblemished record and who was compelled to retire on account of her worsening conditioning
would indeed subvert the salutary intentions of the law in favor of the worker. The court,
therefore, affirms the decision of the respondent Court of Appeals decreeing conversion of
private respondent’s disability from permanent partial disability to permanent total disability.

296
 EMPLOYEES’ COMPENSATION COMMISSION (SSS) vs. EDMUND SANICO
G.R. No. 134028. December 17, 1999

Ponente: Kapunan, J.

FACTS:
Private respondent Edmund Sanico was a former employee of John Gotamco and sons
as a wood filler from 1986 until he was separated from employment on December 31, 1991 due
to his illness. According to his medical evaluation report he was suffering from pulmonary
tuberculosis PTB.
On November 9, 1994, private respondent filed with the Social Security System (SSS) a claim
on the ground of prescription. The SSS ruled that under Article 201 of the Labor Code, a claim
for compensation shall be given due course only when the same is filed with System three (3)
years for the time the cause of action accrued. According to SSS the three (3) year prescriptive
period on 21 September 1991 when his PTB first became manifest. When he filed his claim on
November 9, 1994, the claim had allegedly already prescribed.
On appeal, petitioner ECC affirmed the decision of the SSS. Private respondent then elevated
the case to the CA, which reversed petitioner’s decision and granted private respondent’s claim
for compensation benefits. In ruling that the private respondent’s claim was filed well within the
prescriptive period under the law the CA reconciled Art. 201 of the Labor Code with Article 1144
(2) of the Civil Code. That “an action upon an obligation must be filed within ten (10) years from
the time the cause of action accrues and that private respondent’s filing of his compensation
claim on November 9,1994 was within, even long before, The prescriptive period.

ISSUE:
Whether or not private respondent’s claim for compensation benefit had already
prescribed when he filed his claim on November 9, 1994?

HELD:
The Supreme Court ruled in favor of Private respondent Sanico.
The prescriptive period for filing compensation claims should be reckoned from the time the
employees lost his earning capacity, terminated from employment, due to his illness and not
when the same first became manifest. In this case the private respondent’s was terminated on
December 31, 1991 due to his illness, he filed his claim for compensation benefits on Nov. 9,
1994, accordingly, private respondent’s claim was filed within the three-year prescriptive period
under Article 201 of the Labor Code.
“Disability should not be understood more on its medical significance but on the loss of earning
capacity.” Permanent disability means disablement of an employee to earn wages in the same
kind of work, or work similar nature that he was trained for or accustomed to perform, or any
kind of work which a person of his mentality and attainment could do. It does not mean absolute
helplessness. In disability compensation, it is not the injury which is compensated, but rather it
is the incapacity to work resulting in the impairment of one’s earning capacity.
P.D. No. 626, as amended, is a social legislation whose purpose is to provide meaningful
protection to the working class against the hazards of disability, illness and other contingencies
resulting in the loss of income.

297
 ROSARIO VDA. DE SUANES, petitioner,
vs.
THE WORKMEN'S COMPENSATION COMMISSION and THE REPUBLIC OF THE
PHILIPPINES (Bureau of Public Highways), respondents.

Facts:
Artemio Suanes was a construction capataz of the Bureau of Public Highways (BPH),
Batangas Provincial Office. His Service Record further shows that thereafter, from 1 July 1970
up to the time of his death on 21 June 1973. Artemio Suanes was a construction capataz in the
Office of the Provincial Engineer, Batangas Province. The certificate of death issued by Dr.
Salvacion Altamira of the Magsino General Hospital in Lipa City, Batangas, attributed Artemio's
demise to 'Cardio-respiratory Arrest due to Cerebrovascular Accident'.
On 5 March 1975, petitioner, as surviving spouse of Artemio Suanes, filed with Regional
Office No. IV of the Workmen's Compensation Unit (WCU), Department of Labor, a claim for
compensation under the applicable provisions of the Workmen's Compensation Act (Act No.
3428, as amended). In this claim, the decedent's illness was described as "Internal Hemorrhage
due to Hypertension. 3 Petitioner's claim was referred by the WCU to the BPH which, however,
controverted the claim of petitioner. In a letter dated 26 June 1975, BPH asserted that there was
"[l]ack of causative relation of the illness alleged in [petitioner's] claim with the nature of the
decedent's employment" and that petitioner had failed to comply with the requirements of
Section 24, Act No. 3428, as amended, regarding the giving of notice and subsequent filing of
claim.
BPH, further, asked the WCU Regional Officeto dismiss petitioner's claim upon the
ground that claim had been filed against the wrong party, Artemio's employer at the time of his
death being the Provincial Engineer's Office of the Provincial Government of Batangas, rather
than the BPH.
The petitioner asks the Court to review and set aside the decision dated 31 December
1975 of the Workmen's Compensation Commission (WCC)

Issue:
Whether or not petitioner's Motion to Set Aside the Order of Dismissal issued by
the WCC Referee was properly denied simply upon the ground that it had not been
accompanied by an affidavit of merits.

Ruling:
It is well settled that, under the Workmen's Compensation Act, petitioner is accordingly relieved
of the burden of proving causation between the illness and the employment in view of the legal
presumption that said illness arose out of the decedent's employment. The burden of proving
non-compensability of the cause of death is shifted to the employer. Respondent Batangas
Provincial Engineer had failed to discharge this burden. Indeed, none of the respondents even
attempted to present any evidence to rebut the presumption of compensability; all of them
chose to rely upon the formal defenses discussed above. But those defenses do not constitute
evidence to overthrow the statutory presumption. In legal effect, no evidence was introduced by
the respondents to offset that legal presumption. The Court, therefore, is left with no alternative
but to rule in favor of petitioner's claim.

298
INTERORIENT MARITIME ENTERPRISES, INC. vs. NATIONAL LABOR RELATIONS
COMMISSION

G.R. No. 115497 September 16, 1996

FACTS:

Deceased seaman, Jeremias Pineda was contracted to work as Oiler on board the
vessels, "MV Amazonia", owned and operated by its foreign principal, Fircroft Shipping
Corporation for a period of nine (9) months with additional three (3) months upon mutual
consent of both parties.

On September 28, 1989, he finished his contract and was discharged from the port of
Dubai for repatriation to Manila. His flight schedule from Dubai to the Philippines necessitated a
stopover at Bangkok, Thailand, and during said stopover he disembarked on and failed to join
the connecting flight to Hongkong with final destination to Manila.

Thereafter, Jeremias Pineda was shot by a Thai Officer on duty on October 2, 1989 at
around 4:00 P.M.; According to the Thai police, Pineda approached and tried to stab the police
sergeant with a knife and that therefore he was forced to pull out his gun and shot Pineda.

The heirs of Pineda filed a claim for death benefits against herein petitioners. The POEA
Administrator rendered his decision holding petitioners liable for death compensation benefits
and burial expenses.

Petitioners appealed the POEA decision to the public respondent. In a Decision dated March 30,
1994, public respondent upheld the POEA.

Thus, this recourse to this Court by way of a special civil action for certiorari.

ISSUE:
Whether or not the heirs of Pineda can claim death benefits and compensation against
the employer.

HELD:
Yes, the employer should pay compensation and death benefits of Pineda to his heirs.

According to the Supreme Court, attacked the Thai policeman when he was no longer in
complete control of his mental faculties, the aforequoted provision of the Standard Format
Contract of Employment exemption the employer from liability should not apply in the instant
case. Firstly, the fact that the deceased suffered from mental disorder at the time of his
repatriation means that he must have been deprived of the full use of his reason, and that
thereby, his will must have been impaired, at the very least. Thus, his attack on the policeman
can in no wise be characterized as a deliberate, willful or voluntary act on his part. Secondly,
and apart from that, we also agree that in light of the deceased's mental condition, petitioners
"should have observed some precautionary measures and should not have allowed said
seaman to travel home alone", and their failure to do so rendered them liable for the death of
Pineda. Indeed, "the obligations and liabilities of the (herein petitioners) do not end upon the
expiration of the contracted period as (petitioners are) duty bound to repatriate the seaman to
the point of hire to effectively terminate the contract of employment.”

299
 NORSE MANAGEMENT CO. vs. NATIONAL SEAMEN BOARD,
G.R. No. L-54204 September 30, 1982
RELOVA, J.:

FACTS: Napoleon B. Abordo, the deceased husband of private respondent Restituta ,

was the 2nd Engr. of M.T. "Cherry Earl" when he died from an apoplectic stroke in the course
of his employment with petitioner . The M.T. "Cherry Earl" is a vessel of Singaporean Registry.
He was receiving a monthly salary of US$850.00 at the time of his death.

In her complaint for "death compensation benefits, accrued leave pay and time-off allowances,
funeral expenses, attorney's fees and other benefits and reliefs available in connection with the
death of Napoleon B. Abordo," filed before the National Seamen Board, Restituta C. Abordo
alleged that the amount of compensation due her from petitioners Norse Management Co.
(PTE) and Pacific Seamen Services, Inc., principal and agent, respectively, should be based on
the law where the vessel is registered. On the other hand, petitioners contend that the law of
Singapore should not be applied in this case because the National Seamen Board cannot take
judicial notice of the Workmen's Insurance Law of Singapore. As an alternative, they offered to
pay private respondent Restituta C. Abordo the sum of P30,000.00 as death benefits based on
the Board's Memorandum Circular No. 25 which they claim should apply in this case.

Ministry of Labor and Employment, after hearing the case, rendered judgment on June 20,
1979, ordering herein petitioners "to pay jointly and severally the following:
I. US$30,600 (the 36-month salary of the decreased)) or its equivalent in
Philippine currency as death compensation benefits;
II. US$500.00 or its equivalent in Philippine currency as funeral expenses;
III. US$3,110 or 10% of the total amount recovered as attorney's fees. It is
also ordered that payment must be made thru the National Seamen Board within ten (10) days
from receipt of this decision.

Petitioners appealed to the Ministry of Labor.

On December 11, 1979, the Ministry rendered its decision in this case as follows: The facts in
the main are not disputed. The deceased, husband of complainant herein, was employed as a
Second Engineer by respondents and served as such in the vessel "M.T. Cherry Earl" until that
fatal day in May 1978 when, while at sea, he suffered an apoplectic stroke and died four days
later or on 29 May 1978. In her complaint filed before this Board, Abordo argued that the
amount of compensation due her should be based on the law where the vessel is registered,
which is Singapore law. Agreeing with said argument, this Board issued the questioned Order.
Hence, this Motion for Reconsideration.

In their motion for reconsideration, respondents strongly argue that the law of Singapore should
not be applied

ISSUE: Whether or not the law of Singapore ought to be applied in this case?

HELD: We rule in the affirmative. It is true that the law of Singapore was not alleged and proved
in the course of the hearing. And following Supreme Court decisions in a long line of cases that
a foreign law, being a matter of evidence, must be alleged and proved, the law of Singapore
ought not to be recognized in this case. But it is our considered opinion that the jurisprudence
on this matter was never meant to apply to cases before administrative or quasi-judicial bodies
such as the National Seamen Board. For well-settled also is the rule that administrative and

300
quasi-judicial bodies are not bound strictly by technical rules. It has always been the policy of
this Board, as enunciated in a long line of cases, that in cases of valid claims for benefits on
account of injury or death while in the course of employment, the law of the country in which the
vessel is registered shall be considered. We see no reason to deviate from this well-considered
policy. Certainly not on technical grounds as movants herein would like us to.

WHEREFORE, the motion for reconsideration is hereby denied and the Order of tills Board
dated 20 June 1979 affirmed. Let execution issue immediately.

In the event of illness or injury to Employee arising out of and in the course of his employment
and not due to his own willful misconduct and occurring whilst on board any vessel to which he
may be assigned, but not any other time, the EMPLOYER win provide employee with free
medical attention, including hospital treatment, also essential medical treatment in the course of
repatriation and until EMPLOYEE's arrival at his point of origin. If such illness or injury
incapacitates the EMPLOYEE to the extent the EMPLOYEE's services must be terminated as
determined by a qualified physician designated by the EMPLOYER and provided such illness or
injury was not due in part or whole to his willful act, neglect or misconduct compensation shall
be paid to employee in accordance with and subject to the limitations of the Workmen's
Compensation Act of the Republic of the Philippines or the Workmen's Insurance Law of registry
of the vessel whichever is greater. (Emphasis supplied)

In the aforementioned "Employment Agreement" between petitioners and the late Napoleon B.
Abordo, it is clear that compensation shall be paid under Philippine Law or the law of registry of
petitioners' vessel, whichever is greater. Since private respondent Restituta C. Abordo was
offered P30,000.00 only by the petitioners, Singapore law was properly applied in this case.

The "Employment Agreement" is attached to the Supplemental Complaint of Restituta C. Abordo

and, therefore, it forms part thereof. As it is familiar with Singapore Law, the National Seamen
Board is justified in taking judicial notice of and in applying that law.

Furthermore, Article 20, Labor Code of the Philippines, provides that the National Seamen
Board has original and exclusive jurisdiction over all matters or cases including money claims,
involving employer-employee relations, arising out of or by virtue of any law or contracts
involving Filipino seamen for overseas employment. Thus, it is safe to assume that the Board is
familiar with pertinent Singapore maritime laws relative to workmen's compensation. Moreover,
the Board may apply the rule on judicial notice and, "in administrative proceedings, the technical
rules of procedure — particularly of evidence — applied in judicial trials, do not strictly apply."
(Oromeca Lumber Co. Inc. vs. Social Security Commission, 4 SCRA 1188).

Finally, Article IV of the Labor Code provides that "all doubts in the implementation and
interpretation of the provisions of this code, including its implementing rules and resolved in
favor of labor.

For lack of merit, this petition is DENIED.

301
 PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
FRANCISCO HERNANDEZ (at large), KARL REICHL, and YOLANDA GUTIERREZ DE
REICHL, accused,
KARL REICHL and YOLANDA GUTIERREZ DE REICHL, accused-appellants

PUNO, J.:

FACTS:

In April 1993, eight (8) informations for syndicated and large scale illegal recruitment and
eight (8) informations for estafa were filed against accused-appellants, spouses Karl and
Yolanda Reichl, together with Francisco Hernandez. Only the Reichl spouses were tried and
convicted by the trial court as Francisco Hernandez remained at large.1âwphi1.nêt

ISSUE:

Whether or not the respondents are guilty of illegal recruitment.

HELD:

In the case at bar, the prosecution was able to prove beyond reasonable doubt that
accused-appellants engaged in activities that fall within the definition of recruitment and
placement under the Labor Code. The evidence on record shows that they promised overseas
employment to private complainants and required them to prepare the necessary documents
and to pay the placement fee, although they did not have any license to do so. There is illegal
recruitment when one who does not possess the necessary authority or license gives the
impression of having the ability to send a worker abroad.

Accused-appellants assert that they merely undertook to secure Austrian visas for
private complainants, which act did not constitute illegal recruitment. They cite the document
marked at Exhibit "J" stating that they promised to obtain Austrian tourist visas for private
complainants. We are not convinced. Private complainants Narcisa Hernandez, Leonora Perez
and Charito Balmes categorically stated that Karl and Yolanda Reichl told them that they would
provide them overseas employment and promised them that they would be able to leave the
country on a specified date. We do not see any reason to doubt the truthfulness of their
testimony. The defense has not shown any ill motive for these witnesses to falsely testify against
accused-appellants if it were not true that they met with the Reichl spouses and the latter
represented themselves to have the capacity to secure gainful employment for them abroad.
The minor lapses in the testimony of these witnesses pointed out by accused-appellants in their
brief do not impair their credibility, especially since they corroborate each other on the material
points, i.e., that they met with the three accused several times, that the three accused promised
to give them overseas employment, and that they paid the corresponding placement fee but
were not able to leave the country. It has been held that truth-telling witnesses are not always
expected to give error-free testimonies considering the lapse of time and the treachery of
human memory. Moreover, it was shown that Karl Reichl signed a document marked as Exhibit
"C" where he promised to refund the payments given by private complainants for the processing
of their papers. We are not inclined to believe Mr. Reichl's claim that he was forced by Francisco
Hernandez to sign said document. There is no showing, whether in his testimony or in that of his
wife, that private complainants threatened to harm them if he did not sign the document. Mr.

302
Reichl is an educated man and it cannot be said that he did not understand the contents of the
paper he was signing. When he affixed his signature thereon, he in effect acknowledged his
obligation to ensure the departure of private complainants and to provide them gainful
employment abroad. Such obligation arose from the promise of overseas placement made by
him and his co-accused to private complainants. The admission made by accused-appellants in
Exhibit "J" that they promised to obtain Austrian visas for private complainants does not negate
the fact that they also promised to procure for them overseas employment. In fact, in Exhibit "J",
accused-appellants admitted that each of the private complainants paid the amount
of P50,000.00. However, in Exhibit "C", which was executed on a later date, accused-appellants
promised to refund to each complainant an amount exceeding P150,000.00. This is an
acknowledgment that accused-appellants received payments from the complainants not only for
securing visas but also for their placement abroad.

Accused-appellants' defense of denial and alibi fail to impress us. The acts of recruitment were
committed from June 1992 until January 1993 in Batangas City. Karl Reichl was in Manila from
July 29, 1992 until September 19, 1992, and then he returned to the Philippines and stayed in
Batangas from October 21, 1992. Yolanda Reichl, on the other hand, claimed that he was in
Manila on the dates alleged in the various informations. It is of judicial notice that Batangas City
is only a few hours' drive from Manila. Thus, even if the spouses were staying in Manila, it does
not prevent them from going to Batangas to engage in their recruitment business. Furthermore,
it appears that the three accused worked as a team and they conspired and cooperated with
each other in recruiting domestic helpers purportedly to be sent to Italy. Francisco Hernandez
introduced Karl and Yolanda Reichl to the job applicants as his business partners. Karl and
Yolanda Reichl themselves gave assurances to private complainants that they would seek
employment for them in Italy. Francisco Hernandez remitted the payments given by the
applicants to the Reichl spouses and the latter undertook to process the applicants' papers.
There being conspiracy, each of the accused shall be equally liable for the acts of his co-
accused even if he himself did not personally take part in its execution.

303
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 129577-80 February 15, 2000

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
BULU CHOWDURY, accused-appellant.

Facts: The accused worked as an interviewer at Cartrade Agency from 1990 until 1994, that
from the period of August 1994 to October 1994, he recruited the complainants: Estrella B.
Calleja, Melvin C. Miranda and Aser S. Sasis, for employment in Korea without first obtaining
the required license and/or authority from the Philippine Overseas Employment Administration.
They were likewise charged with three counts of estafa committed against private complainants.
The State Prosecutor, however, later dismissed the estafa charges against Chowdury and filed an
amended information indicting only Ong for the offense.

Chowdury was arraigned on April 16, 1996 while Ong remained at large. He pleaded "not guilty"
to the charge of illegal recruitment in large scale. The prosecution presented four witnesses:
private complainants Aser Sasis, Estrella Calleja and Melvin Miranda, and Labor Employment
Officer Abbelyn Caguitla. The trial court found Chowdury guilty beyond reasonable doubt of the
crime of illegal recruitment in large scale. Chowdury appealed.

Issue is whether accused-appellant knowingly and intentionally participated in the

commission of the crime charged.

Held: Evidence shows that accused-appellant interviewed private complainants in the months of
June, August and September in 1994 at Craftrade's office. At that time, he was employed as
interviewer of Craftrade which was then operating under a temporary authority given by the
POEA pending renewal of its license. He was convicted based on the fact that he was not
registered with the POEA as employee of Craftrade. Neither was he, in his personal capacity,
licensed to recruit overseas workers.

Upon examination of the records, the prosecution failed to prove that accused-appellant was
aware of Craftrade's failure to register his name with the POEA and that he actively engaged in
recruitment despite this knowledge. The obligation to register its personnel with the POEA
belongs to the officers of the agency.32 A mere employee of the agency cannot be expected to
know the legal requirements for its operation. The evidence at hand shows that accused-appellant
carried out his duties as interviewer of Craftrade believing that the agency was duly licensed by
the POEA and he, in turn, was duly authorized by his agency to deal with the applicants in its
behalf. Accused-appellant in fact confined his actions to his job description. He merely
interviewed the applicants and informed them of the requirements for deployment but he never
received money from them. Their payments were received by the agency's cashier, Josephine

304
Ong. Furthermore, he performed his tasks under the supervision of its president and managing
director. Hence, we hold that the prosecution failed to prove beyond reasonable doubt accused-
appellant's conscious and active participation in the commission of the crime of illegal
recruitment. His conviction, therefore, is without basis.

IN VIEW WHEREOF, the assailed decision of the Regional Trial Court is REVERSED and SET
ASIDE. Accused-appellant is hereby ACQUITTED. The Director of the Bureau of Corrections is
ordered to RELEASE accused-appellant unless he is being held for some other cause, and to
REPORT to this Court compliance with this order within ten (10) days from receipt of this
decision.

305
People of the Philippines vs. Cabais (G.R. No. 129070 March 16, 2001)

Facts:

Sometime in February 1994, complainant Joan Merante, 37 years old, met accused
Nellie Cabais in Maharlika, Baguio City. Accused Cabais informed her that she was
connected with Red Sea Employment Agency (RSEA), a Manila-based agency which
was licensed to recruit overseas contract workers. She also talked to the other
complainants who have shown their positive interest to the employment in Korea.

Accused Cabais talked to complainants several times during the period of February
1994 up to May 1994, persuading them to be contract workers in South Korea. In
subsequent meetings, accused Cabais introduced accused Anita Forneas as her boss
and the owner of RSEA. Accused Cabais and Forneas tried to convince them to submit
their applications so that RSEA could process them. Later on, accused Cabais
introduced to them a certain Korean named Harm Yo Hong who managed to persuade
the complainants to apply as contract workers in South Korea.

Issue:

Accused-appellant Nellie Cabais contends that she is not liable for illegal recruitment
and estafa considering that she was merely an employee of Red Sea Employment
Agency and did not actually recruit applicants.

Held:

An employee of a company or corporation engaged in illegal recruitment may be held

liable as principal, together with his employer, if it is shown that he actively and
consciously participated in illegal recruitment. All of the complainants testified that they
personally met accused-appellant and transacted with her regarding the overseas job
placement offers. Thus, accused-appellant actively participated in the recruitment of the
complainants.

WHEREFORE, the Court AFFIRMS the decision of the Regional Trial Court, Baguio
City, Branch 6, convicting accused-appellant Nellie Cabais y Gamuelan of illegal
recruitment in a large scale by a syndicate, and sentencing her to life imprisonment and
to pay a fine of one hundred thousand (P100,000.00) pesos, and costs;

SO ORDERED.

306
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. LUZ GONZALES-FLORES, accused-
appellant.
G.R. Nos. 138535-38. April 19, 2001
MENDOZA, J.:

Facts:

That on or about the month of August, 1994, in Quezon City, Philippines, the said accused,
conspiring together, confederating with several persons whose true names and true identities
have not as yet been ascertained, and helping one another, did then and there wilfully,
unlawfully and feloniously defraud FELIXBERTO LEONGSON, JR. y CASTAÑEDA in the
following manner, to wit: the said accused, by means of false manifestations and fraudulent
representation which she made to said complainant to the effect that they had the power and
capacity to recruit and employ complainant abroad .

after requiring them to submit certain documentary requirements and exacting from them the
total amount of P128,000.00, Philippine Currency, as recruitment fees, such recruitment
activities being done without the required license or authority from the Department of Labor.

Two days later, Baloran and Domingo went to the compound where Felixberto and accused-
appellant were residing and called Felixberto, Cloyd, and Jojo to a meeting. Domingo told the
applicants that he was the chief engineer of the luxury ocean liner where they would embark
and repeated to them the salaries and other benefits which they would receive. He told them
not to get impatient.

Accused-appellant later saw complainant to collect the balance of P35,000.00. Complainant

was told to give the money to accused-appellant at Wendy’s in Cubao, Quezon City on August
12, 1994.

At the appointed date and place, complainant and his wife delivered the amount to accused-
appellant who, in turn, handed it to Baloran. No receipt was, however, issued to Felixberto.

Another meeting was held on August 16, 1994 at the Mandarin Hotel in Makati City by accused-
appellant, Domingo, Baloran, Mendoza, the Leongson spouses, the Malgapo spouses, and Jojo
Bumatay. The applicants were told by Domingo that they would be employed as waiters and
attendants in the luxury liner and asked them again to wait a while.

On August 18, 1994, accused-appellant saw complainant again to collect the P25,000.00
balance. Felixberto paid the amount to accused-appellant four days later. As in the case of the
first two payments, no receipt was given for the P25,000.00. Accused-appellant told him that
she would turn over the amount to Baloran. Although complainant regularly followed up his
application with accused-appellant, he was told each time to have patience and to just wait for
the call from Domingo or from Baloran. But Felixberto never heard from either one of these two.

Accused-appellant was investigated by the Baler Police Station 2 on November 11, 1994 as a
result of the complaints filed against her by Felixberto, Ronald, and Larry. Thereafter, she was
detained.[17]

307
On November 24, 1994, she appeared before the NBI accompanied by a policewoman to
comply with the subpoena issued regarding her complaint. According to NBI Agent Jesus
Manapat, accused-appellant’s complaint was dismissed for lack of merit.

Based on the evidence presented, the trial court rendered its assailed decision on November
23, 1998, the dispositive portion of which reads:

Issue:
Whether or not the accused guilty of illegal recruitment in large scale?

Held:
WHEREFORE, the guilt of the accused for illegal recruitment in large scale and estafa in three
(3) counts having been proved beyond reasonable doubt, she is hereby convicted of said crimes
and is sentenced:

SO ORDERED.

Hence, this appeal. Accused-appellant contends that-

I. THE LOWER COURT ERRED IN RELYING UPON THE JURISPRUDENCE AND

AUTHORITIES CITED, I.E., PEOPLE VS. COMIA, PEOPLE VS. MANOZCA, PEOPLE VS.
HONRADA, PEOPLE VS. TAN TIONG MENG, PEOPLE VS. VILLAS AND PEOPLE VS.
SENDON BECAUSE, WITH DUE RESPECT, THE FACTS AND CIRCUMSTANCES AVAILING
IN SAID CASES ARE DIFFERENT AS IN THE PRESENT CASE; AND

II. [THE LOWER COURT] ERRED IN HOLDING THE ACCUSED GUILTY BEYOND
REASONABLE DOUBT ON THE BASIS OF THE EVIDENCE ADDUCED BY THE
PROSECUTION TAKEN IN THE LIGHT OF THE UNREBUTTED EVIDENCE OF THE
ACCUSED ON VERY MATERIAL POINTS.[21]

The contentions are without merit.

In Criminal Case No. Q-94-59473, accused-appellant was charged with illegal recruitment in
large scale, the essential elements of which are: (1) that the accused engages in acts of
recruitment and placement of workers defined under Art. 13 (b) or in any of the prohibited
activities under Art. 34 of the Labor Code; (2) that the accused has not complied with the
guidelines issued by the Secretary of Labor and Employment, particularly with respect to the
securing of a license or an authority to recruit and deploy workers, either locally or overseas;
and (3) that the accused commits the unlawful acts against three or more persons, individually
or as a group.[22]

In these cases, according to the certification of the POEA, accused-appellant had no license or
authority to engage in any recruitment activities.[23] In fact, this was stipulated at the trial.[24]
Accused-appellant claims, however, that she herself was a victim of illegal recruitment and that
she simply told complainants about job opportunities abroad.

The allegation is untenable. Art. 13 (b) of the Labor Code defines “recruitment and placement”
as referring to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services, promising or advertising for

308
employment, locally or abroad, whether for profit or not. The same article further states that any
person or entity which, in any manner, offers or promises for a fee employment to two or more
persons shall be deemed engaged in recruitment and placement.[25]

The evidence for the prosecution shows that accused-appellant sought out complainants and
promised them overseas employment. Despite their initial reluctance because they lacked the
technical skills required of seamen, complainants were led to believe by accused-appellant that
she could do something so that their applications would be approved. Thus, because of
accused-appellant’s misrepresentations, complainants gave her their moneys. Accused-
appellant’s companions, Domingo, Baloran, and Mendoza, made her ploy even more plausible.

Accused-appellant contends that all she did was to refer complainants to Domingo, Baloran,
and Mendoza. However, under Art. 13 (b) of the Labor Code, recruitment includes “referral,”
which is defined as the act of passing along or forwarding an applicant for employment after
initial interview of a selected applicant for employment to a selected employer, placement
officer, or bureau.[26] In these cases, accused-appellant did more than just make referrals. She
actively and directly enlisted complainants for supposed employment abroad, even promising
them jobs as seamen, and collected moneys from them.

The failure of complainants to present receipts to evidence payments made to accused-

appellant is not fatal to the prosecution case. The presentation of the receipts of payments is
not necessary for the conviction of accused-appellant. As long as the prosecution is able to
establish through credible testimonies and affidavits that the accused-appellant was involved in
the prohibited recruitment, a conviction for the offense can very well be justified.[27] In these
cases, complainants could not present receipts for their payment because accused-appellant
assured them she would take care of their money.

More importantly, accused-appellant’s defense is uncorroborated. Not one of the persons she
included in her complaint to the NBI was ever presented in her defense in these cases. Nor did
she present Domingo, Baloran, or Mendoza to corroborate her statements. It is probable that
had she presented any of these persons, their testimonies would have been adverse to
accused-appellant.[34]

In sum, we are of the opinion that the trial court correctly found accused-appellant guilty of
illegal recruitment in large scale. The imposition on accused-appellant of the penalty of life
imprisonment and a fine of P100,000.00 is thus justified.

Accused-appellant was likewise found guilty of estafa under Art. 315 (2) (a) of the Revised
Penal Code committed -

By means of any of the following false pretenses or fraudulent acts executed prior to or
simultaneously with the commission of the fraud:

(a) By using fictitious name, or falsely pretending to possess power, influence, qualifications,
property, credit, agency, business or imaginary transactions, or by means of other similar
deceits.

Both elements of the crime were established in these cases, namely, (a) accused-appellant
defrauded complainant by abuse of confidence or by means of deceit and (b) complainant

309
suffered damage or prejudice capable of pecuniary estimation as a result.[37] Complainants
parted with their money upon the prodding and enticement of accused-appellant on the false
pretense that she had the capacity to deploy them for employment abroad. In the end,
complainants were neither able to leave for work overseas nor did they get their money back,
thus causing them damage and prejudice.[38]

The issues that misappropriation on the part of accused-appellant of the money paid by
complainants and their demand for the same were not sufficiently established are immaterial
and irrelevant, conversion and demand not being elements of estafa under Art. 315 (2) (a) of the
Revised Penal Code.

In accordance with the ruling in People v. Mercado,[40] the fact that no receipts were presented
to prove the amounts paid by complainants to accused-appellant does not prevent an award of
actual damages in view of the fact that complainants were able to prove by their respective
testimonies and affidavits that accused-appellant was involved in the recruitment process and
succeeded in inveigling them to give their money to her. The award of moral damages should
likewise be upheld as it was shown to have factual basis.

Held:
the decision of the Regional Trial Court, Branch 77, Quezon City, finding accused-appellant
guilty of illegal recruitment in large scale and estafa against complainants Felixberto Leongson,
Jr., Ronald Frederizo, and Larry Tibor is AFFIRMED, with the MODIFICATIONS that, in the
cases for estafa, accused-appellant is sentenced:

(1) In Criminal Case No. Q-94-59470, to suffer a prison term ranging from four (4) years and two
(2) months of prision correccional, as minimum, to ten (10) years of prision mayor, as maximum;

(2) In Criminal Case No. Q-94-59471, to suffer a prison term ranging from four (4) years and two
(2) months of prision correccional, as minimum, to 10 years of prision mayor, as maximum; and

(3) In Criminal Case No. Q-94-59472, to suffer a prison term ranging from four (4) years and two
(2) months of prision correccional, as minimum, to nine (9) years of prision mayor, as maximum.

SO ORDERED.

310
 [G.R. Nos. 124671-75. September 29, 2000]
PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. LINDA SAGAYDO, accused-
appellant.
PARDO, J.:

FACTS:
On December 15, 1992, Baguio City Prosecutor II Estrellita P. Bernabe filed with the Regional Trial
Court, Baguio City, Branch 59, separate informations charging accused Linda Sagaydo with one (1) case
of illegal recruitment in large scale, and four (4) cases of estafa.
Upon arraignment on August 18, 1993, accused pleaded not guilty to all the five (5) charges against
her. Thus, trial ensued. The complainants recounted their respective experience with accused Linda
Sagaydo. The accused denied having recruited any of the private complainants. She claimed that they
came to her voluntarily after being informed that she was able to send her three (3) sons to Korea. While
accused admitted having received money from complainants Gina Cleto and Naty Pita, she said she used
their money to buy their plane tickets. Gina and Naty were not able to leave because the Korean
government imposed a visa requirement beginning January, 1992. When asked why she was not able to
return the money of Gina and Naty, accused said that she returned the plane tickets to the Tour Master
travel Agency for refund but said agency did not make reimbursements. With respect to complainants
Jessie Bolinao and Rogelio Tibeb, the accused denied having received any money from them.
The trial court gave credence to the testimonies of the complainants and rejected the denial of
accused. Thus, on October 25, 1995, the trial court rendered a decision convicting her of the charges of
illegal recruitment and estafa, the decretal portion of which is quoted in the opening paragraph of this
opinion.
Hence, this appeal.

ISSUE:
Whether or not the accused, Sagaydo is guilty of one (1) case of illegal recruitment in large scale
and four (4) cases of estafa.

HELD:
“Illegal recruitment has been defined to include the act of engaging in any of the activities mentioned
in Article 13 (b) of the Labor Code without the required license or authority from the POEA. Under the
aforesaid provision, any of the following activities would constitute recruitment and placement:
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, including referrals,
contract services, promising or advertising for employment, locally or abroad, whether for profit or not.
Article 13 (b) further provides that any person or entity which, in any manner, offers or promises for a fee
employment to two (2) or more persons shall be deemed engaged in recruitment and placement.
Illegal recruitment is deemed committed in large scale if committed against three (3) or more
persons, individually or as a group.” “This crime requires proof that the accused: (1) engaged in the
recruitment and placement of workers defined under Article 13 or in any of the prohibited activities under
Article 34 of the Labor Code; (2) does not have a license or authority to lawfully engage in the recruitment
and placement of workers; and (3) committed the infraction against three or more persons, individually or
as a group.”
All the aforementioned requisites were present in this case. The accused-appellant made
representations to each of the private complainants that she could send them to Korea to work as factory
workers, constituting a promise of employment which amounted to recruitment as defined under Article 13
(b) of the Labor Code. From the testimonies of the private complainants that the trial court found to be

311
credible and untainted with improper motives, there is no denying that accused-appellant gave the
complainants the distinct impression that she had the power or ability to send them abroad for work such
that the latter were convinced to part with their money in order to be employed. As against the positive
and categorical testimonies of the complainants, mere denial of accused-appellant cannot prevail.
As to the license requirement, the record showed that accused-appellant did not have the authority
to recruit for employment abroad, per certification issued by the POEA Regional Extension Unit in Baguio
City.
The conviction of accused-appellant LINDA SAGAYDO for illegal recruitment and estafa was
sustained subject to the MODIFICATION on the penalties.

312
G.R. No. 119594 January 18, 2000
THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
BENZON ONG y SATE alias "BENZ ONG," accused-appellant.
MENDOZA, J.:

Facts: The information for illegal recruitment in large scale 2 alleged —

That sometime during and between the period from November, 1993 to January, 1994, in the City of
Baguio, Philippines, the above-named accused, representing himself to have the capacity. contract,
enlist, hire and transport Filipino workers for employment abroad, did then and there willfully,
unlawfully and feloniously, for a fee, recruit and promise employment/job placement of 9 persons in
Taiwan, without first obtaining or securing license or authority from the proper governmental agency.

For his defense, accused-appellant testified that when complainants sought his help, he advised them to
go to the POEA but complainants claimed that they do not know anyone at said office. He then offered
to scout for a recruitment agency in Manila. Accused-appellant accompanied complainants to Steadfast
Recruitment Agency in Manila.

Issue: WON COURT ERRED IN FINDING THE ACCUSED-APPELLANT GUILTY OF ILLEGAL RECRUITMENT

Held:
Accused-appellant claims the when complainants filled out their respective bio-data, application forms
and other documents for employment in Taiwan, they knew that they were applying for employment
abroad through the Steadfast Recruitment Agency. He claims that he merely suggested to them the
opportunity to work overseas but that he never advertised himself as a recruiter.
The contention has no merit.

Accused-appellant is charged with violation of Art. 38 of the Labor Code, as amended by Presidential
Decree No. 2018, which provides that any recruitment activity, including the prohibited practices
enumerated in Art. 34 of said Code, undertaken by persons who have no license or authority to engage
in recruitment for overseas employments is illegal and punishable under Art. 39. Under Art. 13(b) of the
Labor Code, "recruitment and placement" refer to any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not; provided, that any person or
entity which, in any manner, offers or promises for a fee employment to two or more persons, is
considered engaged in recruitment and placement. On the other hand, "referral" is employment as the
act of passing along or forwarding of an applicant for employment after initial interview of a selected
applicant for employment to a selected employer, placement officer or bureau. 27
On the other hand, illegal recruitment is considered an offense involving economic sabotage if any of
these qualifying circumstances exist, namely, (a) when illegal recruitment is committed by a syndicate,
i.e., if it is carried out by a group of three or more persons conspiring and/or confederating with one
another; or, (b) when illegal recruitment is committed in large scale, i.e., if it is committed against three
or more persons individually or as a group. The essential elements of the crime of illegal recruitment in
large scale are: (1) the accused engages in acts of recruitment and placement of workers defined under
Art. 13(b) or in any prohibited activities under Art. 34 of the Labor Code; (2) the accused has not
complied with the guidelines issued by the Secretary of Labor and Employment, particularly with respect
to the securing of a license or an authority to recruit and deploy workers, either locally or overseas; and
(3) the accused commits the unlawful acts against three or more persons, individually or as a group.

313
Moreover, it is settled that a person who is convicted of illegal recruitment may, in addition, be convicted
of estafa under Art. 315(2)(a) of the Revised Penal Code. There is no problem of double jeopardy
because illegal recruitment is malum prohibitum, in which the criminal intent is not necessary, whereas
estafa is malum in se in which the criminal intent of the accused is necessary. 35
WHEREFORE, the decision appealed from is AFFIRMED.

314
 PEOPLE OF THE PHILIPPINES vs. REYDANTE CALONZO Y AMBROSIO

G.R. Nos. 115150-55 September 27, 1996

FACTS:

REYDANTE CALONZO Y AMBROSIO was charged with Illegal Recruitment in Large

Scale and five (5) counts of Estafa. The Regional Trial Court found the accused guilty
as charged. accused-appellant contends that the court a quo erred in giving credence to
the testimonies of prosecution witnesses considering that the amounts claimed to have
been collected by him did not correspond to the amounts indicated in the receipts
presented by the complaining witnesses.

ISSUE:

Whether the person convicted for illegal recruitment under the Labor Code can be
convicted for violation of the Revised Penal Code provisions on estafa.

RULING:

The Court reiterated the rule that the person convicted for illegal recruitment under the
Labor Code can be convicted for violation of the Revised Penal Code provisions on
estafa provided the elements of the crime are present. . In People v. Romero we said
that the elements of estafa were: (a) that the accused defrauded another abuse of
confidence or by means of deceit, and (b) that damage or prejudice capable of
pecuniary estimation is caused to the offended party or third person

315
 Dee C. Chuan and Sons vs. Court of Industrial Relations
85 Phil 431, January 31, 1950

Facts: Dee C. Chuan & Sons, Inc. assails the validity of an order of the Court of Industrial
Relations. The order made upon petitioner's request for authority to hire" about twelve(12) more
laborers from time to time and on a temporary basis," contains the proviso that "the majority of
the laborers to be employed should be native." The petition was filed pending settlement by the
court of a labor dispute between the petitioner and Kaisahan Ng Mga Manggagawa sa Kahoy sa
Pilipinas.
At the outset, the appellant takes exception to the finding of the court below that Dee C. Chuan
& Sons, Inc. is capitalized with foreign descent.

Issue: Can the the Court of Industrial Relations intervene in questions of selection of employees
and workers so as to impose unconstitutional restrictions?

Decision: The employer's right to hire labor is not absolute has to be admitted. "This privilege of
hiring and firing ad libitum is, of course, being subjected to restraints today." Statutes are cutting
in on it. And so does Commonwealth Act No. 103. The regulations of the hours of labor of
employees and of the employment of women and children are familiar examples of the limitation
of the employer's right in this regard. The petitioner's request for permission to employ
additional; laborers is an implicit recognition of the correctness of the proposition. The power of
the legislature to make regulations is subject only to the condition that they should be affected
with public interest and reasonable under the circumstances. The power may be exercised
directly by the law-making body or delegated by appropriate rules to the courts or administrative
agencies.
We are of the opinion that the order under consideration meets the test of reasonableness and
public interest. The passage of Commonwealth Act No. 103 was "in conformity with the
constitutional objective and . . . the historical fact that industrial and agricultural disputes have
given rise to disquietude, bloodshed and revolution in our country." (Antamok Goldfields Mining
Co. vs. Court of Industrial Relations, 40 Off. Gaz., 8th Supp., 173.) 1 "Commonwealth Act No.
103 has precisely vested the Court of Industrial Relations with authority to intervene in all
disputes between employees or strikes arising from the difference as regards wages,
compensation, and other labor conditions which it may take cognizance of." (Central Azucarera
de Tarlac vs. Court of Industrial Relations, 40 Off. Gaz., 3rd Supp., 319, 324.) 2 Thus it has
jurisdiction to determine the number of men to be laid off during off-seasons. By the same token,
the court may specify that a certain proportion of the additional laborers to be employed should
be Filipinos, if such condition, in the court's opinion, "is necessary or expedient for the purpose
of settling disputes or doing justice to the parties."

316
Encyclopaedia Britannica Inc. vs. NLRC (G.R. No. 87098 November 4, 1996)

Facts:

Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia
Britannica and was in charge of selling petitioner's products through some sales representatives.
As compensation, private respondent received commissions from the products sold by his agents.
He was also allowed to use petitioner's name, goodwill and logo. It was, however, agreed upon
that office expenses would be deducted from private respondent's commissions. Petitioner would
also be informed about appointments, promotions, and transfers of employees in private
respondent's district.

On June 14, 1974, private respondent Limjoco resigned from office to pursue his private
business. Then on October 30, 1975, he filed a complaint against petitioner Encyclopaedia
Britannica with the Department of Labor and Employment, claiming for non-payment of
separation pay and other benefits, and also illegal deduction from his sales commissions.

Issue:

Whether respondent Limjoco is indeed an employee of the petitioner.

Held:

Private respondent was not an employee of the petitioner company. He had free rein in the means
and methods for conducting the marketing operations. He selected his own personnel and the
only reason why he had to notify the petitioner about such appointments was for purpose of
deducting the employees' salaries from his commissions.

Private respondent was merely an agent or an independent dealer of the petitioner. He was free to
conduct his work and he was free to engage in other means of livelihood.

As stated earlier, "the element of control is absent; where a person who works for another does
so more or less at his own pleasure and is not subject to definite hours or conditions of work, and
in turn is compensated according to the result of his efforts and not the amount thereof, we
should not find that the relationship of employer and employee exists. In fine, there is nothing in
the records to show or would "indicate that complainant was under the control of the petitioner"
in respect of the means and methods in the performance of complainant's work.

Consequently, private respondent is not entitled to the benefits prayed for.

In view of the foregoing premises, the petition is hereby GRANTED, and the decision of the
NLRC is hereby REVERSED AND SET ASIDE.

SO ORDERED.

317
 INSULAR LIFE ASSURANCE CO., LTD., vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO,
G.R. No. 84484 November 15, 1989
NARVASA, J.:

FACTS : Pettitioner entered contract with Basiao for insurance policies and annuities in
accordance with the existing rules and regulations" of the Company; he would receive
"compensation, in the form of commissions ... as provided in the Schedule of Commissions" of
the contract to "constitute a part of the consideration of ... (said) agreement;" and the "rules in ...
(the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and those which
may from time to time be promulgated by it, ..." were made part of said contract.

Either party may terminate this contract by giving to the other notice in writing to that effect. It
shall become ipso facto cancelled if the Insurance Commissioner should revoke a Certificate of
Authority previously issued or should the Agent fail to renew his existing Certificate of Authority
upon its expiration. The Agent shall not have any right to any commission on renewal of
premiums that may be paid after the termination of this agreement for any cause whatsoever,
except when the termination is due to disability or death in line of service. As to commission
corresponding to any balance of the first year's premiums remaining unpaid at the termination of
this agreement, the Agent shall be entitled to it if the balance of the first year premium is paid,
less actual cost of collection, unless the termination is due to a violation of this contract,
involving criminal liability or breach of trust
Some four years later, in April 1972, the parties entered into another contract — an Agency
Manager's Contract — and to implement his end of it Basiao organized an agency or office to
which he gave the name M. Basiao and Associates, while concurrently fulfilling his
commitments under the first contract with the Company.

In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a
reconsideration, Basiao sued the Company in a civil action and this, he was later to claim,
prompted the latter to terminate also his engagement under the first contract and to stop payment
of his commissions starting April 1, 1980. Basiao thereafter filed with the then Ministry of Labor
a complaint 4 against the Company and its president. Without contesting the termination of the
first contract, the complaint sought to recover commissions allegedly unpaid thereunder, plus
attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim,
asserting that he was not the Company's employee, but an independent contractor and that the
Company had no obligation to him for unpaid commissions under the terms and conditions of his
contract. The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the
underwriting agreement had established an employer-employee relationship between him and the
Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said
official's decision directed payment of his unpaid commissions "... equivalent to the balance of
the first year's premium remaining unpaid, at the time of his termination, of all the insurance
policies solicited by ... (him) in favor of the respondent company ..." plus 10% attorney's fees.
This decision was, on appeal by the Company, affirmed by the National Labor Relations
Commission. Hence, the present petition for certiorari and prohibition

ISSUE: Whether or not there exist an employer-employee relationship?

318
HELD: The Court, therefore, rules that under the contract invoked by him, Basiao was not an
employee of the petitioner, but a commission agent, an independent contractor whose claim for
unpaid commissions should have been litigated in an ordinary civil action. The Labor Arbiter
erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as
did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it
unnecessary and premature to consider Basiao's claim for commissions on its merits.

The Company's thesis, that no employer-employee relation in the legal and generally accepted
sense existed between it and Basiao, is drawn from the terms of the contract they had entered
into, which, either expressly or by necessary implication, made Basiao the master of his own
time and selling methods, left to his judgment the time, place and means of soliciting insurance,
set no accomplishment quotas and compensated him on the basis of results obtained. He was not
bound to observe any schedule of working hours or report to any regular station; he could seek
and work on his prospects anywhere and at anytime he chose to, and was free to adopt the selling
methods he deemed most effective.

... In determining the existence of employer-employee relationship, the following elements are
generally considered, namely: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employees'
conduct — although the latter is the most important element (35 Am. Jur. 445). ...

There is no dearth of authority holding persons similarly placed as respondent Basiao to be

independent contractors, instead of employees of the parties for whom they workedThe Labor
Arbiter's decision makes reference to Basiao's claim of having been connected with the Company
for twenty-five years. Whatever this is meant to imply, the obvious reply would be that what is
germane here is Basiao's status under the contract of July 2, 1968, not the length of his
relationship with the Company.

319
 G.R. No. 102467 June 13, 1997

EQUITABLE BANKING CORPORATION, Chairman MANUEL L. MORALES, President & Director GEORGE L. GO,
Vice-Chairman & Director RICARDO J. ROMULO, Vice-Chairman & Director JOHN C.B. GO, Director HERMINIO
B. BANICO, Director FRANCISCO C. CHUA, Director PETER GO PAILIAN, Director RICARDO C. LEONG, Director
JULIUS T. LIMPE and Director PEDRO A. ORTIZ, petitioners,
vs.
HON. NATIONAL LABOR RELATIONS COMMISSION, First Division, and RICARDO L. SADAC, respondents.

VITUG, J.:

FACTS:

On 26 June 1989, nine lawyers of the bank's Legal Department addressed a "letter-petition" to the Chairman of the Board of
Directors, accusing private respondent Sadac of abusive conduct, inefficiency, mismanagement, ineffectiveness and
indecisiveness. Private respondent Sadac is the General Counsel and Vice-President for the Legal Department of petitioner bank
with a monthly salary of P8, 000.00, plus an allowance of P4, 500.00 and a Christmas bonus equivalent to a two-month salary.

Private respondent promptly responded and manifested an intention to file criminal, civil and administrative charges against the
nine lawyers. Petitioner Morales as well as petitioner Banico, met with the complaining nine lawyers in an attempt to resolve
their differences. However they were warned that if private respondent were to be retained in his position, the lawyers would
resign en masse. Convinced that reconciliation was out of the question, Mr. Banico submitted a report to the Board of Directors
with the findings that the specific charges against Sadac are each proven and/or established by the same nature of evidence.

Two days later, Mr. Morales issued a memorandum to Sadac stating that due to the circumstances it has chosen the more
compassionate option of waiting for his voluntary resignation from his employ with the Bank and that Atty. Veto has already been
instructed and authorized by the Board to take over from him the functions that he is now performing in the Legal Department..

Private respondent responded with a letter addressed to Board Chairman Morales, furnishing the other members of the Board,
stating that the report of Mr. Banico contained libelous statements and its implementation would lead to an illegal dismissal. He
then requested for a full hearing by the Board of Directors so that he could clear his name.

On 31 August 1989, Mr. Romulo wrote back expressing that the charge where he have been constructively dismissed is likewise
without basis because he is free to remain in the employ of the bank if he so wish, even if the bank were to incur the tremendous
expense of continuing to pay him his high salary just so it can continue to adhere to its compassionate policy of avoiding ruining
the future of any of its officers by a possible dismissal for cause which is certainly bound to leak to the public.

Undaunted, private respondent, in his memorandum of 07 September 1989 to the individual members of the Board of Directors,
persisted in his request for a formal investigation. Having been unheeded, private respondent, on 09 November 1989, filed with
the Manila arbitration branch of the NLRC, a complaint, docketed NLRC Case No. 00-11-05252-89, against herein petitioners for
illegal dismissal and damages.

After learning of the filing of the complaint, the Board of Directors, on 21 November 1989, adopted Resolution No. 5803
terminating the services of private respondent "in view of his belligerence" and the Board's "honest belief that the relationship"
between private respondent and petitioner bank was one of "client and lawyer." Private respondent was removed from his office
occupancy in the bank and ordered disentitled, starting 10 August 1989, to any compensation and other benefits. The Board
instructed management to take the necessary steps to "defend itself and all the members of the Board of Directors" from private
respondent's complaint. Pursuing their stand that the association between the bank and private respondent was one of a client-
lawyer relationship, herein petitioners filed a motion to dismiss the complaint with the NLRC on the ground of lack of
jurisdiction.

Private respondent, opposing the motion, insisted on the existence of an employer-employee relationship between them. In their
reply, petitioners added another ground for seeking a dismissal of the complaint, that the rule governing the duration of private
respondent's term was provided for by the Rules of Court and not by the Labor Code.

ISSUE:

320
Whether or not there exists an employer-employee relationship between the petitioners and the private respondent.

HELD:

Following an exchange of position papers and other pleadings, Labor Arbiter Jovencio Ll. Mayor, Jr., on 02 October 1990,
rendered a decision dismissing the complaint for lack of merit. The Labor Arbiter was convinced that the relationship between
petitioner bank and private respondent was one of lawyer-client based on the functions of the latter which "only a lawyer with
highly trained legal mind, can effectively discharge." The Labor Arbiter concluded that the complaint stated no cause of action
because a lawyer-client relationship should instead be governed by Section 26, Rule 138, of the Rules of Court.

However, on appeal, the NLRC concluded differently. It rendered a resolution reversing the decision of the Labor Arbiter. It held
that private respondent was an employee of petitioner bank.

In determining the existence of an employer-employee relationship, the following elements are considered: (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, with the control test generally assuming primacy in the overall consideration. The power of control refers to the
existence of the power and not necessarily to the actual exercise thereof. It is not essential, in other words, for the employer to
actually supervise the performance of duties of the employee; it is enough that the former has the right to wield the power.

The NLRC, in the instant case, based its finding that there existed an employer-employee relationship between petitioner bank
and private respondent on these factual settings:

4) In his more than eight years employment with the respondent bank, the complainant was given the usual payslips to
evidence his monthly gross compensation.
5) The respondent bank, as employer, withheld taxes due to the Bureau of Internal Revenue from the complainant's salary
as employee.
6) Moreover, the bank enrolled the complainant as its employee under the Social Security System and Medicare programs.
The complainant contributed to the bank Employees' Provident Fund.

The existence of an employer-employee relationship, between the bank and private respondent brings the case within the
coverage of the Labor Code. Under the Code, an employee may be validly dismissed if these requisites are attendant: (1) the
dismissal is grounded on any of the causes stated in Article 282 of Labor Code, and (2) the employee has been notified in writing
and given the opportunity to be heard and to defend himself as so required by Section 2 and Section 5, Rule XIV, Book V, of the
Implementing Rules of the Labor Code.

Article 282(c) of the Labor Code provides that "willful breach by the employee of the trust reposed in him by his employer" is a
cause for the termination of employment by an employer. Ordinary breach of trust will not suffice, it must be willful and without
justifiable excuse. This ground must be founded on facts established by the employer who must clearly and convincingly prove
by substantial evidence the facts and incidents upon which loss of confidence in the employee may fairly be made to rest;
otherwise, the dismissal will be rendered illegal.

WHEREFORE, the questioned Resolution of the NLRC is AFFIRMED with the following MODIFICATIONS: That private
respondent shall be entitled to backwages from termination of employment until turning sixty (60) years of age (in 1995) and,
thereupon, to retirement benefits in accordance with law; that private respondent shall be paid an additional amount of P5,000.00;
that the award of moral and exemplary damages are deleted; and that the liability herein pronounced shall be due from petitioner
bank alone, the other petitioners being absolved from solidary liability. No costs.

321