Sonza vs. ABS-CBN, G.R. No.

138051, June 10, 2004

Ruling:
Facts:
In 1994, respondent ABS-CBN, represented by its
corporate officers, and Mel and Jay Management and
Development Corporation, represented by petitioner Sonza,
entered into an agreement. In said agreement, MJMDC
referred to as agent, agreed to provide petitioners services
exclusively to ABS-CBN as talent for radio and television.
ABS-CBN agreed to pay petitioner Php310,000 as monthly
talent fee for the first year and Php317,000 for the second
and third year.
In 1996, petitioner wrote a letter to ABS-CBN stating
his irrevocable resignation due to issues with his program.
Petitioner then proceeded to file with the DOLE a complaint
alledging that ABS-CBN failed to several benefits to him
including salary, separation pay, 13th month pay, and the
like. ABS-CBN, however, contended that no employeeemployer relationship existed.
The Labor Arbiter dismissed the complaint, finding no
employee-employer relationship, this decision was affirmed
by both the NLRC and the CA.

Issue:
Whether there is an employee-employer relationship.

It is well settled in case law in the Philippines that

there are certain requisites that must be met for there to be
an employee-employer relationship. These requisites are (1)
Selection in hiring, (2) Payment of wages, (3) Power to
dismiss, and (4) Power to control means and method that
work is accomplished. Of the four, the control test is the
most important.
In the current case, it is clear that ABS-CBN did not
have the power to control the method of which petitioner
did his work. On the contrary petitioner was free to proceed
with his program however he pleased, ABS-CBN having hired
him for his talent in radio and television. This setup is more
in line with one of an independent contractor. There is no
employee-employer relationship.

Facts:
Private respondent Laudato filed a petition before
the SSC for social security coverage and remittance of
monthly social security contributions against three of her
former employers, one of which is petitioner Lazaro,
proprietor of Royal Star Marketing engaged in the business
of selling home appliances. Laudato alleged that despite her
employment as sales supervisor of the sales agents for
Royal Star from April of 1979 to March of 1986, Lazaro had
failed during the said period, to report her to the SSC for
compulsory coverage or remit Laudatos social security
contributions.
Lazaro denied that Laudato was a sales supervisor
for Royal Star Marketing, claiming that she was a mere sales
agent and that there was no employee-employer
relationship between him and Laudato. Laudato was
supposedly only paid for commissions for sales actually
made.
The SSC ruled in favor of Laudato, ordering Lazaro to
pay the social security contributions as well as penalties to
Laudato. Petitioner was also ordered to pay damages to SSC
for not reporting the social security coverage off Laudato.
Upon appeal the CA affirmed the decision.

Issue:
Lazaro vs. Social Security Commission, G.R. No.
138254 July 30, 2004

Is there an employee-employer relationship?

Ruling:
It is a well-entrenched principle in Philippine
jurisprudence that when deciding whether there is an actual
employee-employer relationship there are four tests to
prove such, the most important of these tests being the
control test.
Petitioner failed to prove that they had no control
over how Laudato did her job when she was working for
Royal Star Marketing. Laudato on the other hand showed
significant evidence, one of which being her former business
card stating her as sales supervisor of Royal Star that she
was truly employed in the manner she described. Payment
by commission does not disqualify an employee-employer
relationship, on the contrary it is one of the four aspects of
the employee-employer relationship that the employer pays
the employee, commission being one of the possible means
of payment.
Therefore, petition is denied and the ruling of the
SSC and the CA are hereby affirmed as to their holding the
presence of an employee-employer relationship between
petitioner and private respondent.

Phil. Global Communication vs. De Vera, G.R. No.

157214, July 7, 2005

Facts:

Issue:

The 99 persons named as petitioners in this

proceeding were rank-and-file employees of respondent
Empire Food Products, which hired them on various dates.
Petitioners filed against private respondents a complaint for
payment of money claims and for violation of labor
standards laws. They also filed a petition for direct
certification of petitioner Labor Congress of the Philippines
as their bargaining representative.

The petitioners are entitled to labor standard benefits

considering they are paid by piece rate worker.

In an Order dated October 24, 1990, Mediator

Arbiter approved the memorandum of agreement and
certified LCP "as the sole and exclusive bargaining agent
among the rank-and-file employees of Empire Food
Products for purposes of collective bargaining with
respect to wages, hours of work and other terms and
conditions of employment". On November 1990, petitioners
through LCP President Navarro submitted to private
respondents a proposal for collective bargaining. On January
1991, petitioners filed a complaint against private
respondents for ULP by way of Illegal Lockout and/or
Dismissal; Union busting thru Harassment, threats, and
interfering with the rights of employees to selforganization;
Violation
of
the
Memorandum of
Agreement dated October 23, 1990; Underpayment of
Wages in violation of R.A. No.6640 and R.A. No. 6727, such
as Wages promulgated by the Regional Wage Board; Actual,
Moral and Exemplary Damages." As a result of
complainants failure to report for work, the cheese curls
ready for repacking were all spoiled to the prejudice of
respondents.

Ruling:
The petitioners are so entitled to these benefits
namely, holiday pay, premium pay,
13th
month
pay
and service incentive leave. Three (3) factors lead us to
conclude that petitioners, although piece-rate workers, were
regular employees of private respondents. First, as to the
nature of petitioners' tasks were necessary or desirable in
the usual business of private respondents, who were
engaged in the manufacture and selling of such food
products;
second,
petitioners
worked
for
private
respondents throughout
the
year,
and
third,
the
length
of
time that petitioners worked for private
respondents. Thus, while petitioners' mode of compensation
was on a "per piece basis," the status and nature of their
employment was that of regular employees.
The Rules Implementing the Labor Code exclude
certain employees from receiving benefits such as nighttime
pay, holiday pay, service incentive leave and 13th month
pay, "field personnel and other employees whose time and
performance is unsupervised by the employer, including
those
who
are
engaged
on
task/contract
basis,
purely commission basis, or those who are paid a fixed
amount for performing work irrespective
of
the
time
consumed in the performance thereof.
Plainly, petitioners as piece-rate workers do not fall
within this group. As mentioned earlier, not only did

petitioners labor under the control of private respondents as

their employer, likewise did petitioners toil throughout the
year with the fulfillment of their quota as supposed basis for
compensation

ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26,

2006

and was likewise issued a license and authority to operate

by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon,
Deiparine, and Lerasan as production assistants (PAs) on
different dates. They were assigned at the news and public
affairs, for various radio programs in the Cebu Broadcasting
Station. On December 19, 1996, petitioner and the ABS-CBN
Rank-and-File Employees executed a Collective Bargaining
Agreement (CBA) to be effective during the period from
December 11, 1996 to December 11, 1999. However, since
petitioner refused to recognize PAs as part of the bargaining
unit, respondents were not included to the CBA.
On October 12, 2000, respondents filed a Complaint for
Recognition of Regular Employment Status, Underpayment
of Overtime Pay, Holiday Pay, Premium Pay, Service
Incentive Pay, Sick Leave Pay, and 13th Month Pay with
Damages against the petitioner before the NLRC. The Labor
Arbiter rendered judgment in favor of the respondents, and
declared that they were regular employees of petitioner as
such, they were awarded monetary benefits. NLRC affirmed
the decision of the Labor Arbiter. Petitioner filed a motion for
reconsideration but CA dismissed it.
Issue:

Facts:
Petitioner ABS-CBN Broadcasting Corporation (ABSCBN) is engaged in the broadcasting business and owns a
network of television and radio stations, whose operations
revolve around the broadcast, transmission, and relay of
telecommunication signals. It sells and deals in or otherwise
utilizes the airtime it generates from its radio and television
operations. It has a franchise as a broadcasting company,

Whether or not the respondents were considered

regular employees of ABS-CBN.
Ruling:
The respondents are regular employees of ABS-CBN.
It was held that where a person has rendered at least one
year of service, regardless of the nature of the activity
performed, or where the work is continuous or intermittent,

the employment is considered regular as long as the activity

exists, the reason being that a customary appointment is
not indispensable before one may be formally declared as
having attained regular status.
In Universal Robina Corporation v. Catapang, the Court
states that the primary standard, therefore, of determining
regular employment is the reasonable connection between
the particular activity performed by the employee in relation
to the usual trade or business of the employer. The test is
whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can
be determined by considering the nature of work performed
and its relation to the scheme of the particular business or
trade in its entirety. Also, if the employee has been
performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the
law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to
such activity and while such activity exists.
Additionally, respondents cannot be considered as project or
program employees because no evidence was presented to
show that the duration and scope of the project were
determined or specified at the time of their engagement. In
the case at bar, however, the employer-employee
relationship between petitioner and respondents has been
proven. In the selection and engagement of respondents, no
peculiar or unique skill, talent or celebrity status was
required from them because they were merely hired through
petitioners personnel department just like any ordinary
employee. Respondents did not have the power to bargain

for huge talent fees, a circumstance negating independent

contractual relationship. Respondents are highly dependent
on the petitioner for continued work. The degree of control
and supervision exercised by petitioner over respondents
through its supervisors negates the allegation that
respondents are independent contractors.
The presumption is that when the work done is an integral
part of the regular business of the employer and when the
worker, relative to the employer, does not furnish an
independent business or professional service, such work is a
regular employment of such employee and not an
independent contractor. As regular employees, respondents
are entitled to the benefits granted to all other regular
employees of petitioner under the CBA . Besides, only
talent-artists were excluded from the CBA and not
production assistants who are regular employees of the
respondents. Moreover, under Article 1702 of the New Civil
Code: In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and
decent living of the laborer.

reduced her salary to P2,500 per month which was until

September. She asked for her salary but was informed that
she was no longer connected to the company. She did not
anymore report to work since she was not paid for her
salary. She filed an action for constructive dismissal with the
Labor Arbiter.
The Labor Arbiter found that the petitioner was illegally
dismissed. NLRC affirmed the decision while CA reversed it.
Issue:
Whether or not there was an employer-employee
relationship.

Francisco vs. NLRC, G.R. No. 170087, August 31, 2006

Facts:
Petitoner was hired by Kasei Corporation during the
incorporation stage. She was designated as accountant and
corporate secretary and was assigned to handle all the
accounting needs of the company. She was also designated
as Liason Officer to the City of Manila to secure permits for
the operation of the company.
In 1996, Petitioner was designated as Acting Manager. She
was assigned to handle recruitment of all employees and
perform management administration functions. In 2001, she
was replaced by Liza Fuentes as Manager. Kasei Corporation

Ruling: The court held that in this jurisdiction, there has

been no uniform test to determine the existence of an
employer-employee relation. Generally, courts have relied
on the so-called right of control test where the person for
whom the services are performed reserves a right to control
not only the end to be achieved but also the means to be
used in reaching such end. In addition to the standard of
right-of-control, the existing economic conditions prevailing
between the parties, like the inclusion of the employee in
the payrolls, can help in determining the existence of an
employer-employee relationship.
The better approach would therefore be to adopt a twotiered test involving: (1) the putative employers power to
control the employee with respect to the means and
methods by which the work is to be accomplished; and (2)
the underlying economic realities of the activity or
relationship.

In Sevilla v. Court of Appeals, the court observed the need to

consider the existing economic conditions prevailing
between the parties, in addition to the standard of right-ofcontrol like the inclusion of the employee in the payrolls, to
give a clearer picture in determining the existence of an
employer-employee relationship based on an analysis of the
totality of economic circumstances of the worker.
Thus, the determination of the relationship between
employer and employee depends upon the circumstances of
the whole economic activity, such as: (1) the extent to
which the services performed are an integral part of the
employers business; (2) the extent of the workers
investment in equipment and facilities; (3) the nature and
degree of control exercised by the employer; (4) the
workers opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for the
success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the
worker and the employer; and (7) the degree of dependency
of the worker upon the employer for his continued
employment in that line of business. The proper standard of
economic dependence is whether the worker is dependent
on the alleged employer for his continued employment in
that line of business.
By applying the control test, there is no doubt that petitioner
is an employee of Kasei Corporation because she was under
the direct control and supervision of Seiji Kamura, the
corporations Technical Consultant. It is therefore apparent
that petitioner is economically dependent on respondent
corporation for her continued employment in the latters line
of business.

There can be no other conclusion that petitioner is an

employee of respondent Kasei Corporation. She was
selected and engaged by the company for compensation,
and is economically dependent upon respondent for her
continued employment in that line of business. Her main job
function involved accounting and tax services rendered to
Respondent Corporation on a regular basis over an indefinite
period of engagement. Respondent Corporation hired and
engaged petitioner for compensation, with the power to
dismiss her for cause. More importantly, Respondent
Corporation had the power to control petitioner with the
means and methods by which the work is to be
accomplished.

her immediate admission to the Capitol Medical Center

("CMC"). t 6:13 a.m., Corazon started to experience
convulsions at 6:22 a.m., Dr. Estrada, assisted by Dr.
Villaflor, applied low forceps to extract Corazon's baby. In
the process, a 1.0 x 2.5 cm. piece of cervical tissue was
allegedly torn. At 6:27 a.m., Corazon began to manifest
moderate vaginal bleeding which rapidly became profuse.
Corazon died at 9:15 a.m. The cause of death was
"hemorrhage, post-partum.
Issue:
Whether or not CMC is vicariously liable for the
negligence of Dr. Estrada.

Nogales vs. Capitol Medical Center, G.R. No. 142625,

December 19, 2006

Facts:
Pregnant with her fourth child, Corazon Nogales
("Corazon"), who was then 37 years old, was under the
exclusive prenatal care of Dr. Oscar Estrada ("Dr. Estrada")
beginning on her fourth month of pregnancy or as early as
December 1975. Around midnight of 25 May 1976, Corazon
started to experience mild labor pains prompting Corazon
and Rogelio Nogales ("Spouses Nogales") to see Dr. Estrada
at his home. After examining Corazon, Dr. Estrada advised

Ruling:
Private hospitals, hire, fire and exercise real control
over their attending and visiting "consultant" staff. The basis
for holding an employer solidarily responsible for the
negligence of its employee is found in Article 2180 of the
Civil Code which considers a person accountable not only for
his own acts but also for those of others based on the
former's responsibility under a relationship of patria
potestas.
In general, a hospital is not liable for the negligence of an
independent contractor-physician. There is, however, an
exception to this principle. The hospital may be liable if the
physician is the "ostensible" agent of the hospital. This
exception is also known as the "doctrine of apparent
authority.
For a hospital to be liable under the doctrine of apparent
authority, a plaintiff must show that: (1) the hospital, or its
agent, acted in a manner that would lead a reasonable

person to conclude that the individual who was alleged to be

negligent was an employee or agent of the hospital; (2)
where the acts of the agent create the appearance of
authority, the plaintiff must also prove that the hospital had
knowledge of and acquiesced in them; and (3) the plaintiff
acted in reliance upon the conduct of the hospital or its
agent, consistent with ordinary care and prudence. In the
instant case, CMC impliedly held out Dr. Estrada as a
member of its medical staff. Through CMC's acts, CMC
clothed Dr. Estrada with apparent authority thereby leading
the Spouses Nogales to believe that Dr. Estrada was an
employee or agent of CMC.

Coca-Cola Bottlers Phils. vs. Dr. Climaco, G.R. No.

146881,
February 15, 2007
Facts:
Dr. Climaco is a medical doctor who was hired by the
petitioner by virtue of retainer agreement. The agreement
states that there is no employer-employee relationship
between the parties. The retainer agreement was renewed
annually. The last one expired on Dec. 31, 1993. Despite of
the non-renewal of the agreement, respondent continued to
perform his functions as company doctor until he received a
letter in March 1995 concluding their retainer agreement.
Respondent filed a complaint before the NLRC seeking
recognition as a regular employee of the petitioner company
and prayed for the payment of all benefits of a regular
employee. In the decision of the Labor Arbiter, the company
lacked control over the respondents performance of his
duties. Respondent appealed where it rendered that no
employer-employee relationship existed between the
parties.
The CA ruled that an employer-employee relationship
existed.
Issue:
Whether or not there exists an employer-employee
relationship between the parties.
Ruling :
The Court, in determining the existence of an
employer-employee relationship, has invariably adhered to
the four-fold test: (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, or the so-called control test, considered to be the
most important element.
The Court agrees with the finding of the Labor Arbiter and
the NLRC that the circumstances of this case show that no
employer-employee relationship exists between the parties.
The Comprehensive Medical Plan, provided guidelines
merely to ensure that the end result was achieved, but did
not control the means and methods by which respondent
performed his assigned tasks. In addition, the Court finds
that the schedule of work and the requirement to be on call
for emergency cases do not amount to such control, but are
necessary incidents to the Retainership Agreement.

Calamba Medical Center vs. NLRC et al., G.R. No.

176484, Nov. 25, 2008

Facts:
Considering that there is no employer-employee relationship
between the parties, the termination of the Retainership
Agreement, which is in accordance with the provisions of the
Agreement, does not constitute illegal dismissal of
respondent.

Ronaldo Lanzanas and Merceditha Lanzanas are

doctors employed by Calamba Medical Center, Inc. They are
given a retainers fee by the hospital as well as shares from
fees obtained from patients.
One time, Ronaldo was overheard by Dr. Trinidad talking to
another doctor about how low the admission rate to the
hospital is. That conversation was reported to Dr. Desipeda
who was then the Medical Director of the hospital.
Eventually Ronaldo was suspended. Ronaldo filed a case for
Illegal Suspension in March 1998. In the same month, the
rank and file employees organized a strike against the
hospital for unfair labor practices. Desipeda eventually fired
Ronaldo for his alleged participation in the strike, which is
not allowed under the Labor Code for he is a managerial
employee. Desipeda also fired Merceditha on the ground
that she is the wife of Ronaldo who naturally sympathizes
with him.

The Labor Arbiter ruled that there was no Illegal Suspension

for there was no employer-employee relationship because
the hospital has no control over Ronaldo as he is a doctor
who even gets shares from the hospitals earnings.
The National Labor Relations Commission as well as the
Court of Appeals reversed the LA.

When is Control (One of the Four Tests of EmployerEmployee Relationship) 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 is compensated according to the
result of his efforts and not the amount thereof, the element
of control is absent.

Issue:
Whether or not there is an employer-employee
relationship?
Ruling:
Yes. Under the control test, an employment relationship
exists between a physician and a hospital if the hospital
controls both the means and the details of the process by
which the physician is to accomplish his task. There is
control in this case because of the fact that Desipeda
schedules the hours of work for Ronaldo and his wife.
The doctors are also registered by the hospital under the
SSS which is premised on an employer-employee
relationship.
There is Illegal Dismissal committed against Rolando for
there was no notice and hearing held. It was never shown
that Rolando joined the strike. But even if he did, he has the
right to do so for he is not a part of the managerial or
supervisory employees. As a doctor, their decisions are still
subject to revocation or revision by Desipeda.
There is Illegal Dismissal committed against Merceditha for
the ground therefor was not mentioned in Article 282 of the
Labor Code.

Escasinas vs. Shangri-la Mactan Island Resort et al.,

G.R. No. 178827, March 4, 2009

FACTS:
Registered nurses Jeromie D. Escasinas and Evan
Rigor Singco (petitioners) were engaged in 1999 and 1996,
respectively, by Dr. Jessica Joyce R. Pepito (respondent
doctor) to work in her clinic at respondent Shangri-las
Mactan Island Resort (Shangri-la) in Cebu of which she was a
retained physician.
In late 2002, petitioners filed with the National Labor
Relations Commission (NLRC) a complaint for regularization,
underpayment of wages, non-payment of holiday pay, night
shift differential and 13th month pay differential against

respondents, claiming that they are regular employees of

Shangri-la. Shangri-la claimed, however, that petitioners
were not its employees but of respondent doctor, that
Article 157 of the Labor Code, as amended, does not make it
mandatory for a covered establishment to employ health
personnel, that the services of nurses is not germane nor
indispensable to its operations, and that respondent doctor
is a legitimate individual contractor who has the power to
hire, fire and supervise the work of nurses under her.

petitioners could not be regarded as regular employees of

Shangri-la.

The Labor Arbiter (LA) declared petitioners to be regular

employees of Shangri-la, noting that the petitioners usually
perform work which is necessary and desirable to Shangrilas business, and thus ordered Shangri-la to grant them the
wages and benefits due them as regular employees from
the time their services were engaged.

HELD:

Upon appeal, the NLRC declared that no employer-employee

relationship existed between Shangri-la and petitioners. It
ruled that contrary to the finding of the LA, even if Art. 280
of the Labor Code states that if a worker performs work
usually necessary or desirable in the business of an
employer, he cannot be automatically deemed a regular
employee, and that the Memorandum of Agreement
between the respondent and the respondent doctor amply
shows that respondent doctor was in fact engaged by
Shangri-la on retainer basis, under which she could hire her
own nurses and other clinic personnel.
The Court of Appeals (CA) affirmed the NLRC decision,
concluding that all aspects of employment of petitioners
being under the supervision and control of respondent
doctor and since Shangri-la is not principally engaged in the
business of providing medical or healthcare services,

ISSUES:
1. Whether or not Article 157 of the Labor Code make it
mandatory for covered establishment to employ health
personnel; and
2. Whether or not there exists an employer-employee
relationship between Shangri-la and petitioners.
The Court holds that, contrary to petitioners postulation,
Art. 157 does not require the engagement of full-time
nurses as regular employees of a company employing not
less than 50 workers. Thus, the Article provides:
ART. 157. Emergency medical and dental services. It shall
be the duty of every employer to furnish his employees in
any locality with free medical and dental attendance and
facilities consisting of:
(a) The services of a full-time registered nurse when the
number of employees exceeds fifty (50) but not more than
two hundred (200) except when the employer does not
maintain hazardous workplaces, in which case the services
of a graduate first-aider shall be provided for the protection
of the workers, where no registered nurse is available. The
Secretary of Labor shall provide by appropriate regulations
the services that shall be required where the number of
employees does not exceed fifty (50) and shall determine by
appropriate order hazardous workplaces for purposes of this
Article;(b) The services of a full-time registered nurse, a
part-time physician and dentist, and an emergency clinic,
when the number of employees exceeds two hundred (200)
but not more than three hundred (300); and(c) The services

of a full-time physician, dentist and full-time registered

nurse as well as a dental clinic, and an infirmary or
emergency hospital with one bed capacity for every one
hundred (100) employees when the number of employees
exceeds three hundred (300).
In cases of hazardous workplaces, no employer shall engage
the services of a physician or dentist who cannot stay in the
premises of the establishment for at least two (2) hours, in
the case of those engaged on part-time basis, and not less
than eight (8) hours in the case of those employed on fulltime basis. Where the undertaking is nonhazardous in
nature, the physician and dentist may be engaged on
retained basis, subject to such regulations as the Secretary
of Labor may prescribe to insure immediate availability of
medical and dental treatment and attendance in case of
emergency.
Under the foregoing provision, Shangri-la, which employs
more than 200 workers, is mandated to furnish its
employees with the services of a full-time registered nurse,
a part-time physician and dentist, and an emergency clinic
which means that it should provide or make available such
medical and allied services to its employees, not necessarily
to hire or employ a service provider. As held in Philippine
Global Communications vs. De Vera:
x x x while it is true that the provision requires employers to
engage the services of medical practitioners in certain
establishments depending on the number of their
employees, nothing is there in the law which says that
medical practitioners so engaged be actually hired as
employees, adding that the law, as written, only requires the
employer to retain, not employ, a part-time physician who
needed to stay in the premises of the non-hazardous
workplace for two (2) hours.The term full-time in Art. 157

cannot be construed as referring to the type of employment

of the person engaged to provide the services, for Article
157 must not be read alongside Art. 280 in order to vest
employer-employee relationship on the employer and the
person so engaged. So De Vera teaches:x x For, we take it
that any agreement may provide that one party shall render
services for and in behalf of another, no matter how
necessary for the latters business, even without being hired
as an employee. This set-up is precisely true in the case of
an independent contractorship as well as in an agency
agreement. Indeed, Article 280 of the Labor Code, quoted by
the appellate court, is not the yardstick for determining the
existence of an employment relationship. As it is, the
provision merely distinguishes between two (2) kinds of
employees, i.e., regular and casual. x x x
The phrase services of a full-time registered nurse should
thus be taken to refer to the kind of services that the nurse
will render in the companys premises and to its employees,
not the manner of his engagement.
The existence of an independent and permissible contractor
relationship is generally established by considering the
following determinants: whether the contractor is carrying
on an independent business; the nature and extent of the
work; the skill required; the term and duration of the
relationship; the right to assign the performance of a
specified piece of work; the control and supervision of the
work to another; the employers power with respect to the
hiring, firing and payment of the contractors workers; the
control of the premises; the duty to supply the premises,
tools, appliances, materials and labor; and the mode,
manner and terms of payment.

On the other hand, existence of an employer- employee

relationship is established by the presence of the following
determinants: (1) the selection and engagement of the
workers; (2) power of dismissal; (3) the payment of wages
by whatever means; and (4) the power to control the
workers conduct, with the latter assuming primacy in the
overall consideration.
Against the above-listed determinants, the Court holds that
respondent doctor is a legitimate independent contractor.
That Shangri-la provides the clinic premises and medical
supplies for use of its employees and guests does not
necessarily prove that respondent doctor lacks substantial
capital and investment. Besides, the maintenance of a clinic
and provision of medical services to its employees is
required under Art. 157, which are not directly related to
Shangri-las principal business operation of hotels and
restaurants.
As to payment of wages, respondent doctor is the one who
underwrites the following: salaries, SSS contributions and
other benefits of the staff; group life, group personal
accident insurance and life/death insurance for the staff with
minimum benefit payable at 12 times the employees last
drawn salary, as well as value added taxes and withholding
taxes, sourced from her P60,000.00 monthly retainer fee
and 70% share of the service charges from Shangri-las
guests who avail of the clinic services. It is unlikely that
respondent doctor would report petitioners as workers, pay
their SSS premium as well as their wages if they were not
indeed her employees.
With respect to the supervision and control of the nurses
and clinic staff, it is not disputed that a document, Clinic
Policies and Employee Manual claimed to have been
prepared by respondent doctor exists, to which petitioners

gave their conformity and in which they acknowledged their

co-terminus employment status. It is thus presumed that
said document, and not the employee manual being
followed by Shangri-las regular workers, governs how they
perform their respective tasks and responsibilities.
In fine, as Shangri-la does not control how the work should
be performed by petitioners, it is not petitioners employer.

It is understood and agreed that the Agent is an

independent contractor and nothing contained herein shall
be construed or interpreted as creating an employeremployee relationship between the Company and the Agent.
a) The Agent shall canvass for applications for Life
Insurance, Annuities, Group policies and other products
offered by the Company, and collect, in exchange for
provisional receipts issued by the Agent, money due or to
become due to the Company in respect of applications or
policies obtained by or through the Agent or from
policyholders allotted by the Company to the Agent for
servicing, subject to subsequent confirmation of receipt of
payment by the Company as evidenced by an Official
Receipt issued by the Company directly to the policyholder.

Tongko vs. Manufacturers Life Insurance Co., G.R. No.

167622,
January 25, 2011
FACTS:
Taking from the November 2008 decision, the facts are as
follows:
Manufacturers Life Insurance, Co. is a domestic corporation
engaged in life insurance business. De Dios was its
President and Chief Executive Officer. Petitioner Tongko
started his relationship with Manulife in 1977 by virtue of a
Career Agent's Agreement.
Pertinent provisions of the agreement state that:

b) The Company may terminate this Agreement for any

breach or violation of any of the provisions hereof by the
Agent by giving written notice to the Agent within fifteen
(15) days from the time of the discovery of the breach. No
waiver, extinguishment, abandonment, withdrawal or
cancellation of the right to terminate this Agreement by the
Company shall be construed for any previous failure to
exercise its right under any provision of this Agreement.
c) Either of the parties hereto may likewise terminate his
Agreement at any time without cause, by giving to the other
party fifteen (15) days notice in writing.
Sometime in 2001, De Dios addressed a letter to Tongko,
then one of the Metro North Managers, regarding meetings
wherein De Dios found Tongko's views and comments to be
unaligned with the directions the company was taking. De
Dios also expressed his concern regarding the Metro North
Managers' interpretation of the company's goals. He
maintains that Tongko's allegations are unfounded. Some
allegations state that some Managers are unhappy with

their earnings, that they're earning less than what they

deserve and that these are the reasons why Tonko's division
is unable to meet agency development objectives. However,
not a single Manager came forth to confirm these
allegations. Finally, De Dios related his worries about
Tongko's inability to push for company development and
growth.

reconsideration, which is now the subject of the instant

case.

De Dios subsequently sent Tongko a letter of termination in

accordance with Tongko's Agents Contract. Tongko filed a
complaint with the NLRC against Manulife for illegal
dismissal, alleging that he had an employer-employee
relationship with De Dios instead of a revocable agency by
pointing out that the latter exercised control over him
through directives regarding how to manage his area of
responsibility and setting objectives for him relating to the
business. Tongko also claimed that his dismissal was without
basis and he was not afforded due process. The NLRC ruled
that there was an employer-employee relationship as
evidenced by De Dios's letter which contained the manner
and means by which Tongko should do his work. The NLRC
ruled in favor of Tongko, affirming the existence of the
employer-employee relationship.

HELD:

The Court of Appeals, however, set aside the NLRC's ruling.

It applied the four-fold test for determining control and
found the elements in this case to be lacking, basing its
decision on the same facts used by the NLRC. It found that
Manulife did not exert control over Tongko, there was no
employer-employee relationship and thus the NLRC did not
have jurisdiction over the case.
The Supreme Court reversed the ruling of the Court of
Appeals and ruled in favor of Tongko. However, the Supreme
Court issued another Resolution dated June 29, 2010,
reversing its decision. Tongko filed a motion for

ISSUE:
Whether the Supreme Court erred in issuing the June 29,
2010 resolution, reversing its earlier decision that an
employer-employee relationship existed.
The petition is unmeritorious.
LABOR LAW Agency; Employer-employee relationships
The Supreme Court finds no reason to reverse the June 29,
2010 decision. Control over the performance of the task of
one providing service both with respect to the means and
manner, and the results of the service is the primary
element in determining whether an employment relationship
exists. The Supreme Court ruled petitioners Motion against
his favor since he failed to show that the control Manulife
exercised over him was the control required to exist in an
employer-employee relationship; Manulifes control fell short
of this norm and carried only the characteristic of the
relationship between an insurance company and its agents,
as defined by the Insurance Code and by the law of agency
under the Civil Code.
In the Supreme Courts June 29, 2010 Resolution, they noted
that there are built-in elements of control specific to an
insurance agency, which do not amount to the elements of
control that characterize an employment relationship
governed by the Labor Code.The Insurance Code provides
definite parameters in the way an agent negotiates for the
sale of the companys insurance products, his collection
activities and his delivery of the insurance contract or policy.
They do not reach the level of control into the means and
manner of doing an assigned task that invariably

characterizes an employment relationship as defined by

labor law.
To reiterate, guidelines indicative of labor law "control" do
not merely relate to the mutually desirable result intended
by the contractual relationship; they must have the nature
of dictating the means and methods to be employed in
attaining the result. Tested by this norm, Manulifes
instructions regarding the objectives and sales targets, in
connection with the training and engagement of other
agents, are among the directives that the principal may
impose on the agent to achieve the assigned tasks.They are
targeted results that Manulife wishes to attain through its
agents. Manulifes codes of conduct, likewise, do not
necessarily intrude into the insurance agents means and
manner of conducting their sales. Codes of conduct are
norms or standards of behavior rather than employer
directives into how specific tasks are to be done.

Semblante vs. Court of Appeals, G.R. No. 192426,

August 15, 2011
FACTS:
Petitioners Marticio Semblante (Semblante) and Dubrick
Pilar (Pilar) assert that they were hired by respondents-

spouses Vicente and Maria Luisa Loot, the owners of Gallera

de Mandaue(the cockpit), as the official masiadorand
sentenciador, respectively, of the cockpit.
As themasiador, Semblante calls and takes the bets from
the gamecock owners and other bettors and orders the start
of the cockfight. He also distributes the winnings after
deducting thearriba, or the commission for the cockpit.
Meanwhile, as the sentenciador, Pilar oversees the proper
gaffing of fighting cocks, determines the fighting cocks
physical condition and capabilities to continue the cockfight,
and eventually declares the result of the cockfight.
On November 14, 2003, however, petitioners were denied
entry into the cockpit upon the instructions of respondents,
and were informed of the termination of their services
effective that date. This prompted petitioners to file a
complaint for illegal dismissal against respondents.
In answer, respondents denied that petitioners were their
employees and alleged that they were associates of
respondents
independent
contractor,
Tomas
Vega.
Respondents claimed that petitioners have no regular
working time or day and they are free to decide for
themselves whether to report for work or not on any
cockfighting day. In times when there are few cockfights
inGallera de Mandaue, petitioners go to other cockpits in the
vicinity. Lastly, petitioners, so respondents assert, were only
issued identification cards to indicate that they were free
from the normal entrance fee and to differentiate them from
the general public.
Labor Arbiter Julie C. Rendoque found petitioners to be
regular employees of respondents as they performed work
that was necessary and indispensable to the usual trade or
business of respondents for a number of years. The Labor
Arbiter also ruled that petitioners were illegally dismissed,

and so ordered respondents to pay petitioners their

backwages and separation pay.
Respondents counsel received the Labor Arbiters Decision
on September 14, 2004. And within the 10-day appeal
period, he filed the respondents appeal with the NLRC on
September 24, 2004, but without posting a cash or surety
bond equivalent to the monetary award granted by the
Labor Arbiter. It was only on October 11, 2004 that
respondents filed an appeal bond dated October 6, 2004.
Hence, in a Resolution dated August 25, 2005, the NLRC
denied the appeal for its non-perfection.
Subsequently, however, the NLRC, acting on respondents
Motion for Reconsideration, reversed its Resolution on the
postulate that their appeal was meritorious and the filing of
an appeal bond, albeit belated, is a substantial compliance
with the rules.The NLRC held in its Resolution of October 18,
2006 that there was no employer-employee relationship
between petitioners and respondents, respondents having
no part in the selection and engagement of petitioners, and
that no separate individual contract with respondents was
ever executed by petitioners.
The appellate court found for respondents, noting that
referees and bet-takers in a cockfight need to have the kind
of expertise that is characteristic of the game to interpret
messages conveyed by mere gestures. Hence, petitioners
are akin to independent contractors who possess unique
skills, expertise, and talent to distinguish them from
ordinary employees.
The CA refused to reconsider its Decision. Hence, petitioners
came to this Court, arguing in the main that the CA
committed a reversible error in entertaining an appeal,
which was not perfected in the first place.

ISSUE:
Whether the CA erred in entertaining an appeal which was
not perfected.
HELD:
Indeed, the posting of a bond is indispensable to the
perfection of an appeal in cases involving monetary awards
from the Decision of the Labor Arbiter. Article 223 of the
Labor Code provides:
Article 223. Appeal. Decisions, awards, or orders of the
Labor Arbiter are final and executory unless appealed to the
Commission by any or both partieswithin ten (10) calendar
days from receipt of such decisions, awards, or orders.Such
appeal may be entertained only on any of the following
grounds:
xxxx
In case of a judgment involving a monetary award,an appeal
by the employer may be perfected only upon the posting of
a cash or surety bondissued by a reputable bonding
company duly accredited by the Commission in the amount
equivalent to the monetary award in the judgment appealed
from.
Time and again, however, this Court, considering the
substantial merits of the case, has relaxed this rule on, and
excused the late posting of, the appeal bond when there are
strong and compelling reasons for the liberality, such as the
prevention of miscarriage of justice extant in the caseor the
special circumstances in the case combined with its legal
merits or the amount and the issue involved.After all,
technical rules cannot prevent courts from exercising their

duties to determine and settle, equitably and completely,

the rights and obligations of the parties. This is one case
where the exception to the general rule lies.

Strict implementation of the rules on appeals must give way

to the factual and legal reality that is evident from the
records of this case. After all, the primary objective of our
laws is to dispense justice and equity, not the contrary.

While respondents had failed to post their bond within the

10-day period provided above, it is evident, on the other
hand, that petitioners are NOT employees of respondents,
since their relationship fails to pass muster the four-fold test
of employment We have repeatedly mentioned in countless
decisions: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees
conduct, which is the most important element.
As found by both the NLRC and the CA, respondents had no
part in petitioners selection and management; petitioners
compensation was paid out of the arriba (which is a
percentage deducted from the total bets), not by
petitioners;and petitioners performed their functions as
masiador and sentenciador free from the direction and
control of respondents. In the conduct of their work,
petitioners relied mainly on their expertise that is
characteristic of the cockfight gambling, and were never
given by respondents any tool needed for the performance
of their work.
Respondents, not being petitioners employers, could never
have dismissed, legally or illegally, petitioners, since
respondents were without power or prerogative to do so in
the first place. The rule on the posting of an appeal bond
cannot defeat the substantive rights of respondents to be
free from an unwarranted burden of answering for an illegal
dismissal for which they were never responsible.

Bernarte vs. PBA, G.R. No. 192084, September 14,

2011
FACTS:
Complainants (Jose Mel Bernarte and Renato Guevarra) aver
that they were invited to join the PBA as referees. During the
leadership of Commissioner Emilio Bernardino, they were
made to sign contracts on a year-to-year basis. During the
term of Commissioner Eala, however, changes were made
on the terms of their employment.
Complainants were not illegally dismissed because they
were not employees of the PBA. Their respective contracts
of retainer were simply not renewed. PBA had the
prerogative of whether or not to renew their contracts,
which they knew were fixed.\
The Labor Arbiter declared petitioner an employee whose
dismissal by respondents was illegal.Tthe NLRC affirmed the
Labor Arbiter's judgment. The Court of Appeals, which

overturned the decisions of the NLRC and Labor Arbiter. The

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

(d) the employer's power to control the employee on the

means and methods by which the work is accomplished.
The so-called"control test"is the most important indicator of
the presence or absence of an employer-employee
relationship.

ISSUE:
Whether petitioner is an employee of respondents, which in
turn determines whether petitioner was illegally dismissed.
HELD:
The petitioners are not employees of respondents.
The existence of an employer-employee relationship is
ultimately a question of fact. As a general rule, factual
issues are beyond the province of this Court. However, this
rule admits of exceptions, one of which is where there are
conflicting findings of fact between the Court of Appeals, on
one hand, and the NLRC and Labor Arbiter, on the other,
such as in the present case.
To determine the existence of an employer-employee
relationship, case law has consistently applied the four-fold
test, to wit:
(a) the selection and engagement of the employee;

The fact that PBA repeatedly hired petitioner does not by

itself prove that petitioner is an employee of the former. For
a hired party to be considered an employee, the hiring party
must have control over the means and methods by which
the hired party is to perform his work, which is absent in this
case. The continuous rehiring by PBA of petitioner simply
signifies the renewal of the contract between PBA and
petitioner, and highlights the satisfactory services rendered
by petitioner warranting such contract renewal. Conversely,
if PBA decides to discontinue petitioner's services at the end
of the term fixed in the contract, whether for unsatisfactory
services, or violation of the terms and conditions of the
contract, or for whatever other reason, the same merely
results in the non-renewal of the contract, as in the present
case. The non-renewal of the contract between the parties
does not constitute illegal dismissal of petitioner by
respondents.

Jao vs. BCC Products Sales Inc. G.R. No. 163700, April
18, 2012

(b) the payment of wages;

FACTS:
(c) the power of dismissal; and

Petitioner maintained that respondent BCC Product Sales

Inc. (BCC) and its President, respondent Terrance Ty (Ty),
employed him as comptroller starting from September 1995,

to handle the financial aspect of BCCs business. On October

19, 1995, the security guards of BCC, acting upon the
instruction of Ty, barred him from entering the premises of
BCC where he then worked.
Petitioner attempted to report to work on different occasions
but the same were frustrated because he continued to be
barred from entering the premises of BCC. Hence, he filed a
complaint for illegal dismissal, reinstatement with full
backwages, non-payment of wages, damages and attorneys
fees.
Respondents countered that petitioner was not their
employee but the employee of Sobien Food Corporation
(SFC), the major creditor and supplier of BCC; and that SFC
had posted him as its comptroller in BCC to oversee BCCs
finances and business operations and to look after SFCs
interests or investments in BCC.
The LA dismissed the complaint for lack of employer
employee relationship. NLRC reversed the LA decision. On
appeal, the CA held that there was no employer- employee
relationship existed between petitioner BCC and the private
respondent. Hence, this petition.
ISSUE:

control the employee on the means and methods by which

the work is accomplished. The last element, the so-called
control test, is the most important element.
Hereunder are some of the circumstances and incidents
occurring while petitioner was supposedly employed by BCC
that debunked his claim against respondents:
It can be deduced from the March 1996 affidavit of
petitioner that respondents challenged his authority to
deliver some 158 checks to SFC. Considering that he
contested respondents challenge by pointing to the existing
arrangements between BCC and SFC, it should be clear that
respondents did not exercise the power of control over him,
because he thereby acted for the benefit and in the interest
of SFC more than of BCC.
In addition, petitioner presented no document setting forth
the terms of his employment by BCC. The failure to present
such agreement on terms of employment may be
understandable and expected if he was a common or
ordinary laborer who would not jeopardize his employment
by demanding such document from the employer, but may
not square well with his actual status as a highly educated
professional.

Whether or not there is an employer- employee relationship

HELD: No. CA Decision Affirmed.
Labor Law
In determining the presence or absence of an employeremployee relationship, the Court has consistently looked for
the following incidents, to wit: (a) the selection and
engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employers power to

Petitioners admission that he did not receive his salary for

the three months of his employment by BCC, as his
complaint for illegal dismissal and non-payment of wages
and the criminal case for estafa he later filed against the
respondents for non-payment of wages indicated, further
raised grave doubts about his assertion of employment by
BCC. If the assertion was true, we are puzzled how he could
have remained in BCCs employ in that period of time
despite not being paid the first salary ofP20,000.00/month.

Moreover, his name did not appear in the payroll of BCC

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

9, 1999, respondent, whose stage name was Joey R. Roa,

filed a complaint for alleged unfair labor practice,
constructive
illegal
dismissal,
and
the
underpayment/nonpayment of his premium pay for holidays,
separation pay, service incentive leave pay, and 13111
month pay.
Respondent averred that he had worked as a pianist at the
Legend Hotels Tanglaw Restaurant from September 1992
with an initial rate of P400.00/night that was given to him
after each nights performance; that his rate had increased
to P750.00/night; and that during his employment, he could
not choose the time of performance, which had been fixed
from 7:00 pm to 10:00 pm for three to six times/week. He
added that the Legend Hotels restaurant manager had
required him to conform with the venues motif; that he had
been subjected to the rules on employees representation
checks and chits, a privilege granted to other employees;
that on July 9, 1999, the management had notified him that
as a cost-cutting measure his services as a pianist would no
longer be required effective July 30, 1999; that he disputed
the excuse, insisting that Legend Hotel had been lucratively
operating as of the filing of his complaint; and that the loss
of his employment made him bring his complaint.2
Issue: Whether
relationship

Legend Hotel vs Realuyo

GR 153511, July 18, 2012
Facts:
This labor case for illegal dismissal involves a pianist
employed to perform in the restaurant of a hotel. On August

there

exists

an

employer-employee

Ruling: Employer-employee relationship existed between

the parties. The issue of whether or not an employeremployee relationship existed between petitioner and
respondent is essentially a question of fact. The factors that
determine the issue include who has the power to select the
employee, who pays the employees wages, who has the

power to dismiss the employee, and who exercises control of

the methods and results by which the work of the employee
is accomplished.10 Although no particular form of evidence is
required to prove the existence of the relationship, and any
competent and relevant evidence to prove the relationship
may be admitted, a finding that the relationship exists must
nonetheless rest on substantial evidence, which is that
amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion.
A review of the circumstances reveals that respondent was,
indeed, petitioners employee. He was undeniably employed
as a pianist in petitioners Madison Coffee Shop/Tanglaw
Restaurant from September 1992 until his services were
terminated on July 9, 1999.
First of all, petitioner actually wielded the power of selection
at the time it entered into the service contract dated
September 1, 1992 with respondent. This is true,
notwithstanding petitioners insistence that respondent had
only offered his services to provide live music at petitioners
Tanglaw Restaurant, and despite petitioners position that
what had really transpired was a negotiation of his rate and
time of availability. The power of selection was firmly
evidenced by, among others, the express written
recommendation dated January 12, 1998 by Christine
Velazco, petitioners restaurant manager, for the increase of
his remuneration.
Secondly, petitioner argues that whatever remuneration was
given to respondent were only his talent fees that were not
included in the definition of wage under the Labor Code.
Respondent was paid P400.00 per three hours of
performance from 7:00 pm to 10:00 pm, three to six nights

a week. Such rate of remuneration was later increased to

P750.00
upon
restaurant
manager
Velazcos
recommendation. There is no denying that the remuneration
denominated as talent fees was fixed on the basis of his
talent and skill and the quality of the music he played during
the hours of performance each night, taking into account
the prevailing rate for similar talents in the entertainment
industry
Respondents remuneration, albeit denominated as talent
fees, was still considered as included in the term wage in
the sense and context of the Labor Code, regardless of how
petitioner chose to designate the remuneration.
Thirdly, the power of the employer to control the work of the
employee is considered the most significant determinant of
the existence of an employer-employee relationship. This is
the so-called control test, and is premised on whether the
person for whom the services are performed reserves the
right to control both the end achieved and the manner and
means used to achieve that end.
A review of the records shows, however, shows that
respondent performed his work as a Pianist under
petitioners supervision and control. Specifically, petitioners
control of both the end achieved and the manner and means
used to achieve that end was demonstrated by the
following, to wit:
a) He could not choose the time of his performance,
which petitioners had fixed from 7:00 pm to 10:00
pm, three to six times a week;
b) He could not choose the place of his performance;
c) The restaurants manager required him at certain
times to perform only Tagalog songs or music, or to

wear barong Tagalog to conform to the Filipiniana

motif; and
d) He was subjected to the rules on employees
representation check and chits, a privilege granted to
other employees.

that Dakila was not their regular employee as he was not

required to observe regular working hours and was free to
adopt means and methods to accomplish his task except as
to the results of the work required of him.Hence, no
employer- employee relationship existed between them.
Both the Labor Arbiter and the NLRC ruled that Dakila was
illegally dismissed. The Court of Appeals affirmed the
findings of the Labor Arbiter and the NLRC.
ISSUE:
Whether or not Dakila was illegally dismissed?

New Philippine Skylanders Inc. vs. Dakila, G.R. No.

199547,
September 24, 2012

HELD:

FACTS:

LABOR LAW: illegal dismissal

Respondent Francisco Dakila (Dakila) was employed by The

New Philippine Skylanders, Inc. (Skylanders) as early as
1987 and terminated for cause in April 1997 when the
corporation was sold. In May 1997, he was rehired as
consultant by Skylanders under a Contract for Consultancy
Services.

The issue of illegal dismissal is premised on the existence of

an employer-employee relationship between the parties
herein.Records reveal that both the LA and the NLRC, as
affirmed by the CA, have found substantial evidence to show
that respondent Dakila was a regular employee who was
dismissed without cause.

Thereafter, in a letter dated April 19, 2007, Dakila informed

Skylanders of his compulsory retirement effective May 2,
2007 and sought for the payment of his retirement benefits.
His request, however, was not acted upon. Instead, he was
terminated from service effective May 1, 2007.

Following Article 279 of the Labor Code, an employee who is

unjustly dismissed from work is entitled to reinstatement
without loss of seniority rights and other privileges and to
his full backwages computed from the time he was illegally
dismissed. However, considering that respondent Dakila was
terminated on May 1, 2007, or one (1) day prior to his
compulsory retirement on May 2, 2007, his reinstatement is
no longer feasible. His backwages should be computed only
for days prior to his compulsory retirement which in this
case is only a day.

Thus, Dakila filed a complaint for constructive illegal

dismissal. He averred that the consultancy contract was a
scheme to deprive him of the benefits of regularization,
claiming to have assumed tasks necessary and desirable in
the trade or business of Skylanders and under their direct
control and supervision. On the contrary, Skylanders argued

The petition is partly granted.

PARTLY GRANTED.

to the revolving funds Bandag provided them. Bandag

terminated their SFA.

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

GR No. 171482, March 12, 2014
This case concerns the effect on the status of employment
of employees who entered into a Service Franchise
Agreement with their employer.
Facts:
On various dates between 1991 and 1998, petitioners
Ashmor M. Tesoro, Pedro Ang, and Gregorio Sharp used to
work as salesmen for respondents Metro Manila Retreaders,
Inc., Northern Luzon Retreaders, Inc., or Power Tire and
Rubber Corporation. These are sister companies collectively
called Bandag. Bandag offered repair and retread services
for used tires. In 1998, however, Bandag developed a
franchising scheme that would enable others to operate tire
and retreading businesses using its trade name and service
system. Petitioners quit their jobs as salesmen and entered
into separate Service Franchise Agreements (SFAs) with
Bandag for the operation of their respective franchises.
Under this SFA, Bandag would provide funding with the
petitioners subject to regular liquidation of revolving funds.
The expenses of these funds will be deducted from their sale
in order to determine their income. After some time,
petitioners began to default on their obligations to submit
periodic liquidations of their operational expenses in relation

Aggrieved, petitioners filed a complaint for constructive

dismissal, nonpayment of wages, incentive pay, 13th
month pay and damages against Bandag with the National
Labor Relations Commission (NLRC). Petitioners contend that
despite the SFA, they remained employees of Bandag. For its
part, Bandag pointed out that petitioners freely resigned
from their employment and decided to avail themselves of
the opportunity to be independent entrepreneurs under the
franchise scheme that Bandag had. Thus, no employer
employee relationship existed between petitioners and
Bandag.
Issue:
Whether or not petitioners remained to be Bandags
salesmen under the franchise scheme it entered into with
them.
Ruling:
No, petitioners were no longer employees of Bandag the
moment they entered into the SFA. Franchising is a business
method of expansion that allows an individual or group of
individuals to market a product or a service and to use of
the patent, trademark, trade name and the systems
prescribed by the owner.
The tests for determining employeremployee relationship
are: (a) the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d)
the employers power to control the employee with respect
to the means and methods by which the work is to be
accomplished. The last is called the control test, the most
important element.

When petitioners agreed to operate Bandags franchise

branches in different parts of the country, they knew that
this substantially changed their former relationships. They
were to cease working as Bandags salesmen, the positions
they occupied before they ventured into running separate
Bandag branches. They were to cease receiving salaries or
commissions. Their incomes were to depend on the profits
they made. Yet, petitioners did not then complain of
constructive dismissal. They took their chances, ran their
branches, Gregorio Sharp in La Union for several months
and Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan
for over a year. Clearly, their belated claim of constructive
dismissal is quite hollow.
It is pointed out that Bandag continued, like an employer, to
exercise control over petitioners work. It points out that
Bandag: (a) retained the right to adjust the price rates of
products and services; (b) imposed minimum processed tire
requirement (MPR); (c) reviewed and regulated credit
applications; and (d) retained the power to suspend
petitioners services for failure to meet service standards.
But uniformity in prices, quality of services, and good
business practices are the essence of all franchises. A
franchisee will damage the franchisors business if he sells
at different prices, renders different or inferior services, or
engages in bad business practices. These business
constraints are needed to maintain collective responsibility
for faultless and reliable service to the same class of
customers for the same prices.
This is not the control contemplated in employer
employee relationships. Control in such relationships
addresses the details of day to day work like assigning the
particular task that has to be done, monitoring the way
tasks are done and their results, and determining the time

during which the employee must report for work or

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

Royale Homes Marketing Corp. vs. Alcantara

GR No. 195190, July 28, 2014
FACTS:
Royale Homes, a corporation engaged in marketing real
estates, appointed Alcantara as its Marketing Director for a
fixed period of one year. His work consisted mainly of
marketing Royale Homes' real estate inventories on an
exclusive basis. Royale Homes reappointed him for several
consecutive years
On December 17, 2003, Alcantara filed a Complaint for
Illegal Dismissal against Royale Homes alleging that he was
dismissed from work without any valid or just cause and in
gross disregard of the proper procedure for dismissing
employees. He prayed t to be reinstated to his former

position without loss of seniority rights and other privileges,

as well as to be paid backwages, moral and exemplary
damages, and attorney's fees

relationship cannot be simply ignored, particularly in this

case where the parties' written contract unequivocally
states their intention at the time they entered into it.

Royale Homes denied that Alcantara is its employee

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

In this case, the contract duly signed and not disputed by

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

Labor Arbiter rendered a Decision holding that Alcantara is

an employee of Royale Homes

Since "the terms of the contract are clear and leave no

doubt upon the intention of the contracting parties, the
literal meaning of its stipulations should control." No
construction is even needed as they already expressly state
their intention.

NLRC rendered its Decision ruling that Alcantara is not an

employee but a mere independent contractor of Royale
Homes. It based its ruling mainly on the contract
CA promulgated its Decision reversing the NLRC's Decision
pointing out that Royale Homes exercised some degree of
control over Alcantara since his jobis subject to company
rules, regulations, and periodic evaluations.
ISSUE:
whether Alcantara was an independent contractor or an
employee of Royale Homes
RULING:
Alcantara is not an employee of Royal Home but a mere
independent contractor
The juridical relationship of the parties based on their
written contract
The primary evidence of the nature of the parties'
relationship in this case is the written contract that they
signed. While the existence of employer-employee
relationship is a matter of law, the characterization made by
the parties in their contract as to the nature of their juridical

The juridical relationship of the parties based on Control Test

In determining the existence of an employer-employee
relationship, this Court has generally relied on the four-fold
test, to wit: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the employer's power to control the
employee with respect to the means and methods by which
the work is to be accomplished. Among the four, the most
determinative factor in ascertaining the existence of
employer- employee relationship is the "right of control
test".
In the case, the CA ratiocinatedthat since the performance
of his tasks is subject to company rules, regulations, code of
ethics, and periodic evaluation, the element of control is
present.
The court disagrees. Not every form of control is indicative
of employer-employee relationship.A person who performs
work for another and is subjected to its rules, regulations,

and code of ethics does not necessarily become an

employee. As long as the level of control does not interfere
with the means and methods of accomplishing the assigned
tasks, the rules imposed by the hiring party on the hired
party do not amount to the labor law concept of control that
is indicative of employer-employee relationship
In this case, the rules, regulations, code of ethics, and
periodic evaluation alluded to by Alcantara do not involve
control over the means and methods by which he was to
perform his job. In Tongko Case, this Court held that
guidelines or rules and regulations that do not pertain to the
means or methods to be employed in attaining the result
are not indicative of control as understood in labor law
Neither does the repeated hiring of Alcantara prove the
existence
of
employer-employee
relationship.
The
continuous rehiring of Alcantara simply signifies the renewal
of his contract with Royale Homes, and highlights his
satisfactory services warranting the renewal of such
contract
Payment of Wages
The element of payment of wages is also absent in this
case. Alcantara's remunerations consist only of commission
override of 0.5%, budget allocation, sales incentive and
other forms of company support. There is no proof that he
received fixed monthly salary. No payslip or payroll was ever
presented and there is no proof that Royale Homes
deducted from his supposed salary withholding tax or that it
registered him with the Social Security System, Philippine
Health Insurance Corporation, or Pag-Ibig Fund

Fuji Television Network, Inc., vs. Arlene S. Espiritu

GR No. 204944-45, December 3, 2014
FACTS:
In 2005, Arlene was engaged by Fuji Television Network, Inc.
(Fuji) as a news correspondent/producer. Her employment
contract initially provided for a term of one (1) year but was
successively renewed on a yearly basis with salary
adjustment upon every renewal. In 2009, Arlene was
diagnosed with lung cancer. She informed Fuji about her
condition. In turn, the Chief of News Agency of Fuji, Yoshiki
Aoki, informed Arlene that the company will have a problem
renewing her contract since it would be difficult for her to
perform her job. Then Arlene and Fuji signed a non-renewal
contract on May 5, 2009 where it was stipulated that her
contract would no longer be renewed. The day after Arlene
signed the non-renewal contract, on May 6, 2009, she filed a
complaint for illegal dismissal. She alleged that she was
forced to sign the non-renewal contract when Fuji came to
know of her illness and that Fuji withheld her salaries and

other benefits for March and April 2009 when she refused to
sign. She further alleged that claimed that she was left with
no other recourse but to sign the non-renewal contract, and
it was only upon signing that she was given her salaries and
bonuses, in addition to separation pay equivalent to four (4)
years.
Labor Arbiter Borbolla dismissed Arlene's complaint because
applying the four-fold test Arlene was not Fuji's employee
but an independent contractor.
National Labor Relations Commissionreversed the Labor
Arbiter's decision and held that Arlene was a regular
employee with respect to the activities for which she was
employed since she continuously rendered services that
were deemed necessary and desirable to Fuji's business
Court of Appeals: affirmed the National Labor Relations
Commission with the modification that Fuji immediately
reinstate Arlene to her position as News Producer without
loss of seniority rights, and pay her backwages, 13th-month
pay, mid-year and year-end bonuses, sick leave and
vacation leave with pay until reinstated, moral damages,
exemplary damages, attorney's fees, and legal interest of
12% per annum of the total monetary awards
CONTENTION OF FUJI: that Arlene was hired as an
independent contractor; that Fuji had no control over her
work; that there was no illegal dismissal because she freely
agreed not to renew her fixed-term contract as evidenced by
her e-mail correspondences with Yoshiki Aoki
ISSUE:
W/N Arlene was a regular employee, not an independent
contractor
RULING:

The Court has often used the four-fold test to determine the
existence of an employer-employee relationship. Under the
four-fold test, the "control test" is the most important. In
proving employer-employee relationship through evidence,
the Court ruled that:
There is no hard and fast rule designed to establish the
aforesaid elements. Any competent and relevant evidenceto
prove the relationship may be admitted. Identification cards,
cash vouchers, social security registration, appointment
letters or employment contracts, payrolls, organization
charts, and personnel lists, serve as evidence of employee
status.
Arlene claims to be a regular employee. However Fuji insists
that she was an independent employee. The burden of
proving that she was an independent contractor lies with
Fuji. In labor cases, the quantum of proof required is
substantial evidence.
Under Article 280, the provision classifies employees into
regular, project, seasonal, and casual. It further classifies
regular employees into two kinds:
1.
Those "engaged to perform activities which are
usually necessary or desirable in the usual business or trade
of the employer" (regular employees)
2.
Casual employees who have "rendered at least one
year of service, whether such service is continuous or
broken."
The Court defines independent contractor as:
. . . one who carries on a distinct and independent business
and undertakes to perform the job, work, or service on its
own account and under one's own responsibility according
to one's own manner and method, free from the control and

direction of the principal in all matters connected with the

performance of the work except as to the results thereof.
Moreover, no employer-employee relationship exists
between independent contractors and their principals who
engage the contractor's services, but there is an employeremployee relationship between the contractor and workers
hired to accomplish the work for the principal. Thus, their
contracts are governed by the Civil Code provisions on
contracts and other applicable laws.
In the facts of the case and using the four-fold test, Arlene
was hired by Fuji as a news producer, but there was no
showing that she was hired because of unique skills that
would distinguish her from ordinary employees. Neither was
there any showing that she had a celebrity status. Her
monthly salary amounting to US$1,900.00 appears to be a
substantial sum. Fuji had the power to dismiss Arlene, as
provided for in her professional employment contract. Even
the mode of transportation in carrying out her functions was
controlled by Fuji. Therefore, Arlene is a regular employee
and not an independent contractor.
There is also a test for determining regular employment
where there is a reasonable connection between the
employee's activities and the usual business of the
employer. Article 280 provides that the nature of work must
be "necessary or desirable in the usual business or trade of
the employer" the test for determining regular
employment. However, there may also be a situation where
an employee's work is necessary but is not always desirable
in the usual course of business of the employer. In this
situation, there is no regular employment.
Fuji is engaged in the business of broadcasting, including
news programming. It is based in Japan and has overseas
offices to cover international news. Based on the record,

Fuji's Manila Bureau Office is a small unit and has a few

employees. Arlene had to do all activities related to news
gathering.
Arlene's tasks included "monitoring and getting news
stories, reporting and interviewing subjects in front of a
video camera, timely submission of news and current events
reports pertaining to the Philippines and going to Fuji's
regional office in Thailand." She also had to report for work
in Fuji's office in Manila from Mondays to Fridays, eight (8)
hours per day. She had no equipment and had to use the
facilities of Fuji to accomplish her tasks. Therefore, the
successive renewals of Arlene's contract indicated the
necessity and desirability of her work in the usual course of
Fuji's business. Arlene had become a regular employee with
the right to security of tenure.
Also, Arlene's contract indicating a fixed term did not
automatically mean that she could never be a regular
employee. An employee can be a regular employee with a
fixed-term contract. The law does not preclude the
possibility that a regular employee may opt to have a fixedterm contract for valid reasons. In the case of Brent: for as
long as it was the employee who requested, or bargained,
that the contract have a "definite date of termination," or
that the fixed-term contract be freely entered into by the
employer and the employee, then the validity of the fixedterm contract will be upheld.
WHEREFORE, having established that Arlene is a regular
employee and not an independent contractor, the petition is
DENIED. The decision of the Court of Appeals is AFFIRMED
with the modification that backwages shall be computed
from June 2009

Program (CRP) from 1999 to 2000, and retrenched fortyseven (47) employees of its Tanauan Plant on July 31,
1999.
On September 24, 1999, twenty-seven (27) of said
employees,5 led by Anecito Molon (Molon, et al.), filed
complaints for illegal dismissal before the NLRC which
were docketed as NLRC RAB Cases Nos. VIII-9-0432-99 to
9-0458-99, entitled Molon, et al. v. Pepsi-Cola Products,
Philippines, Inc.

Cabaobas et al., vs. Pepsi Cola GR No.176908,

March 25, 2015
Facts:
Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI)
is a domestic corporation engaged in the manufacturing,
bottling and distribution of soft drink products, which
operates plants all over the country, one of which is the
Tanauan Plant in Tanauan, Leyte.
In 1999, PCPPIs Tanauan Plant allegedly incurred
business losses in the total amount of Twenty-Nine Million
One Hundred Sixty-Seven Thousand and Three Hundred
Ninety (P29,167,390.00) Pesos. To avert further losses,
PCPPI implemented a company-wide retrenchment
program denominated as Corporate-wide Rightsizing

On January 15, 2000, petitioners, who are permanent and

regular employees of the Tanauan Plant, received their
respective letters, informing them of the cessation of
their employment on February 15, 2000, pursuant to
PCPPI's CRP. Petitioners then filed their respective
complaints for illegal dismissal before the National Labor
Relations Commission Regional Arbitration Branch No. VIII
in Tacloban City. Said complaints were docketed as NLRC
RAB VIII-03-0246-00 to 03-0259-00, entitled Kempis, et
al. v. Pepsi-Cola Products, Philippines, Inc.
In their Consolidated Position Paper,6 petitioners alleged
that PCPPI was not facing serious financial losses because
after their termination, it regularized four (4) employees
and hired replacements for the forty-seven (47)
previously dismissed employees. They also alleged that
PCPPI's CRP was just designed to prevent their union,
Leyte Pepsi-Cola Employees Union-Associated Labor
Union (LEPCEU-ALU), from becoming the certified
bargaining agent of PCPPI's rank-and-file employees.
In its Position Paper,7 PCPPI countered that petitioners
were dismissed pursuant to its CRP to save the company
from total bankruptcy and collapse; thus, it sent notices
of termination to them and to the Department of Labor
and Employment. In support of its argument that its CRP

is a valid exercise of management prerogative, PCPPI

submitted audited financial statements showing that it
suffered financial reverses in 1998 in the total amount of
SEVEN HUNDRED MILLION (P700,000,000.00) PESOS,
TWENTY- SEVEN MILLION (P27,000,000.00) PESOS of
which was allegedly incurred in the Tanauan Plant in 1999
The petitioners filed with the Labor Arbiter and got a
favorable judgement. The Labor Arbiter declared the
dismissal of petitioners to be illegal and ordered their
reinstatement. On appeal to NLRC, the judgement was
reversed. NLRC ruled that the retrenchment by PCPPI was
legal.
Issue:
Whether the dismissal due to retrenchment of the
petitioners was legal
Ruling:
The petition has no merit.
Essentially, the prerogative of an employer to retrench its
employees must be exercised only as a last resort,
considering that it will lead to the loss of the employees'
livelihood. It is justified only when all other less drastic
means have been tried and found insufficient or
inadequate. Corollary thereto, the employer must prove
the requirements for a valid retrenchment by clear and
convincing evidence; otherwise, said ground for
termination would be susceptible to abuse by scheming
employers who might be merely feigning losses or
reverses in their business ventures in order to ease out
employees. These requirements are:
(1) That retrenchment is reasonably necessary and likely
to prevent business losses which, if already incurred, are

not merely de minimis, but substantial, serious, actual

and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the
employees and to the Department of Labor and
Employment at least one month prior to the intended
date of retrenchment;
(3) That the employer pays the retrenched employees
separation pay equivalent to one (1) month pay or at
least one-half () month pay for every year of service,
whichever is higher;
(4) That the employer exercises its prerogative to
retrench employees in good faith for the advancement of
its interest and not to defeat or circumvent the
employees right to security of tenure; and
(5) That the employer used fair and reasonable criteria in
ascertaining who would be dismissed and who would be
retained among the employees, such as status,
efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.
NLRC found that PCPPI complied with all the requirements
of substantial loss and due notice to both the DOLE and
the workers to be retrenched. Still, after having complied
with all the requirements, the retrenchment was deemed
necessary and therefore became valid exercise of
management prerogative.

Begino et al., vs. ABS-CBN Corp., GR No. 199166,

April 20, 2015

Broadcasters sa Pilipinas (KBP) and other regulatory

agencies;

Facts:

(b) the Talents non-engagement in similar work for a

person or entity directly or indirectly in competition with
or adverse to the interests of ABS-CBN and nonpromotion of any product or service without prior written
consent; and

Respondent ABS-CBN Corporation (formerly ABS-CBN

Broadcasting Corporation) is a television and radio
broadcasting corporation which, for its Regional Network
Group in Naga City, employed respondent Amalia
Villafuerte (Villafuerte) as Manager. There is no dispute
regarding the fact that, thru Villafuerte, ABS-CBN
engaged the services of petitioners Nelson Begino
(Begino) and Gener Del Valle (Del Valle) sometime in
1996 as Cameramen/Editors for TV Broadcasting.
Petitioners Ma. Cristina Sumayao (Sumayao) and Monina
Avila-Llorin (Llorin) were likewise similarly engaged as
reporters sometime in 1996 and 2002, respectively. With
their services engaged by respondents thru Talent
Contracts which, though regularly renewed over the
years, provided terms ranging from three (3) months to
one (1) year, petitioners were given Project Assignment
Forms which detailed, among other matters, the duration
of a particular project as well as the budget and the daily
technical requirements thereof. In the aforesaid
capacities, petitioners were tasked with coverage of news
items for subsequent daily airings in respondents TV
Patrol Bicol Program.
The aforesaid talent contracts, which specifically
providing that nothing would be deemed or construed to
establish an employee-employer relationship, provided:
(a) the Talents creation and performance of work in
accordance with the ABS-CBNs professional standards
and compliance with its policies and guidelines covering
intellectual property creators, industry codes as well as
the rules and regulations of the Kapisanan ng mga

(c) the results-oriented nature of the talents work which

did not require them to observe normal or fixed working
hours
Petitioners later filed against respondent for non-payment
of employment benefits, claiming they were regular
employees of respondent company.
Petitioners alleged that they performed functions
necessary and desirable in ABS-CBN's business.
Mandated to wear company IDs and provided all the
equipment they needed, petitioners averred that they
worked under the direct control and supervision of
Villafuerte and, at the end of each day, were informed
about the news to be covered the following day, the
routes they were to take and, whenever the subject of
their news coverage is quite distant, even the start of
their workday. Petitioners were also subjected to annual
competency assessment tests.
Respondents argued that, although it occasionally
engages in production and generates programs thru
various means, ABS-CBN is primarily engaged in the
business of broadcasting television and radio content.
Not having the full manpower complement to produce its
own program, the company had allegedly resorted to
engaging independent contractors like actors, directors,
artists, anchormen, reporters, scriptwriters and various

production and technical staff. This purportedly included

petitioners as hired talents and not as regular employees
During the pendency of the action, petitioners were
terminated so they filed a second action against
respondents for regularization.
Issue:
Whether an employee-employer relationship exists.
Ruling:
An employee-employer relationship
petitioners and respondents.

exists

between

Insofar as the nature of ones employment is concerned,

Article 280 of the Labor Code of the Philippines also
provides as follows:
ART. 280. Regular and Casual Employment. The
provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be
regular where the employee has been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the employer,
except where the employment has been fixed for a
specific project or undertaking the completion or
termination of which has been determined at the time of
the engagement of the employee or where the work or
service to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be

considered a regular employee with respect to the

activity in which he is employed and his employment
shall continue while such actually exists.
It has been ruled that the foregoing provision
contemplates four kinds of employees, namely: (a)
regular employees or those who have been engaged to
perform activities which are usually necessary or
desirable in the usual business or trade of the employer;
(b) project employees or those whose employment has
been fixed for a specific project or undertaking, the
completion or termination of which has been determined
at the time of the engagement of the employee; (c)
seasonal employees or those who work or perform
services which are seasonal in nature, and the
employment is for the duration of the season; and (d)
casual employees or those who are not regular, project,
or seasonal employees.26 To the foregoing classification
of employee, jurisprudence has added that of contractual
or fixed term employee which, if not for the fixed term,
would fall under the category of regular employment in
view of the nature of the employees engagement, which
is to perform activity usually necessary or desirable in the
employers business.27
The Court finds that, notwithstanding the nomenclature
of their Talent Contracts and/or Project Assignment Forms
and the terms and condition embodied therein,
petitioners are regular employees of ABS-CBN.
Time and again, it has been ruled that the test to
determine whether employment is regular or not is the
reasonable connection between the activity performed by
the employee in relation to the business or trade of the
employer.

Petitioners
herein
were
constantly
re-hired
by
respondents and should be given the title of regular
employees.

Social Security System vs. Ubana, GR No. 200114,

Aug 25, 2015
Facts:
On December 26, 2002, respondent Debbie Ubana filed a
civil case for damages against the DBP Service
Corporation, petitioner Social Security System (SSS), and
the SSS Retirees Association5 before the RTC of Daet,
Camarines Norte. The case was docketed as Civil Case
No. 7304 and assigned to RTC Branch 39.

In her Complaint,6 respondent alleged that in July 1995,

she applied for employment with the petitioner. However,
after passing the examinations and accomplishing all the
requirements for employment, she was instead referred
to DBP Service Corporation for "transitory employment."
She took the pre-employment examination given by DBP
Service Corporation and passed the same. On May 20,
1996, she was told to report for training to SSS, Naga City
branch, for immediate deployment to SSS Daet branch.
On May 28, 1996, she was made to sign a six-month
Service Contract Agreement.
After that respondent worked for SSS for 6 years,
occupying several positions during this time period.
Respondent claims she was not properly paid by
petitioner and because of the oppressive and prejudicial
treatment by SSS, she was forced to resign on August 26,
2002 as she could no longer stand being exploited, the
agony of dissatisfaction, anxiety, demoralization, and
injustice. She asserted that she dedicated six years of her
precious time faithfully serving SSS, foregoing more
satisfying employment elsewhere, yet she was merely
exploited and given empty and false promises; that
defendants conspired to exploit her and violate civil
service laws and regulations and Civil Code provisions on
Human Relations, particularly Articles 19, 20, and 21.8 As
a result, she suffered actual losses by way of unrealized
income, moral and exemplary damages, attorney's fees
and litigation expenses.
On October 1, 2003, the RTC issued an Order10
dismissing respondent's complaint for lack of jurisdiction,
stating that her claim for damages "has a reasonable
causal connection with her employer-employee relations
with the defendants" and so should fall under the labor
arbiter of the NLRC. Respondents filed a motion for

reconsideration and said motion was granted. The RTC

stated:

Whether the trial court had jurisdiction over the case or if

it was one that should be filed with the labor arbiter.

Section 2(1), Art. K-B, 1987 Constitution, expressly

provides that "the civil service embraces all branches,
subdivisions, instrumentalities, and agencies of the
government, including government-owned or controlled
corporation[s] with original charters." Corporations with
original charters are those which have been created by
special law[s] and not through the general corporation
law. In contrast, labor law claims against governmentowned and controlled corporations without original
charters fall within the jurisdiction of the Department of
Labor and Employment and not the Civil Service
Commission. (Light Rail Transit Authority vs. Perfecto
Venus, March 24, 2006.)

Ruling:

Having been created under an original charter, RA No.

1161 as amended by R.A. 8282, otherwise known as the
Social Security Act of 1997, the SSS is governed by the
provision[s] of the Civil Service Commission. However,
since the SSS denied the existence of an employeremployee relationship, and the case is one for Damages,
it is not the Civil Service Commission that has jurisdiction
to try the case, but the regular courts.
A perusal of the Complaint filed by the plaintiff against
the defendant SSS clearly shows that the case is one for
Damages.
The RTC then ordered the case reinstated in the docket of
active civil cases.
Petitioned filed a motion for reconsideration but was
denied. Petitioner was also denied upon appeal to the CA.
Issue:

The trial court had jurisdiction over the case, it being one
for damages.
In her Complaint, respondent acknowledges that she is
not petitioner's employee, but that precisely she was
promised that she would be absorbed into the SSS
plantilla after all her years of service with SSS; and that
as SSS Processor, she was paid only P229.00 daily or
P5,038.00 monthly, while a regular SSS Processor
receives a monthly salary of P18,622.00, or P846.45 daily
wage. In its pleadings, petitioner denied the existence of
an employer-employee relationship between it and
respondent; in fact, it insists on the validity of its service
agreements with DBP Service Corporation and SSS
Retirees Association - meaning that the latter, and not
SSS, are respondent's true employers. Since both parties
admit that there is no employment relation between
them, then there is no dispute cognizable by the NLRC.
Thus, respondent's case is premised on the claim that in
paying her only P229.00 daily - or P5,038.00 monthly - as
against a monthly salary of P18,622.00, or P846.45 daily
wage, paid to a regular SSS Processor at the time,
petitioner exploited her, treated her unfairly, and unjustly
enriched itself at her expense.
For Article 217 of the Labor Code to apply, and in order
for the Labor Arbiter to acquire jurisdiction over a
dispute, there must be an employer-employee relation
between the parties thereto.chanrobleslaw
x x x It is well settled in law and jurisprudence that where
no employer-employee relationship exists between the

parties and no issue is involved which may be resolved

by reference to the Labor Code, other labor statutes or
any collective bargaining agreement, it is the Regional
Trial Court that has jurisdiction, x x x The action is within
the realm of civil law hence jurisdiction over the case
belongs to the regular courts. While the resolution of the
issue involves the application of labor laws, reference to
the labor code was only for the determination of the
solidary liability of the petitioner to the respondent where
no employer-employee relation exists. Article 217 of the
Labor Code as amended vests upon the labor arbiters
exclusive original jurisdiction only over the following.
1. Unfair labor practices;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this
Code, including questions involving legality of strikes and
lockouts; and
6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other
claims, arising from employer- employee relations,
including those of persons in domestic or household
service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.

In all these cases, an employer-employee relationship is

an indispensable jurisdictional requisite x x x.26
Since there is no employer-employee relationship
between the parties herein, then there is no labor dispute
cognizable by the Labor Arbiters or the NLRC.
There being no employer-employee relation or any other
definite or direct contract between respondent and
petitioner, the latter being responsible to the former only
for the proper payment of wages, respondent is thus
justified in filing a case against petitioner, based on
Articles 19 and 20 of the Civil Code, to recover the proper
salary due her as SSS Processor.
PT & T vs. NLRC
G.R. No. 118978; May 23, 1997
Facts:
Grace de Guzman was initially hired by petitioner as a
reliever for a fixed period from November 21, 1990 until
April 20, 1991 vice one C.F. Tenorio who went on maternity
leave. Under the Reliever Agreement which she signed with
Petitioner Company, her employment was to be immediately
terminated upon expiration of the agreed period.
Thereafter, from June 10, 1991 to July 1, 1991, and from July
19, 1991 to August 8, 1991, private respondents services as
reliever were again engaged by petitioner, this time in
replacement of one Erlinda F. Dizon who went on leave
during both periods. After August 8, 1991, and pursuant to
their Reliever Agreement, her services were terminated.
It now appears that private respondent had made the a
representation that she was single even though she
contracted marriage months before, in the two successive
reliever agreements which she signed on June 10, 1991 and

July 8, 1991. When petitioner supposedly learned about the

same later, its branch supervisor sent to private respondent
a memorandum requiring her to explain the discrepancy. In
that memorandum, she was reminded about the companys
policy of not accepting married women for employment.
Private respondent was dismissed from the company
effective January 29, 1992, which she readily contested by
initiating a complaint for illegal dismissal. Labor Arbiter
handed down a decision declaring that private respondent,
who had already gained the status of a regular employee,
was illegally dismissed by petitioner. On appeal to the
National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiter and it ruled that private
respondent had indeed been the subject of an unjust and
unlawful discrimination by her employer, PT&T.
Issue:
Whether or not discrimination merely by reason of the
marriage of a female employee is expressly prohibited by
Article 136.
Ruling:
SC ruled that the stipulation is violative of Art. 136 of the
Labor Code.
An employer is free to regulate, according to his discretion
and best business judgment, all aspects of employment,
from hiring to firing, except in cases of unlawful
discrimination or those which may be provided by law.
Petitioners policy of not accepting or considering as
disqualified from work any woman worker who contracts
marriage runs afoul of the test of, and the right against,
discrimination, afforded all women workers by our labor laws
and by no less than the Constitution.

Respondents act of concealing the true nature of her status

from PT&T could not be properly characterized as willful or
in bad faith as she was moved to act the way she did mainly
because she wanted to retain a permanent job in a stable
company. In other words, she was practically forced by that
very same illegal company policy into misrepresenting her
civil status for fear of being disqualified from work.
The government, to repeat, abhors any stipulation or policy
in the nature of that adopted by petitioner PT&T. The Labor
Code states, in no uncertain terms, as follows:
ART. 136.
Stipulation against marriage. - It shall be
unlawful for an employer to require as a condition of
employment or continuation of employment that a woman
shall not get married, or to stipulate expressly or tacitly that
upon getting married, a woman employee shall be deemed
resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee
merely by reason of marriage.
Under American jurisprudence, job requirements which
establish employer preference or conditions relating to the
marital status of an employee are categorized as a sexplus discrimination where it is imposed on one sex and not
on the other. Further, the same should be evenly applied
and must not inflict adverse effects on a racial or sexual
group which is protected by federal job discrimination laws.
Petitioners policy is not only in derogation of the provisions
of Article 136 of the Labor Code on the right of a woman to
be free from any kind of stipulation against marriage in
connection with her employment, but it likewise assaults
good morals and public policy, tending as it does to deprive
a woman of the freedom to choose her status, a privilege
that by all accounts inheres in the individual as an intangible
and inalienable right.

Hence, while it is true that the parties to a contract may

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

or employees of competing drug companies.

If
management perceives a conflict of interest or a potential
conflict between such relationship and the employees
employment with the company, the management and the
employee will explore the possibility of a transfer to
another department in a non-counterchecking position or
preparation for employment outside the company after six
months.

Reminders from Tecsons district manager did not stop him

from marrying.Tecson married Bettsy, an Astras Branch
Coordinatior in Albay. She supervised the district managers
and medical representatives of her company and prepared
marketing strategies for Astra in that area.

Duncan Asso.
Wellcome Phils.

Of

Detailman-PTGWO

vs.

Glaxo

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

Facts:
Petitioner Pedro Tecson was hired by respondent Glaxo
Wellcome Philppines(glaxo) as medical representative on
Oct.24,1994 thereafter signed a contract of employment
which stipulates among others that he agrees to study and
abide existing company rules; to disclose to management
any existing of future relationship by consanguinity or
affinity with co-employees or employees of competing drug
companies and if ever that such management find such
conflict of interest,he must resign. The Employee Code of
Conduct of Glaxo similarly provides that an employee is
expected to inform management of any existing or future
relationship by consanguinity or affinity with co-employees

Tecson was reassigned to another place and was not given

products that the Astra company has and he was not
included in products seminars and training.
Tecson requested for time in complying said policy by asking
for a transfer in the Glaxos milk division in which the other
company had no counterpart. Thereafter, he bought the
matter to Grievance Committee but the parties failed to
resolve such issue, Glaxo offered Tecson a separation pay of
one-half () month pay for every year of service, or a total
of P50,000.00 but he declined the offer. On November 15,
2000, the National Conciliation and Mediation Board (NCMB)
rendered its Decision declaring as valid Glaxos policy on
relationships between its employees and persons employed
with competitor companies, and affirming Glaxos right to
transfer Tecson to another sales territory.
Tecson filed for a petition for review on the CA and the CA
promulgated that the NCMB did not err in rendering its
decision. A recon was filed in appellate court but it was
denied, hence this petition for certiorari. Petitioners

contention it was violative of constitutional law which is the

equal protection clause and he was constructively dismissed
while the respondents contention that it is a valid exercise of
it s management prerogatives.
Issue:
Whether or not the policy of a pharmaceutical company
prohibiting its employees from marrying employees of
another pharmaceutical company is valid?

Ruling:
This petition was denied. Glaxo has a right to guard its trade
secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from
competitors, especially so that it and Astra are rival
companies in the highly competitive pharmaceutical
industry
The prohibition against personal or marital relationships with
employees of competitor companies upon Glaxos
employees is reasonable under the circumstances because
relationships of that nature might compromise the interests
of the company. In laying down the assailed company
policy, Glaxo only aims to protect its interests against the
possibility that a competitor company will gain access to its
secrets and procedures.
That Glaxo possesses the right to protect its economic
interests cannot be denied. No less than the Constitution
recognizes the right of enterprises to adopt and enforce
such a policy to protect its right to reasonable returns on
investments and to expansion and growth.

The challenged company policy does not violate the equal

protection clause of the Constitution as petitioners
erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed
only to the state or those acting under color of its authority.
From the wordings of the contractual provision and the
policy in its employee handbook, it is clear that Glaxo does
not impose an absolute prohibition against relationships
between its employees and those of competitor companies.
Its employees are free to cultivate relationships with and
marry persons of their own choosing. What the company
merely seeks to avoid is a conflict of interest between the
employee and the company that may arise out of such
relationships.
There was no merit in Tecsons contention that he was
constructively dismissed when he was transferred from the
Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City-Agusan del Sur sales area, and when he
was excluded from attending the companys seminar on
new products which were directly competing with similar
products manufactured by Astra. Constructive dismissal is
defined as a quitting, an involuntary resignation resorted to
when
continued
employment
becomes
impossible,
unreasonable, or unlikely; when there is a demotion in rank
or diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable
to the employee. The record does not show that Tecson was
demoted or unduly discriminated upon by reason of such
transfer.

Issue:
WON the policy of the employer banning spouses from
working in the same company violates the rights of the
employee under the Constitution and the Labor Code or is a
valid exercise of management prerogative?
Ruling:
Petitioners sole contention that "the company did not just
want to have two or more of its employees related between
the third degree by affinity and/or consanguinity" is lame.
Article 136 of the Labor Code which provides:

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

Facts:
Simbol was employed by the company on Oct 1993. He met
Alma Dayrit, also an employee of the company, whom he
married. Prior to the marriage, Ongsitco advised the couple
that should they decide to get married, one of them should
resign pursuant to a company policy to which Simbol
complied.
1. New applicants will not be allowed to be hired if in case
he/she has [a] relative, up to [the] 3rd degree of
relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one
male and another female) developed a friendly relationship
during the course of their employment and then decided to
get married, one of them should resign to preserve the
policy stated above.

It shall be unlawful for an employer to require as a condition

of employment or continuation of employment that a
woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married a woman
employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her
marriage.
The requirement is that a company policy must be
reasonable under the circumstances to qualify as a valid
exercise of management prerogative. It is significant to note
that in the case at bar, respondents were hired after they
were found fit for the job, but were asked to resign when
they married a co-employee. Petitioners failed to show how
the marriage of Simbol, then a Sheeting Machine Operator,
to Alma Dayrit, then an employee of the Repacking Section,
could be detrimental to its business operations. e. The policy
is premised on the mere fear that employees married to
each other will be less efficient. If we uphold the questioned
rule without valid justification, the employer can create
policies based on an unproven presumption of a perceived

danger at the expense of an employees right to security of

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

without leave. Feeling aggrieved, Velasco filed a case for

illegal dismissal. She asserted that she was absent since she
was suffering urinary tract infection and she was pregnant.
She sent an application for leave to the supervisor. Upon
check up of the company doctor, Velasco was advised to
rest. On the following check-ups, she was again advised to
rest where this time, she was not able to get secure a leave.
The Labor Arbiter rendered decision that she was an
incorrigible absentee. Respondent appealed to the NLRC.
NLRC vacated the decision of the Labor Arbiter. It decided
that respondent was illegally dismissed and was entitled to
reinstatement. Petitioner appealed to CA where it dismissed
its claim and affirmed NLRC, thus, this petition.
Issue:
Whether or not the dismissal was illegal?

Del Monte Phils. V. Velasco G.R. No. 153477; March 6,

2007
Facts:
Lolita Velasco was hired by Del Monte as seasonal employee
and was subsequently regularized by Del Monte. On June
1987, petitioner warned Velasco of its absences and was
repeatedly reminded that her absence without permission
may result to forfeiture of her vacation leave.
Another warning was sent due to her absences without
permission which eventually led to the forfeiture of her
vacation entitlement. On September 1994, a notice of
hearing was sent to Velasco informing her of the charges
filed against her for violating the Absence without leave
rule. On January 1995, after the hearing, Del Monte
terminated the services of Velasco due to excessive absence

Ruling:
Yes. In this case, by the measure of substantial evidence,
what is controlling is the finding of the NLRC and the CA that
respondent was pregnant and suffered from related
ailments. It would be unreasonable to isolate such condition
strictly to the dates stated in the Medical Certificate or the
Discharge Summary. It can be safely assumed that the
absences that are not covered by, but which nonetheless
approximate, the dates stated in the Discharge Summary
and Medical Certificate, are due to the continuing condition
of pregnancy and related illnesses, and, hence, are justified
absences.
The termination was illegal since it comes within the
purview of the prohibited acts provided in Article 137 of the
Labor Code. Based on Article 137, it shall be unlawful for
any employer (1) to deny any woman employee the benefits

provided for in this Chapter or to discharge any woman

employed by him for the purpose of preventing her from
enjoying any of the benefits provided under this Code; (2) to
discharge such woman on account of her pregnancy, or
while on leave or in confinement due to her pregnancy; and
(3) to discharge or refuse the admission of such woman
upon returning to her work for fear that she may again be
pregnant.
The respondent was illegally dismissed by the petitioner on
account of her pregnancy. The act of the employer is
unlawful, it being contrary to law.

YRASUEGUI V. PHIL. AIRLINEGR NO. 168081; Oct. 17,

2008
Facts:
This case portrays the peculiar story of an international
flight steward who was dismissed because of his failure to
adhere to the weight standards of the airline company.
Petitioner was a former international flight steward of PAL.
He had problems meeting the required weight standards for
cabin and crew. He was advised to go on leave without pay
several times to address his weight concerns, to no avail.
PAL had him grounded until such time he satisfactorily
complies with the weight standards and he was directed to
report every two weeks for weight checks.
On November 5, 1992, petitioner weighed 205 lbs, way
beyond his ideal weight of 166 lbs. On June 15, 1993,

petitioner was formally informed by PAL that due to his

inability to attain his ideal weight, and considering the
utmost leniency extended to him which spanned a period
covering a total of almost five (5) years, his services were
considered terminated effective immediately
The Labor Arbiter ruled that he was illegally dismissed. The
Labor Arbiter held that the weight standards of PAL are
reasonable in view of the nature of the job of petitioner.[15]
However, the weight standards need not be complied with
under pain of dismissal since his weight did not hamper the
performance of his duties.[16] Assuming that it did,
petitioner could be transferred to other positions where his
weight would not be a negative factor. NLRC affirmed the
decision of the Labor Arbiter, with modifications.
The CA, however, reversed the ruling. Contrary to the NLRC
ruling, the weight standards of PAL are meant to be a
continuing qualification for an employees position. The
failure to adhere to the weight standards is an analogous
cause for the dismissal of an employee under Article 282(e)
of the Labor Code in relation to Article 282(a). It is not willful
disobedience as the NLRC seemed to suggest.
Issue:
Whether or not the petitioner was illegally dismissed.
Ruling:
I. The obesity of petitioner is a ground for dismissal under
Article 282(e)[44] of the Labor Code.
[T]he standards
violated in this case were not mere orders of the employer;
they were the prescribed weights that a cabin crew must
maintain in order to qualify for and keep his or her position
in the company. In other words, they were standards that
establish continuing qualifications for an employees
position. By its nature, these qualifying standards are norms

that apply prior to and after an employee is hired. They

applyprior to employment because these are the standards
a job applicant must initially meet in order to be hired. They
apply after hiring because an employee must continue to
meet these standards while on the job in order to keep his
job. Under this perspective, a violation is not one of the
faults for which an employee can be dismissed
II. The dismissal of petitioner can be predicated on the bona
fide occupational qualification defense.
Aircrafts have
constricted cabin space, and narrow aisles and exit doors.
Being overwieight impedes mobility in times of emergencies
where seconds are precious.
Petitioner was not, therefore, illegally dismissed. He is
entitled to a separation pay, including his regular
allowances.

In February 2004, GMPC terminated SIPs contract as GMPC

concessionaire.The termination of the concession contract
caused the termination of the respondents employment,
prompting them to file a complaint for illegal dismissal, with
money claims, against SIP and the spouses Pablo. NLRC
ruled in favor of the petitioner and CA affirmed the ruling of
NLRC.SIP seeks a reversal of the appellate courts ruling that
it was the employer of the respondents, claiming that it was
merely a labor-only contractor of GMPC
Issue:
Whether or not SIP was liable to them for their statutory
benefits, although it was not made to answer for their lost
employment due to the involuntary nature of the canteens
closure
Ruling:
The employer-employee relationship issue.

SIP Food House et al vs. Batolina, GR No. 192473

Facts:
The GSIS Multi-Purpose Cooperative (GMPC) is an entity
organized by the employees of the Government Service
Insurance System (GSIS). Incidental to its purpose, GMPC
wanted to operate a canteen in the new GSIS Building, but
had no capability and expertise in this area. Thus, it
engaged the services of the petitioner S.I.P. Food House
(SIP), owned by the spouses Alejandro and Esther Pablo, as
concessionaire. The respondents Restituto Batolina and
nine (9) others (the respondents) worked as waiters and
waitresses in the canteen.

The CA ruled out SIPs claim that it was a labor-only

contractor or a mere agent of GMPC. We agree with the CA;
SIP and its proprietors could not be considered as mere
agents of GMPC because they exercised the essential
elements of an employment relationship with the
respondents such as hiring, payment of wages and the
power of control, not to mention that SIP operated the
canteen on its own account as it paid a fee for the use of the
building and for the privilege of running the canteen. The
fact that the respondents applied with GMPC in February
2004 when it terminated its contract with SIP, is another
clear indication that the two entities were separate and
distinct from each other. We thus see no reason to disturb
the CAs findings.
The respondents money claims

We likewise affirm the CA ruling on the monetary award to

Batolina and the other complainants. The free board and
lodging SIP furnished the employees cannot operate as a
set-off for the underpayment of their wages. We held in
Mabeza v. National Labor Relations Commission that the
employer cannot simply deduct from the employees wages
the value of the board and lodging without satisfying the
following requirements: (1) proof that such facilities are
customarily furnished by the trade; (2) voluntary acceptance
in writing by the employees of the deductible facilities; and
(3) proof of the fair and reasonable value of the facilities
charged. As the CA aptly noted, it is clear from the records
that SIP failed to comply with these requirements.
On the collateral issue of the proper computation of the
monetary award, we also find the CA ruling to be in order.
Indeed, in the absence of evidence that the employees
worked for 26 days a month, no need exists to recompute
the award for the respondents who were explicitly claiming
for their salaries and benefits for the services rendered from
Monday to Friday or 5 days a week or a total of 20 days a
month.

SLL INTERNATIONAL CABLES SPECIALIST vs. NLRC

Facts:
Sometime in 1996, and January 1997, private respondents
were hired by petitioner Lagon as apprentice or trainee
cable/lineman. The three were paid the full minimum wage
and other benefits but since they were only trainees, they
did not report for work regularly but came in as substitutes
to the regular workers or in undertakings that needed extra
workers to expedite completion of work. Soon after they

were engaged as private employees for their Islacom project

in Bohol. Private respondents started on March 15, 1997
until December 1997. Upon the completion of their project,
their employment was also terminated. Private respondents
received the amount of P145.00, the minimum prescribed
daily wage for Region VII. In July 1997, the amount of P145
was increased to P150.00 and in October of the same year,
the latter was increased to P155.00.
On May 21, 1999, private respondents for the 4th time
worked with Lagon's project in Camarin, Caloocan City with
Furukawa Corporation as the general contractor. Their
contract would expire on February 28, 2000, the period of
completion of the project. From May 21, 1997-December
1999, private respondents received the wage of P145.00. At
this time, the minimum prescribed rate for Manila was
P198.00. In January to February 28, the three received the
wage of P165.00. The existing rate at that time was
P213.00.
For reasons of delay on the delivery of imported materials
from Furukawa Corporation, the Camarin project was not
completed on the scheduled date of completion. Face[d]
with economic problem[s], Lagon was constrained to cut
down the overtime work of its worker[s][,] including private
respondents. Thus, when requested by private respondents
on February 28, 2000 to work overtime, Lagon refused and
told private respondents that if they insist, they would have
to go home at their own expense and that they would not be
given anymore time nor allowed to stay in the quarters. This
prompted private respondents to leave their work and went
home to Cebu. On March 3, 2000, private respondents filed
a complaint for illegal dismissal, non-payment of wages,
holiday pay, 13th month pay for 1997 and 1998 and service
incentive leave pay as well as damages and attorney's fees

Issue:
Whether or not the respondent should be allowed to recover
the differential due to the failure of the petitioner to pay the
minimum wage.
Whether or not value of the facilities that the private
respondents enjoyed should be included in the computation
of the "wages" received by them
Ruling:
As a general rule, on payment of wages, a party who alleges
payment as a defense has the burden of proving it.
Specifically with respect to labor cases, the burden of
proving payment of monetary claims rests on the employer,
the rationale being that the pertinent personnel files,
payrolls, records, remittances and other similar documents
-- which will show that overtime, differentials, service
incentive leave and other claims of workers have been paid
-- are not in the possession of the worker but in the custody
and absolute control of the employer.
In this case, petitioners, aside from bare allegations that
private respondents received wages higher than the
prescribed minimum, failed to present any evidence, such
as payroll or payslips, to support their defense of payment.
Thus, petitioners utterly failed to discharge the onus
probandi.
On whether the value of the facilities should be included in
the computation of the "wages" received by private
respondents, Section 1 of DOLE Memorandum Circular No. 2
provides that an employer may provide subsidized meals
and snacks to his employees provided that the subsidy shall
not be less that 30% of the fair and reasonable value of such
facilities. In such cases, the employer may deduct from the
wages of the employees not more than 70% of the value of

the meals and snacks enjoyed by the latter, provided that

such deduction is with the written authorization of the
employees concerned.
Moreover, before the value of facilities can be deducted
from the employees' wages, the following requisites must all
be attendant: first, proof must be shown that such facilities
are customarily furnished by the trade; second, the
provision of deductible facilities must be voluntarily
accepted in writing by the employee; and finally, facilities
must be charged at reasonable value.[20] Mere availment is
not sufficient to allow deductions from employees' wages.
[21]
These requirements, however, have not been met in this
case. SLL failed to present any company policy or guideline
showing that provisions for meals and lodging were part of
the employee's salaries. It also failed to provide proof of the
employees' written authorization, much less show how they
arrived at their valuations. At any rate, it is not even clear
whether private respondents actually enjoyed said facilities.
In short, the benefit or privilege given to the employee
which constitutes an extra remuneration above and over his
basic or ordinary earning or wage is supplement; and when
said benefit or privilege is part of the laborers' basic wages,
it is a facility. The distinction lies not so much in the kind of
benefit or item (food, lodging, bonus or sick leave) given,
but in the purpose for which it is given. In the case at bench,
the items provided were given freely by SLL for the purpose
of maintaining the efficiency and health of its workers while
they were working at their respective projects.
For said reason, the cases of Agabon and Glaxo are
inapplicable in this case. At any rate, these were cases of
dismissal with just and authorized causes. The present case

involves the matter of the failure of the petitioners to

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

As stipulated in respondent's existing Retirement Plan Rules

and Regulations at the time, the Annual Performance
Incentive Pay of RSMs, DSSs, and SSSs shall be considered
in the computation of retirement benefits, as follows: Basic
Monthly Salary + Monthly Average Performance Incentive
(which is the total performance incentive earned during the
year immediately preceding 12 months) No. of Years in
Service.
Claiming his entitlement to an additional PhP474,600.00 as
Sales Management Incentives (SMI) and to the amount of
PhP496,016.67 which respondent allegedly deducted
illegally, representing the unpaid accounts of two dealers
within his jurisdiction, petitioner filed a complaint before the
NLRC on June 11, 2002 for the payment of his "Full
Retirement Benefits, Merit Increase, Commission/Incentives,
Length of Service, Actual, Moral and Exemplary Damages,
and Attorney's Fees."

Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc.

G.R. No. 176985, April 1, 2013
Fact:
Petitioner Ricardo E. Vergara, Jr. was an employee of
respondent Coca-Cola Bottlers Philippines, Inc. from May
1968 until he retired on January 31, 2002 as a District Sales
Supervisor (DSS) for Las Pias City, Metro Manila.

(Apparently, Petitioner argued that the granting of SMI to all

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

Ruling:
Generally, employees have a vested right over existing
benefits voluntarily granted to them by their employer.
Thus, any benefit and supplement being enjoyed by the
employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution
of benefits is actually founded on the Constitutional
mandate to protect the rights of workers, to promote their
welfare, and to afford them full protection. In turn, said
mandate is the basis of Article 4 of the Labor Code which
states that "all doubts in the implementation and
interpretation of this Code, including its implementing rules
and regulations, shall be rendered in favor of labor."
There is diminution of benefits when the following requisites
are present:
1.
the grant or benefit is founded on a policy or has
ripened into a practice over a long period of time;
2.

the practice is consistent and deliberate;

3.
the practice is not due to error in the construction or
application of a doubtful or difficult question of law; and
4.
The diminution or discontinuance is done unilaterally
by the employer.
To be considered as a regular company practice, the
employee must prove by substantial evidence that the
giving of the benefit is done over a long period of time, and
that it has been made consistently and deliberately.
Jurisprudence has not laid down any hard-and-fast rule as to
the length of time that company practice should have been
exercised in order to constitute voluntary employer practice.
The common denominator in previously decided cases
appears to be the regularity and deliberateness of the grant
of benefits over a significant period of time. It requires an

indubitable showing that the employer agreed to continue

giving the benefit knowing fully well that the employees are
not covered by any provision of the law or agreement
requiring payment thereof. In sum, the benefit must be
characterized by regularity, voluntary and deliberate intent
of the employer to grant the benefit over a considerable
period of time.
Upon review of the entire case records, We find no
substantial evidence to prove that the grant of SMI to all
retired DSSs regardless of whether or not they qualify to the
same had ripened into company practice.
The granting of the SMI in the retirement package of
Velazquez was an isolated incident and could hardly be
classified as a company practice that may be considered an
enforceable obligation. To repeat, the principle against
diminution of benefits is applicable only if the grant or
benefit is founded on an express policy or has ripened into a
practice over a long period of time which is consistent and
deliberate; it presupposes that a company practice, policy
and tradition favorable to the employees has been clearly
established; and that the payments made by the company
pursuant to it have ripened into benefits enjoyed by them.
Certainly, a practice or custom is, as a general rule, not a
source of a legally demandable or enforceable right.
Company practice, just like any other fact, habits, customs,
usage or patterns of conduct, must be proven by the
offering party who must allege and establish specific,
repetitive conduct that might constitute evidence of habit or
company practice.

asked to be provided also with chairs. Their request was

likewise granted. Sometime in September 2008, the chairs
provided for the operators were removed pursuant to a
national directive of petitioner. This directive is in line with
the "I Operate, I Maintain, I Clean" program of petitioner for
bottling operators, wherein every bottling operator is given
the responsibility to keep the machinery and equipment
assigned to him clean and safe. The program reinforces the
task of bottling operators to constantly move about in the
performance of their duties and responsibilities.

Royal Plant Workers Union vs. Coca-Cola Bottlers

Philippines Inc.

With this task of moving constantly to check on the

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

GR No. 198783, April 15, 2013

Issue:

Facts:

Whether or not the removal of the bottling operators chairs

was a valid exercise of management prerogative. ---YES

Under the employ of each bottling plant of Coca-Cola are

bottling operators. In the case of the plant in Cebu City,
there are 20 bottling operators who work for its Bottling Line
1 while there are 12-14 bottling operators who man its
Bottling Line 2. All of them are male and they are members
of herein respondent Royal Plant Workers Union (ROPWU).
In 1974, the bottling operators of then Bottling Line 2 were
provided with chairs upon their request. In 1988, the
bottling operators of then Bottling Line 1 followed suit and

Ruling:
According to the Union, such removal constitutes a violation
of the 1) Occupational Health and Safety Standards which
provide that every worker is entitled to be provided by the
employer with appropriate seats, among others; 2) policy of
the State to assure the right of workers to a just and
humane condition of work as provided for in Article 3 of the
Labor Code;8 3) Global Workplace Rights Policy of CCBPI

which provides for a safe and healthy workplace by

maintaining a productive workplace and by minimizing the
risk of accident, injury and exposure to health risks; and 4)
diminution of benefits provided in Article 100 of the Labor
Code.
The Court has held that management is free to regulate,
according to its own discretion and judgment, all aspects of
employment, including hiring, work assignments, working
methods, time, place, and manner of work, processes to be
followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers,
and discipline, dismissal and recall of workers. The exercise
of management prerogative, however, is not absolute as it
must be exercised in good faith and with due regard to the
rights of labor.10
In the present controversy, it cannot be denied that CCBPI
removed the operators chairs pursuant to a national
directive and in line with its "I Operate, I Maintain, I Clean"
program, launched to enable the Union to perform their
duties and responsibilities more efficiently. The chairs were
not removed indiscriminately. They were carefully studied
with due regard to the welfare of the members of the Union.
The removal of the chairs was compensated by: a) a
reduction of the operating hours of the bottling operators
from a two-and-one-half (2 )-hour rotation period to a oneand-a-half (1 ) hour rotation period; and b) an increase of
the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with
good intentions as CCBPI wanted to avoid instances of
operators sleeping on the job while in the performance of
their duties and responsibilities and because of the fact that
the chairs were not necessary considering that the
operators constantly move about while working. In short,

the removal of the chairs was designed to increase work

efficiency. Hence, CCBPIs exercise of its management
prerogative was made in good faith without doing any harm
to the workers rights.
The rights of the Union under any labor law were not
violated. There is no law that requires employers to provide
chairs for bottling operators. There was no violation either of
the Health, Safety and Social Welfare Benefit provisions
under Book IV of the Labor Code of the Philippines. As
shown in the foregoing, the removal of the chairs was
compensated by the reduction of the working hours and
increase in the rest period. The directive did not expose the
bottling operators to safety and health hazards.
The Union should not complain too much about standing
and moving about for one and one-half (1 ) hours because
studies show that sitting in workplaces for a long time is
hazardous to ones health. The CBA between the Union and
CCBPI contains no provision whatsoever requiring the
management to provide chairs for the operators in the
production/manufacturing line while performing their duties
and responsibilities.
The Court completely agrees with the CA ruling that the
removal of the chairs did not violate the general principles
of justice and fair play because the bottling operators
working time was considerably reduced from two and a half
(2 ) hours to just one and a half (1 ) hours and the break
period, when they could sit down, was increased to 30
minutes between rotations. The bottling operators new
work schedule is certainly advantageous to them because it
greatly increases their rest period and significantly
decreases their working time. A break time of thirty (30)
minutes after working for only one and a half (1 ) hours is
a just and fair work schedule.

The operators chairs cannot be considered as one of the

employee benefits covered in Article 10016 of the Labor
Code. In the Courts view, the term "benefits" mentioned in
the non-diminution rule refers to monetary benefits or
privileges given to the employee with monetary equivalents.
Such benefits or privileges form part of the employees
wage, salary or compensation making them enforceable
obligations.
This Court has already decided several cases regarding the
non-diminution rule where the benefits or privileges
involved in those cases mainly concern monetary
considerations or privileges with monetary equivalents.
Without a doubt, equating the provision of chairs to the
bottling operators is something within the ambit of
"benefits'' in the context of Article 100 of the Labor Code is
unduly stretching the coverage of the law. The
interpretations of Article 100 of the Labor Code do not show
even with the slightest hint that such provision of chairs for
the bottling operators may be sheltered under its mantle.

On June 9, 1989, Republic Act No. 6727 was enacted into

law. In order to rationalize wages throughout the Philippines,
Republic Act No. 6727 created the NWPC and the RTWPBs of
the different regions.
Article 121 of the Labor Code, as amended by Section 3 of
Republic Act No. 6727, empowered the NWPC to formulate
policies and guidelines on wages, incomes and productivity
improvement at the enterprise, industry and national levels;
to prescribe rules and guidelines for the determination of
appropriate minimum wage and productivity measures at
the regional, provincial or industry levels; and to review
regional wage levels set by the RTWPBs to determine
whether the levels were in accordance with the prescribed
guidelines and national development plans, among others.
On the other hand, Article 122(b) of the Labor Code, also
amended by Section 3 of Republic Act No. 6727, tasked the
RTWPBs to determine and fix minimum wage rates
applicable in their region, provinces or industries therein;
and to issue the corresponding wage orders, subject to the
guidelines issued by the NWPC.
Consequently, the RTWPBNCR issued Wage Order No. NCR
07 on October 14, 1999 imposing an increase of P25.50/day
on the wages of all private sector workers and employees in
the NCR and pegging the minimum wage rate in the NCR at
P223.50/day.6 However, Section 2 and Section 9 of Wage
Order No. NCR07 exempted certain sectors and industries
from its coverage

National Wages and Productivity Commission et al.,

vs The Alliance of Progressive Labor et al.

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

following:

G.R. No. 150326, March 12, 2014

A. [W]orkers in the following sectors which were granted

corresponding wage increases on January 1, 1999 as
prescribed by Wage Order No. NCR06:

Facts:

a.1. Agriculture workers

Plantation

P12.00 Nonplantation

a.2. Cottage/handicraft industry

P18.50

P16.00

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

P12.00
a.4. Retail/Service establishments
Employing 1115 workers

P12.00

Employing not more than 10 workers

P19.00

B. Workers in small establishments employing less that ten

(10) workers.
xxxx
Section 9. Upon application with and as determined by the
Board, based on documentation and other requirements in
accordance with applicable rules and regulations issued by
the Commission, the following may be exempt from the
applicability of this Order:
1.
Distressed establishments as defined in the NPWC
Guidelines No. 01, series of 1996;
2.
Exporters including indirect exporters with at least
50% export sales and with forward contracts with their
foreign buyers/principals entered into on or twelve (12)
months before the date of publication of this Order may be
exempt during the lifetime of said contract but not to
exceed twelve (12) months from the effectivity of this Order.
Feeling aggrieved by their noncoverage by the wage
adjustment, the Alliance of Progressive Labor (APL) and the
Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed
an appeal with the NWPC assailing Section 2(A) and Section
9(2) of Wage Order No. NCR07. They contended that

neither the NWPC nor the RTWPBNCR had the authority to

expand the noncoverage and exemptible categories under
the wage order; hence, the assailed sections of the wage
order should be voided.
The NWPC upheld the validity of Section 2(A) and Section
9(2) of Wage Order No. NCR07. It observed that the
RTWPBs power to determine exemptible categories was
adjunct to its wage fixing function conferred by Article
122(e) of the Labor Code, as amended by Republic Act No.
6727; that such authority of the RTWPB was also recognized
in NWPC Guidelines No. 01, Series of 1996.
The APL and TNMR assailed the decisions of the NWPC on
certiorari in the CA, contending that the power of the
RTWPBNCR to determine exemptible categories was not an
adjunct to its wage fixing function. CA favored the
respondents and granted the petition for certiorari.
Hence, this appeal by petition for review on certiorari by the
NWPC and RTWPBNCR.
Issue:
Whether or not the RTWPBNCR had authority
Ruling:
the RTWPBNCR had the authority to provide additional
exemptions from the minimum wage adjustments embodied
in Wage Order No. NCR07
The NWPC promulgated NWPC Guidelines No. 00195
(Revised Rules of Procedure on Minimum Wage Fixing) to
govern the proceedings in the NWPC and the RTWPBs in the
fixing of minimum wage rates by region, province and
industry. Section 1 of Rule VIII of NWPC Guidelines No. 001
95 recognized the power of the RTWPBs to issue exemptions
from the application of the wage orders subject to the
guidelines issued by the NWPC

(this is the rationale behind exemption)

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS
Exemption of establishments from compliance with the
wage increases and cost of living allowances prescribed by
the Boards may be granted in order to (1) assist
establishments experiencing temporary difficulties due to
losses maintain the financial viability of their businesses and
continued employment of their workers; (2) encourage the
establishment of new businesses and the creation of more
jobs, particularly in areas outside the National Capital
Region and Export Processing Zones, in line with the policy
on industry dispersal; and (3) ease the burden of micro
establishments, particularly in the retail and service sector,
that have a limited capacity to pay.
The following categories of establishments may be
exempted upon application with and as determined by the
Board:
(1.)Distressed establishments; (2.) New business
enterprises (NBEs); (3).Retail/Service establishments
employing not more than ten (10) workers;
(4).Establishments adversely affected by natural
calamities
Under the guidelines, the RTWPBs could issue exemptions
from the application of the wage orders as long as the
exemptions complied with the rules of the NWPC. In its
rules,
the
NWPC
enumerated
four
exemptible
establishments, but the list was not exclusive. The RTWPBs
had the authority to include in the wage orders
establishments that belonged to, or to exclude from the four
enumerated exemptible categories.
If the exemption was outside of the four exemptible
categories, like here, the exemptible category should be: (1)

in accord with the rationale for exemption; (2)

reviewed/approved by the NWPC; and (3) upon review, the
RTWPB issuing the wage order must submit a strong and
justifiable reason or reasons for the inclusion of such
category. It is the compliance with the second requisite that
is at issue here.
The NWPC, in arriving at its decision, weighed the
arguments of the parties and ruled that the RTWPBNCR had
substantial and justifiable reasons in exempting the sectors
and establishments enumerated in Section 2(A) and Section
9(2) based on the public hearings and consultations,
meetings, socialeconomic data and informations gathered
prior to the issuance of Wage Order No. NCR07. The very
fact that the validity of the assailed sections of Wage Order
No. NCR07 had been already passed upon and upheld by
the NWPC meant that the NWPC had already given the wage
order its necessary legal imprimatur. Accordingly, the
requisite approval or review was complied with.
The RTWPBs are the thinking group of men and women
guided by statutory standards and bound by the rules and
guidelines prescribed by the NWPC. In the nature of their
functions, the RTWPBs investigate and study all the
pertinent facts to ascertain the conditions in their respective
regions. Hence, they are logically vested with the
competence to determine the applicable minimum wages to
be imposed as well as the industries and sectors to exempt
from the coverage of their wage orders.
Lastly, Wage Order No. NCR07 is presumed to be regularly
issued in the absence of any strong showing of grave abuse
of discretion on the part of RTWPBNCR. The presumption of
validity is made stronger by the fact that its validity was
upheld by the NWPC upon review.

David/Yiels Hog Dealer

195466, July 2, 2014

vs.

Macasio,

GR

No.

Facts:
Macasio was an employee of David, under his business
Yiels Hog Dealer. Respodent Macasio filed against
petitioner for non-payment of overtime pay, holiday pay,
and 13th month pay.
Respondent had been working for petitioner as a butcher
since January 6, 1995 and alleged that since then until
the filing of the complaint with the labor arbiter in 2009
that he had not been paid any of the said benefits.
Petitioner contended that he actual started Yiels during
2005 and that he employed respondent as a butcher or
chopper to be paid on a task basis or pakyaw and so
respondent was not entitled to overtime pay, holiday pay,
and 13th month pay pursuant to the provisions of the
Implementing Rules and Regulations (IRR) of the Labor
Code. David pointed out that Macasio: (1) usually starts
his work at 10:00 p.m. and ends at 2:00 a.m. of the
following day or earlier, depending on the volume of the
delivered hogs; (2) received the fixed amount of P700.00
per engagement, regardless of the actual number of
hours that he spent chopping the delivered hogs; and (3)
was not engaged to report for work and, accordingly, did
not receive any fee when no hogs were delivered.
Macasio disputed Davids allegations. He argued that,
first, David did not start his business only in 2005. He
pointed to the Certificate of Employment that David
issued in his favor which placed the date of his
employment, albeit erroneously, in January 2000. Second,
he reported for work every day which the payroll or time
record could have easily proved had David submitted
them in evidence.

Refuting Macasios submissions,David claims that

Macasio was not his employee as he hired the latter on
"pakyaw" or task basis. He also claimed that he issued
the Certificate of Employment, upon Macasios request,
only for overseas employment purposes. He pointed to
the "Pinagsamang Sinumpaang Salaysay," executed by
Presbitero Solano and Christopher (Antonio Macasios cobutchers), to corroborate his claims.
The LA concluded that as Macasio was engaged on
"pakyaw" or task basis, he is not entitled to overtime,
holiday, SIL and 13th month pay. The NLRC affirmed the
ruling of the LA.
While the CA agreed with the LAand the NLRC that
Macasio was a task basis employee, it nevertheless found
Macasio entitled to his monetary claims following the
doctrine laid down in Serrano v. Severino Santos
Transit.23 The CA explained that as a task basis
employee, Macasio is excluded from the coverage of
holiday, SIL and 13th month pay only if he is likewise a
"field personnel." As defined by the Labor Code, a "field
personnel" is one who performs the work away from the
office or place of work and whose regular work hours
cannot be determined with reasonable certainty. In
Macasios case, the elements that characterize a "field
personnel" are evidently lacking as he had been working
as a butcher at Davids "Yiels Hog Dealer" business in
Sta. Mesa, Manila under Davids supervision and control,
and for a fixed working schedule that starts at 10:00 p.m.
Accordingly, the CA awarded Macasios claim for holiday,
SIL and 13th month pay for three years, with 10%
attorneys fees on the total monetary award. The CA,
however, denied Macasios claim for moral and
exemplary damages for lack of basis.

Issue:
Whether a worker engaged on pakyaw or task basis is
entitled to overtime pay, holiday pay, and 13th month pay
Ruling:
The petition is partially granted
There is no doubt as to the employee-employer
relationship, what is questioned is the entitlement to
benefits that necessarily follow said relationship.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the exclusions from
the coverage of Title I, Book III of the Labor Code provisions governing working conditions and rest periods.
Art. 82. Coverage. The provisions of [Title I] shall apply
to employees in all establishments and undertakings
whether for profit or not, but not to government
employees, managerial employees, field personnel,
members of the family of the employer who are
dependent on him for support, domestic helpers, persons
in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor
in appropriate regulations.
xxxx
"Field personnel" shall refer to non-agricultural
employees who regularly perform their duties away from
the principal place of business or branch office of the
employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.
[emphases and underscores ours]

Among the Title I provisions are the provisions on holiday

pay (under Article 94 of the Labor Code) and SIL pay
(under Article 95 of the Labor Code). Under Article
82,"field personnel" on one hand and "workers who are
paid by results" on the other hand, are not covered by
the Title I provisions. The wordings of Article82 of the
Labor Code additionally categorize workers "paid by
results" and "field personnel" as separate and distinct
types of employees who are exempted from the Title I
provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor Code and
its corresponding provision in the IRR47 reads:
Art. 94. Right to holiday pay. (a) Every worker shall be
paid his regular daily wage during regular holidays,
except in retail and service establishments regularly
employing less than (10) workers[.] [emphasis ours]
xxxx
SECTION 1. Coverage. This Rule shall apply to all
employees except:
xxxx
(e)Field personnel and other employees whose time and
performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed in
the performance thereof. [emphases ours]
On the other hand, Article 95 of the Labor Code and its
corresponding provision in the IRR48 pertinently
provides:

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

who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days
with pay.
(b) This provision shall not apply to those who are already
enjoying the benefit herein provided, those enjoying
vacation leave with pay of at least five days and those
employed in establishments regularly employing less
than ten employees or in establishments exempted from
granting this benefit by the Secretary of Labor and
Employment after considering the viability or financial
condition of such establishment. [emphases ours]
xxxx
Section 1. Coverage. This rule shall apply to all
employees except:

85154 enumerates the exemptions from the coverage of

13th month pay benefits. Under Section 3(e), "employers
of those who are paid on xxx task basis, and those who
are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance
thereof"55 are exempted.
Note that unlike the IRR of the Labor Code on holiday and
SIL pay, Section 3(e) of the Rules and Regulations
Implementing PD No. 851 exempts employees "paid on
task basis" without any reference to "field personnel."
This could only mean that insofar as payment of the 13th
month pay is concerned, the law did not intend to qualify
the exemption from its coverage with the requirement
that the task worker be a "field personnel" at the same
time.
Respondent is therefore not entitled to 13th month pay.

xxxx
(e) Field personnel and other employees whose
performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed in
the performance thereof. [emphasis ours]
Not expressly falling under any of the exceptions,
respondent is then entitled to Holiday Pay.
As for 13th month pay, The governing law on 13th month
pay is PD No. 851.53
As with holiday and SIL pay, 13th month pay benefits
generally cover all employees; an employee must be one
of those expressly enumerated to be exempted. Section 3
of the Rules and Regulations Implementing P.D. No.

Our Haus Realty Development Corp., vs. Parian et

al., GR No. 204651, August 6, 2014
Facts:
Respondents Alexander Parian, Jay Erinco, Alexander
Canlas, Jerry Sabulao and Bernardo Tenederowere all

laborers working for petitioner Our Haus Realty

Development Corporation (Our Haus), a company
engaged in the construction business.

their wage should not be deducted to include the meals.

The meals are also considered as customarily given by
the employer.

Sometime in May 2010,

distress. To alleviate its
some of its construction
workers, including the
leaves.

The CA approved the NLRCs decision.

Our Haus experienced financial

condition, Our Haus suspended
projects and asked the affected
respondents, to take vacation

ventually, the respondents were asked to report back to

work but instead of doing so, they filed with the LA a
complaint for underpayment of their daily wages. They
claimed that except for respondent Bernardo N. Tenedero,
their wages were below the minimum rates prescribed in
the following wage orders from 2007 to 2010:
1. Wage Order No. NCR-13, which provides for a daily
minimum wage rate of P362.00for the nonagriculture sector (effective from August 28, 2007
until June 13, 2008); and
2. Wage Order No. NCR-14, which provides for a daily
minimum wage rate of P382.00for the nonagriculture sector (effective from June 14, 2008
until June 30, 2010).
The respondents also alleged that Our Haus failed to pay
them their holiday, service incentive leave (SIL), 13th
month and overtime pays.
The Labor Arbiter decided in favor of Our Haus saying
that the value of the meals, if added to the wages of the
workers would comply with the minimum wage
requirement.
On appeal to the NLRC, the Labor Arbiters judgement was
reversed, stating that without consent by the employees

Issue:
Can meals be considered as deductible to the employees
wage?
Ruling:
The petition by our house must be denied.
No substantial distinction between deducting and
charging a facilitys value from the employees wage; the
legal requirements for creditability apply to both
To justify its non-compliance with the requirements for
the deductibility of a facility, Our Haus asks us to believe
that there is a substantial distinction between the
deduction and the charging of a facilitys value to the
wages. Our Haus explains that in deduction, the amount
of the wage (which may already be below the minimum)
would still be lessened by the facilitys value, thus
needing the employees consent. On the other hand, in
charging, there is no reduction of the employees wage
since the facilitys value will just be theoretically added to
the wage for purposes of complying with the minimum
wage requirement.39
Our Haus argument is a vain attempt to circumvent the
minimum wage law by trying to create a distinction
where none exists.
In reality, deduction and charging both operate to lessen
the actual take-home pay of an employee; they are two
sides of the same coin. In both, the employee receives a

lessened amount because supposedly, the facilitys

value, which is part of his wage, had already been paid to
him in kind. As there is no substantial distinction between
the two, the requirements set by law must apply to both.

Milan et al., vs. NLRC GR No. 202961, February 4,

2015
Facts:
Milan et.al are Solid Mills, Inc.s (Solid Mills) employees.
They are represented by the National Federation of Labor
Unions (NAFLU), their collective bargaining agent. As Solid
Mills employees, Milan et.al. and their families were allowed
to occupy SMI Village, a property owned by Solid Mills.
According to Solid Mills, this was [o]ut of liberality and for
the convenience of its employees . . . [and] on the condition
that the employees would vacate the premises anytime the
Company deems fit.
In September 2003, Milan et.al were informed that effective
October 10, 2003, Solid Mills would cease its operations due
to serious business losses. NAFLU recognized Solid Mills
closure due to serious business losses in the memorandum
of agreement dated September 1, 2003. The memorandum
of agreement provided for Solid Mills grant of separation
pay less accountabilities, accrued sick leave benefits,
vacation leave benefits, and 13th month pay to the
employees. The agreement was entered into with full
knowledge by the parties of their rights under the law and
they bound themselves not to conduct any concerted action
of whatsoever kind, otherwise the grant of financial
assistance as discussed above will be withheld.

Solid Mills filed its Department of Labor and Employment

termination report on September 2, 2003. Later, Solid Mills,
through Alfredo Jingco, sent to Milan et.al individual notices
to vacate SMI Village.
Milan et.al. were no longer allowed to report for work by
October 10, 2003. They were required to sign a
memorandum of agreement with release and quitclaim
before their vacation and sick leave benefits, 13th month
pay, and separation pay would be released. Employees who
signed the memorandum of agreement were considered to
have agreed to vacate SMI Village, and to the demolition of
the constructed houses inside as condition for the release of
their termination benefits and separation pay. Milan et.al.
refused to sign the documents and demanded to be paid
their benefits and separation pay.
Hence, they filed complaints before the Labor Arbiter for
alleged non-payment of separation pay, accrued sick and
vacation leaves, and 13th month pay. They argued that their
accrued benefits and separation pay should not be withheld
because their payment is based on company policy and
practice. Moreover, the 13th month pay is based on law,
specifically, Presidential Decree No. 851. Their possession of
Solid Mills property is not an accountability that is subject to
clearance procedures. They had already turned over to Solid
Mills their uniforms and equipment when Solid Mills ceased
operations.
On the other hand, Solid Mills argued that Milan et.al.s
complaint was premature because they had not vacated its
property.
The Labor Arbiter ruled in favor of Milan et.al. According to
the Labor Arbiter, Solid Mills illegally withheld petitioners
benefits and separation pay. The memorandum of
agreement dated September 1, 2003 stated no condition to

the effect that petitioners must vacate Solid Mills property

before their benefits could be given to them. Milan et.al.s
possession should not be construed as their
accountabilities that must be cleared first before the
release of benefits. Solid Mills appealed to the National
Labor Relations Commission. The National Labor Relations
Commission affirmed part of the decision but reversed and
set aside another part and decided that Milan et.al.s
monetary claims in the form of separation pay, accrued 13th
month pay for 2003, accrued vacation and sick leave pays
are held in abeyance pending compliance of their
accountabilities to respondent company by turning over the
subject lots they respectively occupy at SMI Village Sucat
Muntinlupa City, Metro Manila to Solid Mills. Linga and four
other were already paid their respective separation pays
and benefits. Meanwhile, Teodora Mahilom already retired
long before Solid Mills closure. She was already given her
retirement benefits.
The National Labor Relations Commission ruled that because
of petitioners failure to vacate Solid Mills property, Solid
Mills was justified in withholding their benefits and
separation pay.35 Solid Mills granted the petitioners the
privilege to occupy its property on account of petitioners
employment.36 It had the prerogative to terminate such
privilege.37 The termination of Solid Mills and petitioners
employer-employee relationship made it incumbent upon
petitioners to turn over the property to Solid Mills. The Court
of Appeals ruled that Solid Mills act of allowing its
employees to make temporary dwellings in its property was
a liberality on its part. It may be revoked any time at its
discretion.
Issue:

Whether or not an employer is allowed to withhold terminal

pay and benefits pending the employees return of its
properties
Ruling:
Yes. The fact that majority of NAFLUs members were not
occupants of respondent Solid Mills property is evidence
that possession of the property was not contemplated in the
agreement. Accountabilities should be interpreted to refer
only to accountabilities that were incurred by petitioners
while they were performing their duties as employees at the
worksite. Moreover, applicable laws, company practice, or
policies do not provide that 13th month pay, and sick and
vacation leave pay benefits, may be withheld pending
satisfaction of liabilities by the employee.
Requiring clearance before the release of last payments to
the employee is a standard procedure among employers,
whether public or private. Clearance procedures are
instituted to ensure that the properties, real or personal,
belonging to the employer but are in the possession of the
separated employee, are returned to the employer before
the employees departure.
As a general rule, employers are prohibited from withholding
wages from employees (Art. 116, Labor Code). The Labor
Code also prohibits the elimination or diminution of benefits
(Art. 100, Labor Code).
However, our law supports the employers institution of
clearance procedures before the release of wages. As an
exception to the general rule that wages may not be
withheld and benefits may not be diminished, the Labor
Code provides: Art. 113. Wage deduction. No employer, in

his own behalf or in behalf of any person, shall make any

deduction from the wages of his employees, except:
1. In cases where the worker is insured with his consent
by the employer, and the deduction is to recompense
the employer for the amount paid by him as
premium on the insurance;

and the Court of Appeals is that Solid Mills allowed the use
of its property for the benefit of Milan et.al. as its
employees. Milan et.al were merely allowed to possess and
use it out of Solid Mills liberality. The employer may,
therefore, demand the property at will.

2. For union dues, in cases where the right of the

worker or his union to check-off has been recognized
by the employer or authorized in writing by the
individual worker concerned; and
3. In cases where the employer is authorized by law or
regulations issued by the Secretary of Labor and
Employment.
The Civil Code provides that the employer is authorized to
withhold wages for debts due: Article 1706. Withholding of
the wages, except for a debt due, shall not be made by the
employer. Debt in this case refers to any obligation due
from the employee to the employer. It includes any
accountability that the employee may have to the
employer. There is no reason to limit its scope to uniforms
and equipment, as petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the
union representing petitioners, agreed that the release of
petitioners benefits shall be less accountabilities.
Accountabilities of employees are personal. They need not
be uniform among all employees in order to be included in
accountabilities incurred by virtue of an employer-employee
relationship. Milan et.al. do not categorically deny Solid
Mills ownership of the property, and they do not claim
superior right to it. What can be gathered from the findings
of the Labor Arbiter, National Labor Relations Commission,

Tiger Construction and Development Corp. vs. Abay

et al.
The general rule is that any decision rendered without
jurisdiction is a total nullity and may be struck down at any
time, the party that asserts it must be in good faith and not
evidently availing thereof simply to thwart the execution of
an award that has long become final and executory.
Facts:
On the basis of a complaint filed by respondents Reynaldo
Abay and fifty-nine (59) others before the Regional Office of
the Department of Labor and Employment (DOLE), an
inspection was conducted by DOLE officials at the premises

of petitioner TCDC. Several labor standard violations were

noted, such as deficiencies in record keeping, noncompliance with various wage orders, non-payment of
holiday pay, and underpayment of 13th month pay. The case
was then set for summary hearing.
Consistent with Article 129 of the Labor Code of the
Philippines in relation to Article 217 of the same Code, this
instant case should be referred back to the National Labor
Relations Commission (NLRC) Sub-Arbitration Branch V,
Naga City, on the ground that the aggregate money claim of
each worker exceeds the jurisdictional amount of this Office
[which] is (sic) Five Thousand Pesos Only (P5,000.00).
Before the NLRC could take any action, DOLE Secretary
Patricia A. Sto. Tomas (Secretary Sto. Tomas), in an apparent
reversal of Director Manalos endorsement, issued another
inspection authority on August 2, 2002 in the same case.
Pursuant to such authority, DOLE officials conducted another
investigation of petitioners premises and the same
violations were discovered.
According to petitioner, this July 25, 2002 Order was
tantamount to a dismissal on the ground of lack of
jurisdiction, which dismissal had attained finality; hence, all
proceedings before the DOLE regional office after July 25,
2002 were null and void for want of jurisdiction.
aving the case in her office once more, Director Manalo
finally issued an Order dated January 29, 2003 denying
petitioners motion for reconsideration for lack of merit
Issue:
Whether or not the petitioner can still assail the January 29,
2003 Order of Director Manalo allegedly on the ground of
lack of jurisdiction, after said Order has attained finality and
is already in the execution stage.

Ruling:
The petition lacks merit. Petitioner admits that it failed to
appeal the January 29, 2003 Order within the period
prescribed by law. It likewise admits that the case was
already in the execution process when it resorted to a
belated appeal to the DOLE Secretary. Petitioner, however,
excuses itself from the effects of the finality of the Order by
arguing that it was allegedly issued without jurisdiction and
may be assailed at any time.
Director Manalos initial endorsement of the case to the
NLRC, on the mistaken opinion that the claim was within the
latters jurisdiction, did not oust or deprive her of jurisdiction
over the case. She therefore retained the jurisdiction to
decide the case when it was eventually returned to her
office by the DOLE Secretary. Jurisdiction or authority to try
a certain case is conferred by law and not by the interested
parties, much less by one of them, and should be exercised
precisely by the person in authority or body in whose hands
it has been placed by the law. [18]
We also cannot accept petitioners theory that Director
Manalos initial endorsement of the case to the NLRC served
as a dismissal of the case, which prevented her from
subsequently assuming jurisdiction over the same. The said
endorsement was evidently not meant as a final disposition
of the case; it was a mere referral to another agency, the
NLRC, on the mistaken belief that jurisdiction was lodged
with the latter. It cannot preclude the regional director from
subsequently deciding the case after the mistake was
rectified and the case was returned to her by the DOLE
Secretary, particularly since it was a labor case where
procedural lapses may be disregarded in the interest of
substantial justice.

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

which he earned commissions amounting to P993,558.89

and US$7,588.30. He then requested payment of his
commissions, but Netlink refused and only gave him partial
cash advances chargeable to his commissions. Later on,
Netlink began to nitpick and fault find, like stressing his
supposed absences and tardiness. In order to force him to
resign, Netlink issued several memoranda detailing his
supposed infractions of the companys attendance policy.
Despite the memoranda, Delmo continued to generate huge
sales for Netlink.
On November 28, 1996, Delmo was shocked when he was
refused entry into the company premises by the security
guard pursuant to a memorandum to that effect. His
personal belongings were still inside the company premises
and he sought their return to him. This incident prompted
Delmo to file a complaint for illegal dismissal.

Netlink Computer Inc. vs. Delmo, GR No. 160827, June

18, 2014

Facts: Netlink hired Delmo as account manager tasked to

canvass and source clients and convince them to purchase
the products and services of Netlink. Delmo worked in the
field most of the time. He and his fellow account managers
were not required to accomplish time cards to record their
personal presence in the office of Netlink. He was able to
generate sales worth P35,000,000.00, more or less, from

In its answer to Delmos complaint, Netlink countered that

there were guidelines regarding company working time and
its utilization and how the employees time would be
recorded. Allegedly, all personnel were required to use the
bundy clock to punch in and out in the morning, and in and
out in the afternoon. Excepted from the rules were the
company officers, and the authorized personnel in the field
project assignments. Netlink claimed that it would be losing
on the business transactions closed by Delmo due to the
high costs of equipment, and in fact his biggest client had
not yet paid. Netlink pointed out that Delmo had become
very lax in his obligations, with the other account managers
eventually having outperformed him. Netlink asserted that
warning, reprimand, and suspension memoranda were given
to employees who violated company rules and regulations,
but such actions were considered as a necessary
management tool to instill discipline.

The Labor Arbiter ruled that Delmo was illegally and unjustly
dismissed. Respondents were ordered to reinstate
complainant to his former position without loss of seniority
rights with full backwages and other benefits. The
reinstatement aspect is immediately executory even
pending appeal. In case reinstatement is no longer feasible,
complainant shall be paid separation pay of one-month pay
for every year of service.
The NLRC modified the decision of the LA by setting aside
the backwages and reinstatement decreed by the Labor
Arbiter due to the existence of valid and just causes for the
termination of Delmos employment.
The Court of Appeals uheld NLRCs ruling with modifications
with the awarding of commission and 13th month pay to the
respondent. Whole commission was not awarded since
commission is made to depend on the future and uncertain
event. As regard to 13th month pay, petitioner was not made
to pay because employment was terminated based on valid
and just cause although he was not given due process.
ISSUES:
(I) Whether or not the payment of the commissions should
be in US dollars.
RULING:
I. Yes. As a general rule, all obligations shall be paid in
Philippine currency. However, the contracting parties may
stipulate that foreign currencies may be used for settling
obligations. This is pursuant to Republic Act No. 8183 which
provides as follows:
Section 1. All monetary obligations shall be settled in the
Philippine currency which is legal tender in the Philippines.
However, the parties may agree that the obligation

ortransaction shall be settled in any other currency at the

time of payment.
There was no written contract between Netlink and Delmo
stipulating that the latters commissions would be paid in US
dollars. The absence of the contractual stipulation
notwithstanding, Netlink was still liable to pay Delmo in US
dollars because the practice of paying its sales agents in US
dollars for their US dollar-denominated sales had become a
company policy. This was impliedly admitted by Netlink
when it did not refute the allegation that the commissions
earned by Delmo and its other sales agents had been paid
in US dollars. Instead of denying the allegation, Netlink only
sought a declaration that the US dollar commissions be paid
using the exchange rate at the time of sale. The principle of
non-diminution of benefits, which has been incorporated in
Article 100 of the Labor Code, forbade Netlink from
unilaterally reducing, diminishing, discontinuing or
eliminating the practice. Verily, the phrase "supplements, or
other employee benefits" in Article 100 is construed to
mean the compensation and privileges received by an
employee aside from regular salaries or wages.
With the payment of US dollar commissions having ripened
into a company practice, there is no way that the
commissions due to Delmo were to be paid in US dollars or
their equivalent in Philippine currency determined at the
time of the sales. To rule otherwise would be to cause an
unjust diminution of the commissions due and owing to
Delmo.

PLDT vs. Estranero, GR No. 192518, October 15, 2014

Facts: On July 1, 1995, PLDT employed the respondent as
an Auto-Mechanic/Electrician Helper, Job Grade 3 with a
monthly salary of P15,000.00 at the time of his separation
from the service in 2003. In the year 1995, PLDT adopted a
company-wide Manpower Reduction Program (MRP), aimed
at reducing its work force. To commence with its program,
PLDT offered the affected employees an attractive
redundancy pay consisting of 100% of their basic monthly
salary for every year of service, in addition to their
retirement benefits, if entitled. For those who were not
qualified to the retirement benefits, they were offered
separation or redundancy package of 200% of their basic
monthly salary for every year of service.
Among those gravely affected by the MRP was the Fleet
Management Division where the respondent was assigned,
on account of the significant decrease of company vehicles,
machineries, and equipment that required mechanical
servicing and repair. Consequently, the respondent's
position was included in those declared as redundant.
Attracted by the separation pay offered by the company, the
respondent expressed his conformity to his inclusion in the
MRP. In the inter-office Memorandum dated April 21, 2003,
the respondent declared that he has no objection to being
included in the redundancy program of PLDT.
Since his length of service was seven (7) years, eleven (11)
months and fifteen (15) days, which was rounded to 8 years,
the respondent was not qualified for retirement pay which
required an employee to have worked for at least 15 years.

The respondent was nonetheless entitled to 200% of his

basic monthly salary for every year of service by way of
redundancy pay or equivalent to P240,000.00. In addition,
he was also entitled to other benefits he has earned for the
years prior to, and during the year of his actual
separation, i.e., 2002 and 2003 sick leave benefits, 2002
and 2003 vacation leave and vacation leave premium
benefits, longevity pay, mid-year bonus, 13th month pay and
Christmas bonus, all in the sum of P27,028.37. Thus, his
aggregate redundancy pay plus other earned benefits
amounted to P267,028.37.
However, the respondent had outstanding liabilities arising
from various loans he obtained from different entities,
namely: the Home Development Mutual Fund (HDMF), PLDT
Employees Credit Cooperative, Inc., PLDT Service
Cooperative, Inc., Social Security System (SSS), and the
Manggagawa ng Komunikasyon sa Pilipinas, which summed
to P267,028.37. Thus, PLDT deducted the said amount from
the payment that the respondent was supposed to receive
as his redundancy pay. As a result, when the respondent
was made to sign the Receipt, Release and Quitclaim, it
showed that his take home pay was in the amount of "zero
pesos.
Subsequently, the respondent filed a complaint for illegal
dismissal with reinstatement, as well as moral and
exemplary damages plus attorney's fees. The Labor Arbiter,
the NLRC as well as the Court of Appeals affirmed the
validity of the MRP Program and Estraneros dismissal.
However, the Court of Appeals found that it was unlawful for
PLDT to deduct from his take home pay the loans he
obtained from certain entities without any proof of a written
authorization.

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

such deductions. As aptly stated by the CA, the matter

would have been different if the deductions refer to the
respondent's contributions for his being a member of SSS,
HDMF, or withholding taxes on income, because if such was
the case, the contributions are deductions already
sanctioned by existing laws. Here, it is evidently emphasized
that the subject deductions pertain to the respondent's
outstanding loans from various entities.

The Supreme Court ruled in the negative.

It is clear in Article 113 of the Labor Code that no employer,
in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except in cases
where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment, among
others. The Omnibus Rules Implementing the Labor Code,
meanwhile, provides that deductions from the wages of the
employees may be made by the employer when such
deductions are authorized by law, or when the deductions
are with the written authorization of the employees for
payment to a third person. Thus, any withholding of an
employee's wages by an employer may only be allowed in
the form of wage deductions under the circumstances
provided in Article 113 of the Labor Code, as well as the
Omnibus Rules implementing it. Further, Article 116 of the
Labor Code clearly provides that it is unlawful for any
person, directly or indirectly, to withhold any amount from
the wages of a worker without the worker's consent.
In this case, the deductions made to the respondent's
redundancy pay do not fall under any of the circumstances
provided under Article 113, nor was it established with
certainty that the respondent has consented to the said
deductions or that the petitioners had authority to make

Furthermore, the petitioners may not offset the outstanding

loans of the respondent against the latter's monetary
benefits. The records expressly revealed that the respondent
has obtained various loans from different entities and not
with PLDT. Accordingly, set-off or legal compensation cannot
take place between PLDT and the respondent because they
are not mutually creditor and debtor of each other. Thus,
there can be no valid set-off because the respondent's
creditor is not PLDT.

Peoples Broadcasting (Bombo Radyo Phils) vs. Sec of

DOLE et al. March 6, 2012 Resolution on the main
Decision of May 8, 2009
Facts:
Jandeleon Juezan (Juezan) filed a complaint before the
DOLE against Bombo Radyo Phils. (Bombo Radyo) for
illegal deduction, non-payment of service incentive leave,
13th month pay, premium pay for holiday and rest day and
illegal diminution of benefits, delayed payment of wages
and non-coverage of SSS, PAG-IBIG and Philhealth. On the
basis of the complaint, the DOLE conducted a plant level
inspection. The Labor Inspector in his report wrote,
Management
representative
informed
that
(Juezan)

complainant is a drama talent hired on a per drama

participation
basis
hence
no
employer-employer
relationship existed between them. As proof of this,
management presented photocopies of cash vouchers,
billing statement, employments of specific undertaking, etc.
The management has no control of the talent if he ventures
into another contract with other broadcasting industries.
Issue:
Whether or not the Secretary of Labor has the power to
determine the existence of an employer-employee
relationship.
Ruling:
Yes. No limitation in the law was placed upon the power of
the DOLE to determine the existence of an employeremployee relationship. No procedure was laid down where
the DOLE would only make a preliminary finding, that the
power was primarily held by the NLRC. The law did not say
that the DOLE would first seek the NLRCs determination of
the existence of an employer-employee relationship, or that
should the existence of the employer-employee relationship
be disputed, the DOLE would refer the matter to the NLRC.
The DOLE must have the power to determine whether or not
an employer-employee relationship exists, and from there to
decide whether or not to issue compliance orders in
accordance with Art. 128(b) of the Labor Code, as amended
by RA 7730.
The DOLE, in determining the existence of an employeremployee relationship, has a ready set of guidelines to
follow, the same guide the courts themselves use. The
elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of
dismissal; (4) the employers power to control the

employees conduct. The use of this test is not solely limited

to the NLRC. The DOLE Secretary, or his or her
representatives, can utilize the same test, even in the
course of inspection, making use of the same evidence that
would have been presented before the NLRC.
The determination of the existence of an employeremployee relationship by the DOLE must be respected. The
expanded visitorial and enforcement power of the DOLE
granted by RA 7730 would be rendered nugatory if the
alleged employer could, by the simple expedient of
disputing the employer-employee relationship, force the
referral of the matter to the NLRC. The Court issued the
declaration that at least a prima facie showing of the
absence of an employer-employee relationship be made to
oust the DOLE of jurisdiction. But it is precisely the DOLE
that will be faced with that evidence, and it is the DOLE that
will weigh it, to see if the same does successfully refute the
existence of an employer-employee relationship.
If the DOLE makes a finding that there is an existing
employer-employee relationship, it takes cognizance of the
matter, to the exclusion of the NLRC. The DOLE would have
no jurisdiction only if the employer-employee relationship
has already been terminated, or it appears, upon review,
that no employer-employee relationship existed in the first
place.
It must also be remembered that the power of the DOLE to
determine the existence of an employer-employee
relationship need not necessarily result in an affirmative
finding. The DOLE may well make the determination that no
employer-employee relationship exists, thus divesting itself
of jurisdiction over the case. It must not be precluded from
being able to reach its own conclusions, not by the parties,
and certainly not by this Court.

Under Art. 128(b) of the Labor Code, as amended by RA

7730, the DOLE is fully empowered to make a determination
as to the existence of an employer-employee relationship in
the exercise of its visitorial and enforcement power, subject
to judicial review, not review by the NLRC.
To recapitulate, if a complaint is brought before the DOLE to
give effect to the labor standards provisions of the Labor
Code or other labor legislation, and there is a finding by the
DOLE that there is an existing employer-employee
relationship, the DOLE exercises jurisdiction to the exclusion
of the NLRC. If the DOLE finds that there is no employeremployee relationship, the jurisdiction is properly with the
NLRC. If a complaint is filed with the DOLE, and it is
accompanied by a claim for reinstatement, the jurisdiction is
properly with the Labor Arbiter, under Art. 217(3) of the
Labor Code, which provides that the Labor Arbiter has
original and exclusive jurisdiction over those cases involving
wages, rates of pay, hours of work, and other terms and
conditions of employment, if accompanied by a claim for
reinstatement. If a complaint is filed with the NLRC, and
there is still an existing employer-employee relationship, the
jurisdiction is properly with the DOLE. The findings of the
DOLE, however, may still be questioned through a petition
for certiorari under Rule 65 of the Rules of Court.

Superior Packaging Corp. vs. Balagsay et al., October

10, 2012
Facts:

The petitioner engaged the services of Lancer to provide

reliever services to its business, which involves the
manufacture and sale of commercial and industrial
corrugated boxes. According to petitioner, the respondents
were engaged for four (4) months from February to June
1998 and their tasks included loading, unloading and
segregation of corrugated boxes.
Thereafter, respondents filed complaint against the
petitioner and President, Cesar Luz (Luz), for underpayment
of wages, non-payment of premium pay for worked rest,
overtime pay and non-payment of salary. Upon receipt
Department of Labor and Employment (DOLE) conducted an
inspection of the petitioners premises and found several
violations, to wit:
(1)

Non-presentation of payrolls and daily time records;

(2)
Non-submission
organization;
(3)

of

annual

report

of

safety

Medical and accident/illness reports;

(4)
Non-registration of establishment under Rule 1020 of
Occupational and Health Standards; and
(5)

No trained first aide.

Due to the petitioners failure to appear in the summary

investigations conducted by the DOLE, an Order was issued
on June 18, 2003 finding in favor of the respondents and
adopting the computation of the claims submitted.
Petitioner and Luz were ordered, among others, to pay
respondents their total claims in the amount of Eight
Hundred Forty Thousand Four Hundred Sixty-Three Pesos
and 38/100 (P 840,463.38).
Petitioner filed a motion for reconsideration on the ground
that respondents are not its employees but of Lancer and
that they pay Lancer in lump sum for the services rendered.

The DOLE, however, denied its motion because petitioner

failed to support its claim that the respondents are not its
employees, and even assuming that they were employed by
Lancer, the petitioner still cannot escape liability as Section
13 of the Department Order No. 10, Series of 1997, makes a
principal jointly and severally liable with the contractor to
contractual employees to the extent of the work performed
when the contractor fails to pay its employees wages.
Their appeal to the Secretary of DOLE was dismissed thus, l
petitioner and Luz filed a petition for certiorari with the
Court of Appeals (CA).
On November 17, 2006, the CA affirmed the Secretary of
DOLEs orders, with the modification in that Luz was
absolved of any personal liability under the award.
Hence, this petition for review under Rule 45 of the Rules of
Court.
Issue:
Whether or not DOLE has authority to determine the
existence of an employer-employee relationship? Whether
Superior Packaging Corporation may be held solidarily liable
with Lancer Staffing & Services Network, Inc. (Lancer) for
respondents unpaid money claims?
Ruling:
The petition is bereft of merit.
The DOLE clearly acted within its authority when it
determined the existence of an employer-employee
relationship between the petitioner and respondents as it
falls within the purview of its visitorial and enforcement
power under Article 128(b) of the Labor Code. The

determination of the existence of an employer-employee

relationship by the DOLE must be respected.
With regard to the contention that there is no evidence to
support the finding that the respondents rendered overtime
work and that they worked on their rest day, the resolution
of this argument requires a review of the factual findings
and the evidence presented, Court said that it is not a trier
of facts and it applies with greater force in labor cases.
Hence, where the factual findings of the labor tribunals or
agencies conform to, and are affirmed by, the CA, the same
are accorded respect and finality, and are binding to
Supreme Court.
It was the consistent conclusion of the DOLE and the CA that
Lancer was not an independent contractor but was engaged
in "labor-only contracting"; hence, the petitioner was
considered an indirect employer of respondents and liable to
the latter for their unpaid money claims.
At the time of the respondents employment in 1998, the
applicable regulation was DOLE Department Order No. 10,
Series of 1997. Under said Department Order, labor-only
contracting was defined as follows:
Sec. 9. Labor-only contracting. (a) Any person who
undertakes to supply workers to an employer shall be
deemed to be engaged in labor-only contracting where such
person:
(1) Does not have substantial capital or investment in the
form of tools, equipment, machineries, work premises and
other materials; and
(2) The workers recruited and placed by such persons are
performing activities which are directly related to the
principal business or operations of the employer in which
workers are habitually employed.

Labor-only contracting is prohibited and the person acting as

contractor shall be considered merely as an agent or
intermediary of the employer who shall be responsible to
the workers in the same manner and extent as if the latter
were directly employed by him.
According to the CA, the totality of the facts and surrounding
circumstances of this case point to such conclusion that
Lancer was, indeed, a labor-only contractor. Aside from
these is the undisputed fact that the petitioner failed to
produce any written service contract that might serve as
proof of its alleged agreement with Lancer.
Finally, a finding that a contractor is a "labor-only"
contractor is equivalent to declaring that there is an
employer-employee relationship between the principal and
the employees of the supposed contractor, and the "labor
only" contractor is considered as a mere agent of the
principal, the real employer. The former becomes solidarily
liable for all the rightful claims of the employees.
Petitioner therefore, being the principal employer and
Lancer, being the labor-only contractor, are solidarily liable
for respondents unpaid money claims.

SHS Perforated Materials, Inc. et al., vs. Diaz, GR No.

185814, Oct. 13, 2010
Facts:

Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up

corporation organized and existing under the laws of the
Republic of the Philippines and registered with the Philippine
Economic
Zone
Authority.
Petitioner
Winfried
Hartmannshenn (Hartmannshenn), a German national, is its
president. Thus, the wages of SHS employees are paid out
by ECCP, through its Accounting Services Department
headed by Juliet Taguiang (Taguiang). Manuel F. Diaz
(respondent) was hired by petitioner SHS as Manager for
Business Development on probationary status
During respondents employment, Hartmannshenn was
often abroad and, because of business exigencies, his
instructions to respondent were either sent by electronic
mail or relayed through telephone or mobile phone. During
meetings with the respondent, Hartmannshenn expressed
his dissatisfaction over respondents poor performance.
respondent acknowledged his poor performance and offered
to resign from the company.
On November 18, 2005, Hartmannshenn arrived in the
Philippines from Germany, and on November 22 and 24,
2005, notified respondent of his arrival through electronic
mail messages and advised him to get in touch with him.
Respondent claimed that he never received the messages.
Hartmannshenn instructed Taguiang not to release
respondents salary.
Respondent served on SHS a demand letter and a
resignation letter. It is precisely because of illegal and unfair
labor practices such as these that I offer my resignation with
neither regret nor remorse.
Appealing for the release of his salary respondent filed a
Complaint against the petitioners for illegal dismissal; nonpayment of salaries/wages and 13th month pay with prayer

for reinstatement and full backwages; exemplary damages,

and attorneys fees, costs of suit, and legal interest.
Issues:
Whether or not the temporary withholding of respondents
salary/wages by petitioners was a valid exercise of
management prerogative.
Ruling:
Withholding respondents salary was not a valid exercise of
management prerogative.
Management prerogative refers to the right of an employer
to regulate all aspects of employment, such as the freedom
to prescribe work assignments, working methods, processes
to be followed, regulation regarding transfer of employees,
supervision of their work, lay-off and discipline, and
dismissal and recall of work. Although management
prerogative refers to the right to regulate all aspects of
employment, it cannot be understood to include the right
to temporarily withhold salary/wages without the consent of
the employee.
Any withholding of an employees wages by an employer
may only be allowed in the form of wage deductions under
the circumstances provided in Article 113 of the Labor Code,
as set forth below:

(b) For union dues, in cases where the right of the worker or
his union to check-off has been recognized by the employer
or authorized in writing by the individual worker concerned;
and
(c) In cases where the employer is authorized by law or
regulations issued by the Secretary of Labor.
There is constructive dismissal if an act of clear
discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it
would foreclose any choice by him except to forego his
continued employment. It exists where there is cessation of
work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a
demotion in rank and a diminution in pay.
In this case, the withholding of respondents salary does not
fall under any of the circumstances provided under Article
113. Neither was it established with certainty that
respondent did not work from November 16 to November
30, 2005. Hence, the Court agrees with the LA and the CA
that the unlawful withholding of respondents salary
amounts to constructive dismissal.

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;

Nina Jewelry Manufacturing of Metal Arts Inc. vs.

Montecillo,

G.R. No. 188169, November 28, 2011

Facts:

separation pay but sought reinstatement and payment of

back wages, attorney's fees and 13th month pay.

Respondents were employed as goldsmiths by the petitioner

Nia Jewelry Manufacturing of Metal Arts, Inc. There were
incidents of theft involving goldsmiths in Nia Jewelry's
employ:

Issues:

The petitioner imposed a policy for goldsmiths, which were

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

2)

The petitioner alleged that the goldsmiths were given the

option not to post deposits, but to sign authorizations
allowing the former to deduct from the latter's salaries
amounts not exceeding 15% of their take home pay should
it be found that they lost the gold entrusted to them. The
deposits shall be returned upon completion of the
goldsmiths' work and after an accounting of the gold
received.
The respondents claimed otherwise insisting that petitioner
left the goldsmiths with no option but to post the deposits.
The next day after the policy was imposed, the respondents
no longer reported for work and signified their defiance
against the new policy which at that point had not even
been implemented yet. The respondents alleged that they
were constructively dismissed by the petitioner as their
continued employments were made dependent on their
readiness to post the required deposits. The respondents
then filed a complaint for illegal dismissal and for the award
of separation pay against the petitioner, and later filed their
amended complaint which excluded their earlier prayer for

1)
Whether or not Nia Jewelry Manufacturing of Metal
Arts, Inc. may impose the policy for their goldsmiths
requiring them to post cash bonds or deposits; and
Whether or not there is constructive dismissal.

Ruling:
1) NO, the Nia Jewelry may not impose the policy. Articles
113 and 114 of the Labor Code are clear as to what are the
exceptions to the general prohibition against requiring
deposits and effecting deductions from the employees'
salaries.
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)
(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)
(b)For union dues, in cases where the right of the
worker or his union to check-off has been recognized by the
employer or authorized in writing by the individual worker
concerned; and
c)
(c)In cases where the employer is authorized by law
or regulations issued by the Secretary of Labor.
Article 114.Deposits for loss or damage No employer shall
require his worker to make deposits from which deductions
shall be made for the reimbursement of loss of or damage to
tools, materials, or equipment supplied by the employer,
except when the employer is engaged in such trades,

occupations or business where the practice of making

deposits is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules
and regulations.
The petitioners should first establish that the making of
deductions from the salaries is authorized by law, or
regulations issued by the Secretary of Labor. The petitioners
failed to prove that their imposition of the new policy upon
the goldsmiths under Nia Jewelry's employ falls under the
exceptions specified in Articles 113 and 114 of the Labor
Code.
2) There is NO constructive dismissal. Constructive dismissal
occurs when there is cessation of work because continued
employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank or diminution in
pay or both; or when a clear discrimination, insensibility, or
disdain by an employer becomes unbearable to the
employee.
The petitioners did not whimsically or arbitrarily impose the
policy to post cash bonds or make deductions from the
workers' salaries. As attested to by the respondents' fellow
goldsmiths in their Joint Affidavit, the workers were
convened and informed of the reason behind the
implementation of the new policy. Instead of airing their
concerns, the respondents just promptly stopped reporting
for work.

Facts:
Petitioner Antonio Locsin II was the Regional Sales Manager
of respondent Mekeni Food Corporation. He was hired on
February 2004 to oversee the NCR and Luzon operation. In
addition to his compensation and benefit package, a car was
offered to him under which one-half of the cost of the
vehicle is to be paid by the company and the other half to
be deducted from petitioner's salary. The car valued at
280,000 which Locsin paid through salary deductions of
5,000 per month.
On February 2006, Locsin resigned. A total of 112,500.00
had already been deducted from his monthly salary and
applied as part of his share in the car plan. Upon
resignation, petitioner made personal and written follow-ups
regarding his unpaid salaries, commissions, benefits, and
offer to purchase his service vehicle. Mekeni replied that the
company car plan benefit applied only to employees who
have been with the company for five years; for this reason,
the balance that petitioner should pay on his service vehicle
stood at P116,380.00 if he opts to purchase the same.
On May 3, 2007, petitioner filed against Mekeni and/or its
President, Prudencio S. Garcia, a Complaint for the recovery
of monetary claims consisting of unpaid salaries,
commissions, sick/vacation leave benefits, and recovery of
monthly salary deductions which were earmarked for his
cost-sharing in the car plan.
Issue:
Whether or not petitioner is entitled to a refund of all the
amounts applied to the cost of the service vehicle under the
car plan.

Locsin II vs. Mekeni Food Corp., GR No. 192105,

December 9, 2013

Ruling:

Any benefit or privilege enjoyed by petitioner from using the

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

the most part; and any personal benefit obtained by

petitioner from using the vehicle was merely incidental.

Under Article 22 of the Civil Code, every person who

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

Thus, Mekeni Food Corporation should refund petitioner

Antonio Locsin II's payments under the car plan agreement
amounting only to the extent of the contribution Locsin
made, totalling to the amount of P112,500.00.

Conversely, petitioner cannot recover the monetary value of

Mekeni's counterpart contribution to the cost of the vehicle;
that is not property or money that belongs to him, nor was it
intended to be given to him in lieu of the car plan. Mekeni's
share of the vehicle's cost was not part of petitioner's
compensation package. The vehicle is an asset that
belonged to Mekeni. Just as Mekeni is unjustly enriched by
failing to refund petitioner's payments, so should petitioner
not be awarded the value of Mekeni's counterpart
contribution to the car plan, as this would unjustly enrich
him at Mekeni's expense.

TH Shopfitters Corp., et al., vs. T&H Shopfitters

Corp., Union, GR No. 191714, Feb 26, 2014

of those employees in the SBFZ plant were drastically

reduced to only three (3) days in a month.

Facts:

2nd CAUSE:

On September 7, 2004, the T&H Shopfitters Corporation/

Gin Queen Corporation workers union (THS-GQ Union) filed
their Complaint for Unfair Labor Practice (ULP) by way of
union busting, and Illegal Lockout, with moral and
exemplary damages and attorneys fees, against T&H
Shopfitters Corporation (T&H Shopfitters) and Gin Queen
Corporation before the Labor Arbiter (LA).

On March 24, 2004, THS-GQ Union filed a petition for

certification election and an order was issued to hold the
certification election in both T&H Shopfitters and Gin Queen.

1st CAUSE:
In their desire to improve their working conditions,
respondents and other employees of held their first formal
meeting on November 23, 2003 to discuss the formation of
a union. The following day, seventeen (17) employees were
barred from entering petitioners factory premises located in
Castillejos, Zambales, and ordered to transfer to T&H
Shopfitters warehouse at Subic Bay Freeport Zone (SBFZ)
purportedly because of its expansion. Afterwards, the said
seventeen (17) employees were repeatedly ordered to go on
forced leave due to the unavailability of work.
Respondents contended that the affected employees were
not given regular work assignments, while subcontractors
were continuously hired to perform their functions.
Respondents sought the assistance of the National
Conciliation and Mediation Board. Subsequently, an
agreement between petitioners and THS-GQ Union was
reached. Petitioners agreed to give priority to regular
employees in the distribution of work assignments.
Respondents averred, however, that petitioners never
complied with its commitment but instead hired contractual
workers. Instead, Respondents claimed that the work weeks

On October 10, 2004, petitioners sponsored a field trip to

Iba, Zambales, for its employees. The officers and members
of the THS-GQ Union were purportedly excluded from the
field trip. On the evening of the field trip, a certain Angel
Madriaga, a sales officer of petitioners, campaigned against
the union in the forthcoming certification election.
When the certification election was scheduled on October
11, 2004, the employees were escorted from the field trip to
the polling center in Zambales to cast their votes. The
remaining employees situated at the SBFZ plant cast their
votes as well. Due to the heavy pressure exerted by
petitioners, the votes for "no union" prevailed.
3rd CAUSE:
A memorandum was issued by petitioner Ben Huang
(Huang), Director for Gin Queen, informed its employees of
the expiration of the lease contract between Gin Queen and
its lessor in Castillejos, Zambales and announced the
relocation of its office and workers to Cabangan, Zambales.
When the respondents, visited the site in Cabangan,
discovered that it was a "talahiban" or grassland. The said
union officers and members were made to work as grass
cutters in Cabangan, under the supervision of a certain
Barangay
Captain
Greg
Pangan.
Due
to
these
circumstances, the employees assigned in Cabangan did not
report for work. The other employees who likewise failed to
report in Cabangan were meted out with suspension.

PETITIONERS DEFENSE:

xxxx

In its defense, Petitioners also stress that they cannot be

held liable for ULP for the reason that there is no employeremployee relationship between the former and respondents.
Further, Gin Queen avers that its decision to implement an
enforced rotation of work assignments for respondents was
a management prerogative permitted by law, justified due
to the decrease in orders from its customers, they had to
resort to cost cutting measures to avoid anticipated financial
losses. Thus, it assigned work on a rotational basis. It
explains that its failure to present concrete proof of its
decreasing orders was due to the impossibility of proving a
negative assertion. It also asserts that the transfer from
Castillejos to Cabangan was made in good faith and solely
because of the expiration of its lease contract in Castillejos.
It was of the impression that the employees, who opposed
its economic measures, were merely motivated by spite in
filing the complaint for ULP against it.

(c) To contract out services or functions being performed by

union members when such will interfere with, restrain, or
coerce employees in the exercise of their right to selforganization;

Issues:
Whether ULP acts were committed by petitioners against
respondents.
Ruling:
ULP were committed by petitioners against respondents.
Petitioners are being accused of violations of paragraphs (a),
(c), and (e) of Article 257 (formerly Article 248) of the Labor
Code,13 to wit:
Article 257. Unfair labor practices of employers.It shall be
unlawful for an employer to commit any of the following
unfair labor practices:
(a) To interfere with, restrain or coerce employees in the
exercise of their right to self-organization;

xxxx
(e) To discriminate in regard to wages, hours of work, and
other terms and conditions of employment in order to
encourage or discourage membership in any labor
organization. x x x
The questioned acts of petitioners, namely: 1) sponsoring a
field trip to Zambales for its employees, to the exclusion of
union members, before the scheduled certification election;
2) the active campaign by the sales officer of petitioners
against the union prevailing as a bargaining agent during
the field trip; 3) escorting its employees after the field trip to
the polling center; 4) the continuous hiring of subcontractors
performing respondents functions; 5) assigning union
members to the Cabangan site to work as grass cutters; and
6) the enforcement of work on a rotational basis for union
members, taken together, reasonably support an inference
that, indeed, such were all orchestrated to restrict
respondents free exercise of their right to self-organization.
The Court is of the considered view those petitioners
undisputed actions prior and immediately before the
scheduled certification election, while seemingly innocuous,
unduly meddled in the affairs of its employees in selecting
their exclusive bargaining representative.

the sole and exclusive bargaining agent of all rank-and-file

faculty and staff employees of petitioner.
In December 2003, the parties signed a 5-year CBA effective
June 1, 2003 until May 31, 2008.
On August 16, 2005, petitioner, through its President, Atty.
Maglaya , issued a Memorandum providing guidelines on the
implementation of vacation and sick leave credits as well as
vacation leave commutation which states that vacation and
sick leave credits are not automatic as leave credits would
be earned on a month-to-month and only vacation leave is
commuted or monetized to cash which is effected after the
second year of continuous service of an employee.
Respondents questioned the guidelines for being violative of
existing practices and the CBA which provide that all
covered employees are entitled to 15 days sick leave and 15
days vacation leave with pay every year and that after the
second year of service, all unused vacation leave shall be
converted to cash and paid to the employee at the end of
each school year, not later than August 30 of each year.

Wesleyan University-Phils., vs. Wesleyan UniversityPhils., Faculty & Staff Asso., GR No. 181806, March
12, 2014
Facts:
Petitioner Wesleyan University-Philippines is a non-stock,
non-profit educational institution duly organized and existing
under the laws of the Philippines. Respondent Wesleyan
University-Philippines Faculty and Staff Association, on the
other hand, is a duly registered labor organization acting as

Respondent
file
a
grievance
complaint
on
the
implementation of the vacation and sick leave policy.
Petitioner also announced its plan of implementing a oneretirement policy which was unacceptable to respondent.
Respondent submitted affidavits to prove that there is an
established practice of giving two retirement benefits, one
from the Private Education Retirement Annuity Association
(PERAA) Plan and another from the CBA Retirement Plan.
The Voluntary Arbitrator rendered a Decision declaring the
one-retirement policy and the Memorandum dated August
16, 2005 contrary to law. CA also affirmed the ruling of the
Voluntary Arbitrator.

Petitioner argues that there is only one retirement plan as

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

The Memorandum dated August 16, 2005 is contrary to the

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

Issue:
Whether or not the respondents are entitled to two
retirement plans.
Ruling:
The Non-Diminution Rule found in Article 100 of the Labor
Code explicitly prohibits employers from eliminating or
reducing the benefits received by their employees. This rule,
however, applies only if the benefit is based on an express
policy, a written contract, or has ripened into a practice. To
be considered a practice, it must be consistently and
deliberately made by the employer over a long period of
time. Respondent was able to present substantial evidence
in the form of affidavits to support its claim that there are
two retirement plans. Based on the affidavits, petitioner has
been giving two retirement benefits as early as 1997.
Petitioner, on the other hand, failed to present any evidence
to refute the veracity of these affidavits. Petitioner's
assertion that there is only one retirement plan as the CBA
Retirement Plan and the PERAA Plan are one and the same
is not supported by any evidence.

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

No. 192582, April 7, 2014,
Citing 2011 Nina Jewelry Manufacturing of Metal Arts
Inc. vs. Montecillo
Facts:
The respondent was employed as a sales clerk and assigned
at the petitioners boutique. Her primary tasks were
attending to all customer needs, ensuring efficient
inventory, coordinating orders from clients, cashiering and
reporting to the accounting department. The petitioner
learned that some of their employees had access to their
POS system with the use of a universal password given to
them by a certain Elmer Flores, who in turn learned of the
password from the respondent. The petitioner then
conducted an investigation and asked the petitioner to

explain why she should not be disciplinarily dealt with.

During the investigation the respondent was placed under
preventive suspension. After investigation the petitioner
terminated the respondent on the grounds of loss of trust or
confidence. This respondent was given her final wage and
benefits less the inventory variance incurred by the store.
This urged the respondent to file a complaint for illegal
dismissal, illegal suspension, holiday pay, rest day and
separation pay. The labor arbiter ruled in her favour
awarding her backwages. The petitioner appealed the
decision in the NLRC and the decision was reversed.
However, upon the respondents petition for certiorari in the
court of appeals the decision was reinstated. Hence, this
petition.

wage deductions or require the employees to make deposits

from which deductions shall be made, subject to the
following conditions:

Issue:

In this case, the petitioner failed to sufficiently establish that

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

Whether the negative sales variance could be validly

deducted from the respondents wage?
Ruling:
No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that no employer, in
his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except in cases
where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment, among
others. The Omnibus Rules Implementing the Labor Code,
meanwhile, provides:
SECTION 14. Deduction for loss or damage. Where the
employer is engaged in a trade, occupation or business
where the practice of making deductions or requiring
deposits is recognized to answer for the reimbursement of
loss or damage to tools, materials, or equipment supplied by
the employer to the employee, the employer may make

a)
That the employee concerned is clearly shown to be
responsible for the loss or damage;
b)
That the employee is given reasonable opportunity to
show cause why deduction should not be made;
c)
That the amount of such deduction is fair and
reasonable and shall not exceed the actual loss or damage;
and
d)
That the deduction from the wages of the employee
does not exceed 20 percent of the employee's wages in a
week.

Furthermore, the court ruled, in Nina Jewelry Marketing of

Metal Arts, Inc. v. Montecillo, that:
[T]he petitioners should first establish that the making of
deductions from the salaries is authorized by law, or
regulations issued by the Secretary of Labor. Further, the
posting of cash bonds should be proven as a recognized
practice in the jewelry manufacturing business, or
alternatively, the petitioners should seek for the
determination by the Secretary of Labor through the
issuance of appropriate rules and regulations that the policy
the former seeks to implement is necessary or desirable in
the conduct of business. The petitioners failed in this
respect. It bears stressing that without proofs that requiring
deposits and effecting deductions are recognized practices,

or without securing the Secretary of Labor's determination

of the necessity or desirability of the same, the imposition of
new policies relative to deductions and deposits can be
made subject to abuse by the employers. This is not what
the law intends.

13th month pay, holiday pay, rest day pay, and five (5)-day
service incentive leave pay; and for constructive dismissal.
Petitioner conceded that his payment of wages falls below
the minimum wage law. He averred that NLRC should have
considered as forming a substantial part of private
respondents' total wages the cash value of the tuna liver
and intestines private respondents were entitled to retrieve.
He argued that the combined value of the cash wage and
monetary value of the tuna liver and intestines clearly
exceeded the minimum wage fixed by law.
Both the Labor Arbiter and the NLRC ruled in favor of the
respondents.
Issue:
Whether or not the form of payment by Congson is valid
pursuant to Article 102 of the Labor Code.
Ruling:

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

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

Petitioner's practice of paying the private respondents the

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

Whether or not time spent in collecting wages in a place

other than the place of employment is compensable
notwithstanding that the same is done during official time.
Ruling: SC, affirming the decision of the Labor Arbiter, finds
that the hours spent by complainants in collecting salaries
at a bank in Tagum, Davao del Norte shall be considered
compensable hours worked.
Considering further the
distance between Amacan, Maco to Tagum which is 2
hours by travel and the risks in commuting all the time in
collecting complainants salaries, would justify the granting
of backwages equivalent to two (2) days in a month as
prayed for. Corollary, we likewise hold respondents liable for
the transportation expenses incurred by complainants at
P40.00 round trip fare during pay days.
North Davao Mining vs. NLRC, G.R. No. 112546;
March 13, 1996
Facts:
Due to financial losses, North Davao Mining Corporation laid
off workers. Respondent Wilfredo Guillema is one among
several employees of North Davao who were separated by
reason of the companys closure on May 31, 1992. It
appears that, during the life of the petitioner corporation,
from the beginning of its operations in 1981 until its closure
in 1992, it had been giving separation pay equivalent to
thirty (30) days pay for every year of service. Moreover,
inasmuch as the region where North Davao operated was
plagued by insurgency and other peace and order problems,
the employees had to collect their salaries at a bank in
Tagum, Davao del Norte, some 58 kilometers from their
workplace and about 2 hours travel time by public
transportation; this arrangement lasted from 1981 up to
1990.
Issue:

Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31,
2006
Facts:
The Heir of Sara Lee is engaged in the direct selling of a
variety of product lines for men and women, including
cosmetics, intimate apparels, perfumes, ready to wear
clothes and other novelty items, through its various outlets
nationwide. In the pursuit of its business, the petitioner
engages and contracts with dealers to sell the
aforementioned merchandise. These dealers, known either
as
Independent
Business
Managers
(IBMs)
or
Independent Group Supervisors (IGSs), depending on
whether they sell individually or through their own group,
would obtain at discounted rates the merchandise from the
petitioner on credit or then sell the same products to their
own customers at fixed prices also determined by the
petitioner.

In turn, the dealers are paid Services Fees, or sales

commissions, the amount of which depends on the volume
and value of their sales. Under existing company policy, the
dealers must remit to the petitioner the proceeds of their
sales within a designated credit period, which would either
be 38 days for IGSs or 52 days for IBMs, counted from the
day the said dealers acquired the merchandise from the
petitioner. To discourage late remittances, the petitioner
imposes a Credit Administration Charge, or simply, a
penalty charge, on the value of the unremitted payment.
The dealers under this system earn income through a profit
margin between the discounted purchase price they pay on
credit to the petitioner and the fixed selling price their
customers will have to pay. On top of this margin, the
dealer is given the Service Fee, a sales commission, based
on the volume of sales generated by him or her. Due to the
sheer volume of sales generated by all of its outlets, the
petitioner has found the need to strictly monitor the 38- or
52-day rolling due date of each of its IBMs and IGSs
through the employment of Credit Administration
Supervisors (CAS) for each branch. The primary duty of the
CAS is to strictly monitor each of these deadlines, to
supervise the credit and collection of payments and
outstanding accounts due to the petitioner from its
independent dealers and various customers, and to screen
prospective IBMs. To discharge these responsibilities, the
CAS is provided with a computer equipped with control
systems through which data is readily generated. Under
this organizational setup, the CAS is under the direct and
immediate supervision of the Branch Operations Manager
(BOM).
Cynthia Rey at the time of her dismissal from employment,
held the position of Credit Administration Supervisor or CAS
at the Cagayan de Oro City branch of the petitioner. She was

first employed by the petitioner as an Accounts Receivable

Clerk at its Caloocan City branch. In November 1993,
respondent was transferred to the Cagayan de Oro City
branch retaining the same position.
In January 1994,
respondent was elevated to the position of CAS. At that
time, the Branch Operations Manager or BOM of the
Cagayan de Oro City branch was a certain Mr. Jeremiah
Villagracia. In March 1995, respondent was temporarily
assigned to the Butuan City branch.
Sometime in June 1995, while respondent was still working
in Butuan City, she allegedly instructed the Accounts
Receivable Clerk of the Cagayan de Oro outlet to change the
credit term of one of the IBMs of the petitioner who happens
to be respondents sister-in-law, from the 52-day limit to an
unauthorized term of 60 days. The respondent made the
instruction just before the computer data for the
computation of the Service Fee accruing to Ms. Rey-Petilla
was about to be generated. Ms. Mendoza then reported this
allegedly unauthorized act of respondent to her Branch
Operations Manager, Mr. Villagracia. Acting on the report,
as the petitioner alleges, BOM Villagracia discreetly verified
the records and discovered that it was not only the 52-day
credit term of IBM Rey-Petilla that had been extended by the
respondent, but there were several other IBMs whose credit
terms had been similarly extended beyond the periods
allowed by company policy.
BOM Villagracia then
summoned the respondent and required her to explain the
unauthorized credit extensions.
Issue:
WON the respondent is entitled to 13th month pay.
Ruling:
The award of 13th month pay must be deleted. Respondent
is not a rank-and-file employee and is, therefore, not

entitled to thirteenth-month pay. However, the NLRC and the

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

Dios Hospital, of the '40-hours/5-day workweek' with

compensable weekly two (2) days off provided for by Policy
Instruction No. 54 issued by the Secretary of Labor. Said
policy instruction purports to implement R.A. No. 5901,
otherwise known as An Act Prescribing Forty Hours A Week
of Labor For Government and Private Hospitals Or Clinic
Personnel. Respondent hospital failed to give a favorable
response; thus, petitioners filed a complaint regarding their
claims for statutory benefits under the above-cited law and
policy issuance. However, the Labor Arbiter and,
subsequently, NLRC dismissed the complaint. Hence, this
petition ascribing grave abuse of discretion on the part of
NLRC in concluding that Policy Instructions No. 54 proceeds
from a wrong interpretation of R.A. 5901 and Article 83 of
the Labor Code.
Issue:
Whether or not Policy Instruction No. 54, entitling a full
weekly wage of 7 days upon completion of 40-hour/5-day
workweek, is valid based on existing labor laws.
Ruling:
Policy Instruction No. 54 is void, it being inconsistent with
and repugnant to the provision of Article 83 of the Labor
Code, as well as to R.A. No. 5901.

San Juan De Dios Hospital vs. NLRC, 282 SCRA 316

[1997]
Facts:
Petitioners, the rank-and-file employee-union officers and
members of San Juan De Dios Hospital Employees
Association, sent a letter requesting for the expeditious
implementation and payment by respondent, San Juan De

A perusal of R. A. No. 5901 reveals nothing therein that

gives two days off with pay for health personnel who
complete a 40-hour work or 5-day workweek. In fact, the
Explanatory Note of House Bill No. 16630 (later passed into
law as Republic Act No. 5901) explicitly states that the bill's
sole purpose is to shorten the working hours of health
personnel and not to dole out a two days off with pay.
Petitioners' position is also negated by the very rules and
regulations promulgated by the Bureau of Labor Standards
which implement Republic Act No. 5901. Section 15 of

aforementioned implementing rules grants specific rate of

additional compensation for work performed on Sunday or
for work performed in excess of forty hours a week. Policy
Instruction No. 54 unduly extended the statute.
Article 83 merely provides: (1) the regular office hour of
eight hours a day, five days per week for health personnel,
and (2) where the exigencies of service require that health
personnel work for six days or forty-eight hours then such
health personnel shall be entitled to an additional
compensation of at least thirty percent of their regular wage
for work on the sixth day. There is nothing in the law that
supports then Secretary of Labor and petitioners assertion.
The Secretary of Labor exceeded his authority by including a
two days off with pay in contravention of the clear mandate
of the statute. Administrative interpretation of the law is at
best merely advisory, and the Court will not hesitate to
strike down an administrative interpretation that deviates
from the provision of the statute.

Aug 12 1992 advising all factory-based workers, except

those in the Warehouse and Quality Assurance Department,
of a change in work schedule that discontinued the 30minute paid on call lunch break and set an uninterrupted 1
hour lunch break in lieu thereof.
Private respondents then filed a complaint for unfair labor
practice, discrimination, and evasion of liability with the
Labor Arbiter who dismissed the complaint, ruling that the
elimination of the 30-minute lunch break was a valid
exercise of management prerogative. Appeal was made to
respondent NLRC who reversed the decision of the Labor
Arbiter, declaring that the new work schedule deprived the
employees of the benefits of a time-honored company
practice and that such change also resulted in an unjust
diminution of employee benefits.
The OSG recommended the present petition to be granted,
alleging that the new memorandum containing the work
schedule was not discriminatory not did it constitute unfair
labor practice.
Issue:
Whether or not the memorandum dated Aug 14 1992
discontinuing the 30-minute paid on call lunch break
constituted unfair labor practice and diminution of benefits
Ruling:

Simedarby vs. NLRC, 289 SCRA 86 [1998]

Facts:
Prior to the present controversy, the factory employees of
Sime Darby Pilipinas, Inc. enjoyed a 30-minute paid on call
lunch break in their daily work schedule of 7:45 am to 3:45
pm. The petitioner company passed a memorandum dated

The Supreme Court sustained petitioner, holding that it is

clearly a management prerogative to fix the work schedules
of company employees. Under the old schedule, the
employees are compensated during their 30-minute lunch
break, but in essence it is still working time since the
workers could be called upon to work. Whereas in the new
schedule, the employees are given a longer break of 1 hour,
though uncompensated, it is uninterrupted as workers on

their break are no longer on call. The change in schedule

would improve company productivity as well as enhance the
comfort of workers who could enjoy an uninterrupted break.
The Supreme Court also reiterated the policy that while
social justice and the protection of the working class is
ensured by the Constitution, the same fundamental law also
protects the right of the management to regulate all aspects
of employment as well as to retain the prerogative of
changing work schedules according to the exigencies of the
enterprise. So long as this prerogative is exercised in good
faith, the Court upholds such exercise.

Acosta, had suffered a heart attack. Upon receiving the call

the nurse on duty, Mr. Merlino Eusebio, called private
respondent at home to inform him of the emergency. The
patient arrived at the clinic at 7:50 in the evening and was
rushed by Mr. Eusebio to the hospital. When private
respondent reached the clinic at around 7:51 in the evening,
Mr. Eusebio had already left with the patient. Mr. Acosta died
the following day.
Upon learning about the incident, PAL Medical Director Dr.
Godofredo B. Banzon ordered the Chief Flight Surgeon to
conduct an investigation. The Chief Flight Surgeon, in turn,
required private respondent to explain why no disciplinary
sanction should be taken against him.
In his explanation, private respondent asserted that he was
entitled to a thirty-minute meal break; that he immediately
left his residence upon being informed by Mr. Eusebio about
the emergency and he arrived at the clinic a few minutes
later; that Mr. Eusebio panicked and brought the patient to
the hospital without waiting for him.
Finding private respondents explanation unacceptable, the
management
charged
private
respondent
with
abandonment of post while on duty.

Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]

Facts: Private respondent (Dr. Herminio A. Fabros) was
employed as flight surgeon at petitioner company (PAL). He
was assigned at (PAL Medical Clinic at Nichols) and was on
duty from 4:00 in the afternoon until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening,
private respondent left the clinic to have his dinner at his
residence, which was about five-minute drive away. A few
minutes later, the clinic received an emergency call from the
PAL Cargo Services. One of its employees, Mr. Manuel

Petitioner argues that being a full-time employee, private

respondent is obliged to stay in the company premises for
not less than eight (8) hours. Hence, he may not leave the
company premises during such time, even to take his meals.
Issue: WON being a full-time employee, private respondent
is obliged to stay in the company premises for not less than
eight (8) hours.
Ruling: NO. Employees are not prohibited from going out of
the premises as long as they return to their post on time.
Articles 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work.The normal hours of work

of any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in hospitals
and clinics with a bed capacity of at least one hundred (100)
shall hold regular office hours for eight (8) hours a day, for
five (5) days a week, exclusive of time for meals, except
where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in
which case they shall be entitled to an additional
compensation of at least thirty per cent (30%) of their
regular wage for work on the sixth day. For purposes of this
Article, health personnel shall include: resident physicians,
nurses, nutritionists, dieticians, pharmacists, social workers,
laboratory
technicians,
paramedical
technicians,
psychologists, midwives, attendants and all other hospital or
clinic personnel. (emphasis supplied)
Art. 85. Meal periods.Subject to such regulations as the
Secretary of Labor may prescribe, it shall be the duty of
every employer to give his employees not less than sixty
(60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus
Implementing the Labor Code further states:

Rules

Sec. 7. Meal and Rest Periods.Every employer shall give

his employees, regardless of sex, not less than one (1) hour
time-off for regular meals, except in the following cases
when a meal period of not less than twenty (20) minutes
may be given by the employer provided that such shorter
meal period is credited as compensable hours worked of the
employee;
(a)
Where the work is non-manual work in nature or does
not involve strenuous physical exertion; (b)
Where the
establishment regularly operates not less than sixteen hours

a day; (c)
In cases of actual or impending emergencies
or there is urgent work to be performed on machineries,
equipment or installations to avoid serious loss which the
employer would otherwise suffer; and (d) Where the work
is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty
(20) minutes shall be considered as compensable working
time.
Thus, the eight-hour work period does not include the meal
break.
Nowhere in the law may it be inferred that
employees must take their meals within the company
premises. Employees are not prohibited from going out of
the premises as long as they return to their posts on time.
Private respondents act, therefore, of going home to take
his dinner does not constitute abandonment.
Linton Commercial Co., Inc., vs. Hellera et al., G.R.
No. 163147, October 10, 2007
Facts:
On 17 December 1997, Linton issued a memorandum
addressed to its employees informing them of the
company's decision to suspend its operations from
December 18, 1997 to January 5, 1998 due to the currency
crisis that affected its business operations. Linton submitted
an establishment termination report to the Department of
Labor and Employment (DOLE) regarding the temporary
closure of the establishment covering the said period. The
company's operation was to resume on January 6, 1998. On
January 7, 1997, Linton issued another memorandum
informing them that effective January 12, 1998, it would
implement a new compressed workweek of three (3) days
on a rotation basis. In other words, each worker would be

working on a rotation basis for three working days only

instead for six days a week. On the same day, Linton
submitted an establishment termination report concerning
the rotation of its workers. Linton proceeded with the
implementation of the new policy without waiting for its
approval by DOLE. Aggrieved, sixty-eight (68) workers
(workers) filed a Complaint for illegal reduction of workdays.

Issue:
WON there was an illegal reduction of work when Linton
implemented a compressed workweek by reducing from six
to three the number of working days with the employees
working on a rotation basis.
Ruling:
The compressed workweek arrangement was unjustified and
illegal.
The Bureau of Working Conditions of the DOLE, moreover,
released a bulletin providing for in determining when an
employer can validly reduce the regular number of working
days. The said bulletin states that a reduction of the number
of regular working days is valid where the arrangement is
resorted to by the employer to prevent serious losses due to
causes beyond his control, such as when there is a
substantial slump in the demand for his goods or services or
when there is lack of raw materials. Although the bulletin
stands more as a set of directory guidelines than a binding
set of implementing rules, it has one main consideration,
consistent with the ruling in Philippine Graphic Arts Inc., in

determining the validity of reduction of working hours

that the company was suffering from losses.
Certainly, management has the prerogative to come up with
measures to ensure profitability or loss minimization.
However, such privilege is not absolute. Management
prerogative must be exercised in good faith and with due
regard to the rights of labor. As previously stated, financial
losses must be shown before a company can validly opt to
reduce the work hours of its employees. However, to date,
no definite guidelines have yet been set to determine
whether the alleged losses are sufficient to justify the
reduction of work hours. If the standards set in determining
the justifiability of financial losses under Article 283 (i.e.,
retrenchment) or Article 286 (i.e., suspension of work) of the
Labor Code were to be considered, petitioners would end up
failing to meet the standards. On the one hand, Article 286
applies only when there is a bona fide suspension of the
employer's operation of a business or undertaking for a
period not exceeding six (6) months.
Records show that Linton continued its business operations
during the effectivity of the compressed workweek, which
spanned more than the maximum period. On the other
hand, for retrenchment to be justified, any claim of actual or
potential business losses must satisfy the following
standards: (1) the losses incurred are substantial and not de
minimis; (2) the losses are actual or reasonably imminent;
(3) the retrenchment is reasonably necessary and is likely to
be effective in preventing the expected losses; and (4) the
alleged losses, if already incurred, or the expected imminent
losses sought to be forestalled, are proven by sufficient and
convincing evidence. Linton failed to comply with these
standards.

On a letter dated March 26, 1997, the Bureau of Animal

Industry of the Department of Agriculture reminded Tryco
that its production should be conducted in San Rafael,
Bulacan, not in Caloocan City.
Bisig Manggagawa sa Tryco vs. NLRC, G.R. No.
151309, Oct. 15, 2008
Facts:
Tryco Pharma Corporation (Tryco) is a manufacturer of
veterinary medicines and its principal office is located in
Caloocan City. Petitioners are its regular employees,
occupying the positions of helper, shipment helper and
factory workers, assigned to the Production Department.
They are members of Bisig Manggagawa sa Tryco (BMT), the
exclusive bargaining representative of the rank-and-file
employees.
Tryco and the petitioners signed a Memorandum of
Agreement (MOA), providing for a compressed workweek
schedule to be implemented in the company effective May
20, 1996. As provided, 8:00 a.m. to 6:12 p.m., from Monday
to Friday, shall be considered as the regular working hours,
and no overtime pay shall be due and payable to the
employee for work rendered during those hours. The MOA
specifically stated that the employee waives the right to
claim overtime pay for work rendered after 5:00 p.m. until
6:12 p.m. from Monday to Friday considering that the
compressed workweek schedule is adopted in lieu of the
regular workweek schedule which also consists of 46 hours.
However, should an employee be permitted or required to
work beyond 6:12 p.m., such employee shall be entitled to
overtime pay.

Accordingly, Tryco issued a Memorandum dated April 7,

1997 which directed petitioner Aya-ay to report to the
companys plant site in Bulacan. When petitioner Aya-ay
refused to obey, Tryco reiterated the order on April 18, 1997.
Subsequently, through a Memorandum dated May 9, 1997,
Tryco also directed the other petitioners Egera, Lario and
Barte to report to the companys plant site in Bulacan.
BMT opposed the transfer of its members to San Rafael,
Bulacan, contending that it constitutes unfair labor practice.
In protest, BMT declared a strike on May 26, 1997.
In August 1997, petitioners filed their separate complaints
for illegal dismissal, underpayment of wages, nonpayment
of overtime pay and service incentive leave, and refusal to
bargain against Tryco and its President, Wilfredo C. Rivera.
Petitioners alleged that the company acted in bad faith
during the CBA negotiations because it sent representatives
without authority to bind the company, and this was the
reason why the negotiations failed. Also, the management
transferred petitioners from Caloocan to San Rafael, Bulacan
to paralyze the union. They prayed for the company to pay
them their salaries from May 26 to 31, 1997, service
incentive leave, and overtime pay, and to implement Wage
Order No. 4.
Issue:

Whether or not the company committed Unfair Labor

Practices
Ruling:
NO. Petitioners mainly contend that the transfer orders
amount to a constructive dismissal. They maintain that the
letter of the Bureau of Animal Industry is not credible
because it is not authenticated; it is only a ploy, solicited by
respondents to give them an excuse to effect a massive
transfer of employees. There is not proof to support this
claim. Absent any evidence, the allegation is not only highly
irresponsible but is grossly unfair to the government agency
concerned.
Also, Trycos decision to transfer its production activities to
San Rafael, Bulacan, regardless of whether it was made
pursuant to the letter of the Bureau of Animal Industry, was
within the scope of its inherent right to control and manage
its enterprise effectively.
When the transfer is not unreasonable, or inconvenient, or
prejudicial to the employee, and it does not involve a
demotion in rank or diminution of salaries, benefits, and
other privileges, the employee may not complain that it
amounts to a constructive dismissal. In this case, the
transfer orders do not entail a demotion in rank or
diminution of salaries, benefits and other privileges of the
petitioners. Petitioners, therefore, anchor their objection
solely on the ground that it would cause them great
inconvenience since they are all residents of Metro Manila
and they would incur additional expenses to travel daily
from Manila to Bulacan. Such contention is untenable
because the Court has previously declared that mere

incidental inconvenience is not sufficient to warrant a claim

of constructive dismissal. The distance from Caloocan to San
Rafael, Bulacan is not considerably great so as to compel
petitioners to seek living accommodations in the area and
prevent them from commuting to Metro Manila daily to be
with their families.
Finally, MOA is enforceable and binding against the
petitioners. Where it is shown that the person making the
waiver did so voluntarily, with full understanding of what he
was doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized
as a valid and binding undertaking. In addition, D.O. No. 21
sanctions the waiver of overtime pay in consideration of the
benefits that the employees will derive from the adoption of
a compressed workweek scheme. Moreover, the adoption of
a compressed workweek scheme in the company will help
temper any inconvenience that will be caused the
petitioners by their transfer to a farther workplace. Notably,
the MOA complied with the following conditions set by the
DOLE, under D.O. No. 21, to protect the interest of the
employees in the implementation of a compressed
workweek scheme
Considering that the MOA clearly states that the employee
waives the payment of overtime pay in exchange of a fiveday workweek, there is no room for interpretation and its
terms should be implemented as they are written.
San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30,
2002
Facts:

On 17 October 1992, the Department of Labor and

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

(b)
Whether or not SMC was not accorded with due
process of law in the issuance of the compliance order.

SMC appealed to the DOLE main office in Manila. However,

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

(a)
Amun Jadd (New Year), which falls on the first day of
the first lunar month of Muharram;

Issues:
(a)
Whether or not public respondents seriously erred
and committed grave abuse of discretion when they granted
Muslim Holiday Pay to non-Muslim employees of SMC.

(c)
Whether or not regional director Macaraya,
undersecretary Trajano and undersecretary Espanol have
jurisdiction in issuing the assailed compliance orders.
Ruling:
The court ruled the issues in negative.
Muslim holidays are provided under Articles 169 and 170,
Title I, Book V, of Presidential Decree No. 1083, otherwise
known as the Code of Muslim Personal Laws, which states:
Art. 169. Official Muslim holidays. - The following are hereby
recognized as legal Muslim holidays:

(b)
Maulid-un-Nab (Birthday of the Prophet Muhammad),
which falls on the twelfth day of the third lunar month of
Rabi-ul-Awwal;
(c)
Lailatul Isr Wal Mirj (Nocturnal Journey and
Ascension of the Prophet Muhammad), which falls on the
twenty-seventh day of the seventh lunar month of Rajab;
(d)
d-ul-Fitr (Hari Raya Puasa), which falls on the first
day of the tenth lunar month of Shawwal, commemorating
the end of the fasting season; and

(e)
d-l-Adh (Hari Raya Haji),which falls on the tenth
day of the twelfth lunar month of Dhl-Hijja.
Art. 170. Provinces and cities where officially observed. - (1)
Muslim holidays shall be officially observed in the Provinces
of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao,
North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga
and in such other Muslim provinces and cities as may
hereafter be created; (2) Upon proclamation by the
President of the Philippines, Muslim holidays may also be
officially observed in other provinces and cities.
The foregoing provisions should be read in conjunction with
Article 94 of the Labor Code, which provides:
Art. 94. Right to holiday pay. (a)
Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service
establishments regularly employing less than ten (10)
workers;
(b)
The employer may require an employee to work on
any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate.
Petitioner asserts that Article 3(3) of Presidential Decree No.
1083 provides that "the provisions of this Code shall be
applicable only to Muslims." However, there should be no
distinction between Muslims and non-Muslims as regards
payment of benefits for Muslim holidays. Wages and other
emoluments granted by law to the working man are
determined on the basis of the criteria laid down by laws
and certainly not on the basis of the workers faith or

religion. In addition, the 1999 Handbook on Workers

Statutory Benefits, categorically stated: Considering that all
private corporations, offices, agencies, and entities or
establishments operating within the designated Muslim
provinces and cities are required to observe Muslim
holidays, both Muslim and Christians working within the
Muslim areas may not report for work on the days
designated by law as Muslim holidays.
On the question regarding the jurisdiction of the Regional
Director Allan M. Macaraya, Article 128, Section B of the
Labor Code, as amended by Republic Act No. 7730,
provides: Article 128. Visitorial and enforcement power. (b) Notwithstanding the provisions of Article 129 and 217 of
this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the Secretary
of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance
orders to give effect to the labor standards provisions of this
Code and other labor legislation based on the findings of
labor employment and enforcement officers or industrial
safety engineers made in the course of the inspection. The
Secretary or his duly authorized representative shall issue
writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and
enforcement officer and raises issues supported by
documentary proofs which were not considered in the
course of inspection.
In the case before us, Regional Director Macaraya acted as
the duly authorized representative of the Secretary of Labor
and Employment and it was within his power to issue the

compliance order to SMC. In addition, the Court agrees with

the Solicitor General that the petitioner did not deny that it
was not paying Muslim holiday pay to its non-Muslim
employees. Indeed, petitioner merely contends that its nonMuslim employees are not entitled to Muslim holiday pay.
Hence, the issue could be resolved even without
documentary proofs. In any case, there was no indication
that Regional Director Macaraya failed to consider any
documentary proof presented by SMC in the course of the
inspection.
Anent the allegation that petitioner was not accorded due
process, the court finds that SMC was furnished a copy of
the inspection order and it was received by and explained to
its Personnel Officer. Further, a series of summary hearings
were conducted by DOLE on 19 November 1992, 28 May
1993 and 4 and 5 October 1993. Thus, SMC could not claim
that it was not given an opportunity to defend itself.
Tan vs. Lagrama, G.R. No. 151228; August 15, 2002
Facts:
Petitioner Rolando Tan is the president of Supreme Theater
Corporation and the general manager of Crown and Empire
Theaters in Butuan City. Private respondent Leovigildo
Lagrama is a painter, making ad billboards and murals for
the motion pictures shown at the Empress, Supreme, and
Crown Theaters for more than 10 years, from September 1,
1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was
summoned by Tan and upbraided: "Nangihi na naman ka
sulod sa imong drawinganan." ("You again urinated inside

your work area.") When Lagrama asked what Tan was

saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto
nga mo-drawing ka pa. Guikan karon, wala nay drawing.
Gawas." ("Don't say anything further. I don't want you to
draw anymore. From now on, no more drawing. Get out.")
Lagrama denied the charge against him. He claimed that he
was not the only one who entered the drawing area and
that, even if the charge was true, it was a minor infraction to
warrant his dismissal. However, everytime he spoke, Tan
shouted "Gawas" ("Get out"), leaving him with no other
choice but to leave the premises. Lagrama filed a complaint
with the National Labor Relations Commission (NLRC) in
Butuan City. He alleged that he had been illegally dismissed
and sought reinvestigation and payment of 13th month pay,
service incentive leave pay, salary differential, and
damages.
As no amicable settlement had been reached, Labor Arbiter
Rogelio P. Legaspi directed the parties to file their position
papers. It declared that the dismissal illegal and order the
payment of monetary benefits. Tan appealed to the NLRC
and reversing the decision of the Labor Arbiter.
Issue:
Whether or not the respondent was illegally dismissed and
thus entitled to payment of benefits provided by law.
Ruling:
The respondent was illegally dismissed and entitled to
benefits. The Implementing Rules of the Labor Code provide
that no worker shall be dismissed except for a just or

authorized cause provided by law and after due process.

This provision has two aspects: (1) the legality of the act of
dismissal, that is, dismissal under the grounds provided for
under Article 282 of the Labor Code and (2) the legality in
the manner of dismissal. The illegality of the act of dismissal
constitutes discharge without just cause, while illegality in
the manner of dismissal is dismissal without due process.
In this case, by his refusal to give Lagrama work to do and
ordering Lagrama to get out of his sight as the latter tried to
explain his side, petitioner made it plain that Lagrama was
dismissed. Urinating in a work place other than the one
designated for the purpose by the employer constitutes
violation of reasonable regulations intended to promote a
healthy environment under Art. 282(1) of the Labor Code for
purposes of terminating employment, but the same must be
shown by evidence. Here there is no evidence that Lagrama
did urinate in a place other than a rest room in the premises
of his work.
Instead of ordering his reinstatement as provided in Art. 279
of the Labor Code, the Labor Arbiter found that the
relationship between the employer and employee has been
so strained that the latter's reinstatement would no longer
serve any purpose. The parties do not dispute this finding.
Hence, the grant of separation pay in lieu of reinstatement
is appropriate.
This is of course in addition to the payment of bac kwages
which, in accordance with the ruling in Bustamante v. NLRC
should be computed from the time of Lagrama's dismissal
up to the time of the finality of this decision, without any
deduction or qualification.

The Bureau of Working Conditions 32 classifies workers paid

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

payment of benefits such as Social Security System (SSS)

coverage, sick leave and vacation leave. They deny that
they abandoned their work.
Lambo vs. NLRC, G.R. No. 111042; October 26, 1999

Issue:

Facts:

Whether or not the petitioners are entitled to the minimum

benefits provided by law.

Petitioners Avelino Lambo and Vicente Belocura were

employed as tailors by private respondents J.C. Tailor Shop
and/or Johnny Co on September 10, 1985 and March 3,
1985, respectively. They worked from 8:00 a.m. to 7:00 p.m.
daily, including Sundays and holidays. As in the case of the
other 100 employees of private respondents, petitioners
were paid on a piece-work basis, according to the style of
suits they made. Regardless of the number of pieces they
finished in a day, they were each given a daily pay of at
least P64.00.
On January 17, 1989, petitioners filed a complaint against
private respondents for illegal dismissal and sought
recovery of overtime pay, holiday pay, premium pay on
holiday and rest day, service incentive leave pay, separation
pay, 13th month pay, and attorneys fees. After hearing,
Labor Arbiter found private respondents guilty of illegal
dismissal and accordingly ordered them to pay petitioners
claims. On appeal, the NLRC reversed the decision of the
Labor Arbiter. The NLRC held petitioners guilty of
abandonment of work and accordingly dismissed their
claims except that for 13th month pay.
Petitioners allege that they were dismissed by private
respondents as they were about to file a petition with the
Department of Labor and Employment (DOLE) for the

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

volumes difficult to quantify. 4 Petitioners belong to the first

category, i.e., supervised employees.

month pay are in accordance with our finding that

petitioners are regular employees, although paid on a piecerate basis.

In this case, private respondents exercised control over the

work of petitioners. As tailors, petitioners worked in the
companys premises from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. The mere fact that they
were paid on a piece-rate basis does not negate their status
as regular employees of private respondents. The term
"wage" is broadly defined in Art. 97 of the Labor Code as
remuneration or earnings, capable of being expressed in
terms of money whether fixed or ascertained on a time,
task, piece or commission basis. Payment by the piece is
just a method of compensation and does not define the
essence of the relations. Nor does the fact that petitioners
are not covered by the SSS affect the employer-employee
relationship.
As petitioners were illegally dismissed, they are entitled to
reinstatement with back wages. The Arbiter applied the rule
in the Mercury Drug case, according to which the recovery
of back wages should be limited to three years without
qualifications or deductions. Any award in excess of three
years is null and void as to the excess. The Labor Arbiter
correctly ordered private respondents to give separation
pay.
Considerable time has elapsed since petitioners dismissal,
so that reinstatement would now be impractical and hardly
in the best interest of the parties. In lieu of reinstatement,
separation pay should be awarded to petitioners at the rate
of one month salary for every year of service, with a fraction
of at least six (6) months of service being considered as one
(1) year. The awards for overtime pay, holiday pay and 13th

Asian Transmission vs. CA, 425 SCRA 478 [2004]

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

Said bulletin was reproduced on January 23, 1998, when

April 9, 1998 was both Maundy Thursday and Araw ng
Kagitingan.
Despite the explanatory bulletin, petitioner, Asian
Transmission Corporation, opted to pay its daily paid
employees only 100% of their basic pay on April 9, 1998.
Respondent Bisig ng Asian Transmission Labor Union
(BATLU) protested.
The Voluntary Arbitrator favored the Bisig ng Asian
Transmission Labor Union (BATLU), and held that Article 94
of the Labor Code provides for holiday pay for every regular
holiday, the computation of which is determined by a legal
formula which is not changed by the fact that there are two
holidays falling on one day, like on April 9, 1998 when it was
Araw ng Kagitingan and at the same time was Maundy
Thursday.

Holiday pay is a legislated benefit enacted as part of the

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

In the assailed decision, the Court of Appeals upheld the

findings of the Voluntary Arbitrator.
Issue:
Whether or not daily-paid employees are entitled to be paid
for two regular holidays which fall on the same day.
Ruling:
The Court dismissed the petition and ruled that petitioners
should pay its employees 200% and not just 100% of their
regular daily wages for the unworked April 9, 1998 which
covers two regular holidays, namely, Araw ng Kagitingan
and Maundy Thursday.

Autobus Transport System vs. Bautista, G.R. No.

156364, May 16, 2005

Facts:
Respondent Antonio Bautista has been employed by
petitioner Auto Bus Transport Systems, Inc., since May 1995,
as driver-conductor with travel routes Manila-Tuguegarao via
Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via
Baguio. Respondent was paid on commission basis, seven
percent (7%) of the total gross income per travel, on a twice
a month basis.
On January 2000, while respondent was driving Autobus No.
114 along Sta. Fe, Nueva Vizcaya, the bus he was driving
accidentally bumped the rear portion of Autobus No. 124, as
the latter vehicle suddenly stopped at a sharp curve without
giving any warning. Respondent averred that the accident
happened because he was compelled by the management
to go back to Roxas, Isabela, although he had not slept for
almost twenty-four (24) hours, as he had just arrived in
Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work
until he fully paid the amount of P75,551.50, representing
thirty percent (30%) of the cost of repair of the damaged
buses
and
that
despite
respondent's
pleas
for
reconsideration, the same was ignored by management.
After a month, management sent him a letter of termination.
Thus, on 02 February 2000, respondent instituted a
Complaint for Illegal Dismissal with Money Claims for
nonpayment of 13th month pay and service incentive leave
pay against Autobus.

On 29 September 2000, based on the pleadings and

supporting evidence presented by the parties, Labor Arbiter
decided that the complaint be dismissed where the
respondent must pay to the complainant
Issue: Whether or not respondent is entitled to service
incentive leave.
Ruling: The respondent is entitled to service incentive
leave.
The disposition of the issue revolves around the proper
interpretation of Article 95 of the Labor Code vis--vis
Section 1(D), Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code which provides: RIGHT TO
SERVICE INCENTIVE LEAVE, (a) Every employee who has
rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also
states that this rule shall apply to all employees except: (d)
Field personnel and other employees whose performance is
unsupervised by the employer including those who are
engaged on task or contract basis, purely commission basis,
or those who are paid in a fixed amount for performing work
irrespective of the time consumed in the performance
thereof;
A careful examination of said provisions of law will result in
the conclusion that the grant of service incentive leave has
been delimited by the Implementing Rules and Regulations
of the Labor Code to apply only to those employees not
explicitly excluded by Section 1 of Rule V. According to the

Implementing Rules, Service Incentive Leave shall not apply

to employees classified as "field personnel."

reasonable certainty. This definition is further elaborated in

the Bureau of Working Conditions (BWC), Advisory Opinion
to Philippine Technical-Clerical Commercial Employees
Association 10 which states that:

The phrase "other employees whose performance is

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

As a general rule, field personnel are those whose

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

The same is true with respect to the phrase "those who are
engaged on task or contract basis, purely commission
basis." Said phrase should be related with "field personnel,"
applying the rule on ejusdem generis that the general and
unlimited terms are restrained and limited by the particular
terms that they follow. Hence, employees engaged on task
or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive
leave, unless, they fall under the classification of field
personnel.
What must be ascertained in order to resolve the issue of
propriety of the grant of service incentive leave to
respondent is whether or not he is field personnel?
According to Article 82 of the Labor Code, "field personnel"
shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of
business or branch office of the employer and whose actual
hours of work in the field cannot be determined with

At this point, it is necessary to stress that the definition of a

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

petitioner's business. Accordingly, respondent is entitled to

the grant of service incentive leave.

San Miguel Corp., vs. Del Rosario, G.R. No. 168194,

Dec. 13, 2005

The clear policy of the Labor Code is to grant service

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

Facts:

Service incentive leave is a right which accrues to every

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

On April 17, 2000, respondent was employed by petitioner

as key account specialist. On March 9, 2001, petitioner
informed respondent that her probationary employment will
be severed at the close of the business hours of March 12,
2001. On March 13, 2001, respondent was refused entry to
petitioners premises. On June 24, 2002, respondent filed a
complaint against petitioner for illegal dismissal and
underpayment/non-payment of monetary benefits.
Issue: Whether or not respondent is a regular employee of
petitioner.
Ruling:
Affirmative. In termination cases, like the present
controversy, the burden of proving the circumstances that
would justify the employees dismissal rests with the
employer. The best proof that petitioner should have
presented to prove the probationary status of respondent is
her employment contract. None, having been presented,
the continuous employment of respondent as an account
specialist for almost 11 months, from April 17, 2000 to
March 12, 2001, means that she was a regular employee
and not a temporary reliever or a probationary employee.
And while it is true that by way of exception, the period of
probationary employment may exceed six months when the
parties so agree, such as when the same is established by
company policy, or when it is required by the nature of the

work, none of these exceptional circumstance were proven

in the present case. Hence, respondent whose employment
exceeded six months is undoubtedly a regular employee of
petitioner.
Moreover, even assuming that the employment of
respondent from April 7, 2000 to September 3, 2000, is only
temporary, and that the reckoning period of her
probationary employment is September 4, 2000, she should
still be declared a regular employee because by the time
she was dismissed on March 12, 2001, her alleged
probationary employment already exceeded six months, i.e.,
six months and eight days to be precise.
A worker was
found to be a regular employee notwithstanding the
presentation by the employer of a Payroll Authority
indicating that said employee was hired on probation, since
it was shown that he was terminated four days after the 6th
month of his purported probationary employment.
Neither will petitioners belated claim that respondent
became a probationary employee starting October 1, 2000
work against respondent.
As earlier stated, the payroll
authorities indicating that respondents probationary status
became effective as of such date are of scant evidentiary
value since it does not show the conformity of respondent.
At any rate, in the interpretation of employment contracts,
whether oral or written, all doubts must be resolved in favor
of labor.
Hence, the contract of employment in the instant case,
which appears to be an oral agreement since no written
form was presented by petitioner, should be construed as
one vesting respondent with a regular status and security of
tenure.

Regarding the argument of redundancy, Redundancy, for

purposes of the Labor Code, exists where the services of an
employee are in excess of what is reasonably demanded by
the actual requirements of the enterprise. Succinctly put, a
position is redundant where it is superfluous, and superfluity
of a position or positions may be the outcome of a number
of factors, such as overhiring of workers, decreased volume
of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by
the enterprise.
The determination that the employees services are no
longer necessary or sustainable and, therefore, properly
terminable is an exercise of business judgment of the
employer. The wisdom or soundness of this judgment is not
subject to discretionary review of the Labor Arbiter and the
NLRC, provided there is no violation of law and no showing
that it was prompted by an arbitrary or malicious act. In
other words, it is not enough for a company to merely
declare that it has become overmanned. It must produce
adequate proof of such redundancy to justify the dismissal
of the affected employees.
The following evidence may be proffered to substantiate
redundancy:
the new staffing pattern, feasibility
studies/proposal, on the viability of the newly created
positions, job description and the approval by the
management of the restructuring.
In the case at bar, petitioner presented an affidavit of its
Sales Manager and a memorandum of the company both to
the effect that there is a need to redeploy its regular
employees and terminate the employment of temporary
employees, in view of an excess in manpower. These

documents, however, do not satisfy the requirement of

substantial evidence that a reasonable mind might accept
as adequate to support a conclusion.
Moreover, the lingering doubt as to the existence of
redundancy or of petitioners so called restructuring,
realignment or reorganization which resulted in the
dismissal of not only probationary employees but also of
regular employees, is highlighted by the non-presentation
by petitioner of the required notice to the DOLE and to the
separated employees.
If there was indeed a valid
redundancy effected by petitioner, these notices and the
proof of payment of separation pay to the dismissed regular
employees should have been offered to establish that there
was excess manpower in petitioners GMA-KAG caused by a
decline in the sales volume.
In balancing the interest between labor and capital, the
prudent recourse in termination cases is to safeguard the
prized security of tenure of employees and to require
employers to present the best evidence obtainable,
especially so because in most cases, the documents or proof
needed to resolve the validity of the termination, are in the
possession of employers.
A contrary ruling would
encourage employers to prevent the regularization of an
employee by simply invoking a feigned or unsubstantiated
redundancy program.
Granting that petitioner was able to substantiate the validity
of its reorganization or restructuring, it nevertheless, failed
to effect a fair and reasonable criterion in dismissing
respondent. The criteria in implementing a redundancy are:
(a) less preferred status, e.g. temporary employee; (b)
efficiency; and (c) seniority.

It is evident from the foregoing that the criterion allegedly

used by petitioner in reorganizing its sales unit was the
employment status of the employee.
However, in the
implementation thereof, petitioner erroneously classified
respondent as a probationary employee, resulting in the
dismissal of the latter. Verily, the absence of criteria and the
erroneous implementation of the criterion selected, both
render invalid the redundancy because both have the
ultimate effect of illegally dismissing an employee.
Considering that respondent was illegally dismissed, she is
entitled not only to reinstatement but also to payment of full
back wages, computed from the time her compensation was
actually withheld from her on March 13, 2001, up to her
actual reinstatement. As a regular employee of petitioner
from the date of her employment on April 17, 2000, she is
likewise entitled to other benefits, i.e., service incentive
leave pay and 13th month pay computed from such date
also up to her actual reinstatement.
Respondent is not, however, entitled to holiday pay because
the records reveal that she is a monthly paid regular
employee. Under Section 2, Rule IV, Book III of the Omnibus
Rules Implementing the Labor Code, employees who are
uniformly paid by the month, irrespective of the number of
working days therein, shall be presumed to be paid for all
the days in the month whether worked or not.
Anent attorneys fees, in actions for recovery of wages or
where an employee was forced to litigate and thus incurred
expenses to protect his rights and interests, a maximum of
10% of the total monetary award by way of attorneys fees
is justifiable under Article 111 of the Labor Code, Section 8,
Rule VIII, Book III of its Implementing Rules, and paragraph

7, Article 2208 of the Civil Code. The award of attorneys

fees is proper and there need not be any showing that the
employer acted maliciously or in bad faith when it withheld
the wages. There need only be a showing that the lawful
wages were not paid accordingly, as in the instant
controversy.

Penaranda vs. Baganga Plywood Corp., G.R. No.

159577, May 3, 2006
Facts:
Sometime in June 1999, Petitioner Charlito Pearanda was
hired as an employee of Baganga Plywood Corporation
(BPC) to take charge of the operations and maintenance of
its steam plant boiler. In May 2001, Pearanda filed a
Complaint for illegal dismissal with money claims against
BPC and its general manager, Hudson Chua, before the
NLRC.
After the parties failed to settle amicably, the labor arbiter
directed the parties to file their position papers and submit
supporting documents.
Pearanda alleges that he was employed by respondent
Banganga on March 15, 1999 with a monthly salary of
P5,000.00 as Foreman/Boiler Head/Shift Engineer until he
was illegally terminated on December 19, 2000. he alleges
that his services were terminated without the benefit of due
process and valid grounds in accordance with law.
Furthermore, he was not paid his overtime pay, premium
pay for working during holidays/rest days, night shift
differentials and finally claimed for payment of damages and
attorney's fees having been forced to litigate the present
complaint.
Respondent BPC is a domestic corporation duly organized
and existing under Philippine laws and is represented herein
by its General Manager HUDSON CHUA, the individual
respondent.
Respondents
allege
that
complainant's
separation from service was done pursuant to Art. 283 of

the Labor Code. The respondent BPC was on temporary

closure due to repair and general maintenance and it
applied for clearance with the Department of Labor and
Employment, Regional Office No. XI, to shut down and to
dismiss employees. And due to the insistence of herein
complainant he was paid his separation benefits.
Consequently, when respondent BPC partially reopened in
January 2001, Pearanda failed to reapply.
The labor arbiter ruled that there was no illegal dismissal
and that petitioner's Complaint was premature because he
was still employed by BPC. Petitioners money claims for
illegal dismissal was also weakened by his quitclaim and
admission during the clarificatory conference that he
accepted separation benefits, sick and vacation leave
conversions and thirteenth month pay.
Issue:
Whether or not Pearanda is a regular, common employee
entitled to monetary benefits under Art. 82 of the Labor
Code and is entitled to the payment of overtime pay and
other monetary benefits.

The Implementing Rules of the Labor Code define members

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

Ruling: The petitioner is not entitled to overtime pay and

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

The petitioners work involves:

1.
To supply the required and continuous steam to all
consuming units at minimum cost.

2.
To supervise, check and monitor manpower
workmanship as well as operation of boiler and accessories.
3.
To evaluate
manpower.
4.
fuel.

performance

of

machinery

and

To follow-up supply of waste and other materials for

5.
To train new employees for effective and safety white
working.
6.

Recommend parts and suppliers purchases. acEHSI

7.
To recommend personnel actions such as: promotion,
or disciplinary action.

engineering section. This work necessarily required the use

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

8.
To check water from the boiler, feedwater and
softener, regenerate softener if beyond hardness limit.
9.

Implement Chemical Dosing.

10.
Perform other task as required by the superior from
time to time." 34
The foregoing enumeration, particularly items, 1, 2, 3, 5 and
7 illustrates that petitioner was a member of the managerial
staff. His duties and responsibilities conform to the definition
of a member of a managerial staff under the Implementing
Rules.
Petitioner supervised the engineering section of the steam
plant boiler. His work involved overseeing the operation of
the machines and the performance of the workers in the

Leyte IV Electric Cooperative Inc vs. LEYECO IV

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

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc.

(petitioner)
and
Leyeco
IV
Employees
Union-ALU
(respondent) entered into a Collective Bargaining
Agreement
(CBA)
covering
petitioner
rank-and-file
employees, for a period of five (5) years effective January 1,
1998. On June 7, 2000, respondent, through its Regional
Vice-President, Vicente P. Casilan, sent a letter to petitioner
demanding holiday pay for all employees, as provided for in
the CBA. Petitioner, on the other hand, in its Position Paper,
insisted payment of the holiday pay in compliance with the
CBA provisions, stating that payment was presumed since
the formula used in determining the daily rate of pay of the
covered employees is Basic Monthly Salary divided by 30
days or Basic Monthly Salary multiplied by 12 divided by
360 days, thus with said formula, the employees are already
paid their regular and special days, the days when no work
is done, the 51 un-worked Sundays and the 51 un-worked
Saturdays.
Issue: Whether or not Leyte IV Electric Cooperative is liable
for underpayment of holiday pay.
Held: Leyte IV Electric Cooperative is not liable for
underpayment of holiday pay. The Voluntary Arbitrator
gravely abused its discretion in giving a strict or literal
interpretation of the CBA provisions that the holiday pay be
reflected in the payroll slips. Such literal interpretation
ignores the admission of respondent in its Position Paper
that the employees were paid all the days of the month
even if not worked. In light of such admission, petitioner's
submission of its 360 divisor in the computation of
employees' salaries gains significance.

This ruling was applied in Wellington Investment and

Manufacturing Corporation v. Trajano, 43 Producers Bank of
the Philippines v. National Labor Relations Commission. In
this case, the monthly salary was fixed by Wellington to
provide for compensation for every working day of the year
including the holidays specified by law and excluding only
Sundays. In fixing the salary, Wellington used what it called
the "314 factor"; that is, it simply deducted 51 Sundays from
the 365 days normally comprising a year and used the
difference, 314, as basis for determining the monthly salary.
The monthly salary thus fixed actually covered payment for
314 days of the year, including regular and special holidays,
as well as days when no work was done by reason of
fortuitous cause, such as transportation strike, riot, or
typhoon or other natural calamity, or cause not attributable
to the employees.
It was also applied in Odango v. National Labor Relations
Commission, where Court ruled that the use of a divisor that
was less than 365 days cannot make the employer
automatically liable for underpayment of holiday pay. In said
case, the employees were required to work only from
Monday to Friday and half of Saturday. Thus, the minimum
allowable divisor is 287, which is the result of 365 days, less
52 Sundays and less 26 Saturdays (or 52 half Saturdays).
Any divisor below 287 days meant that the employees were
deprived of their holiday pay for some or all of the ten legal
holidays. The 304-day divisor used by the employer was
clearly above the minimum of 287 days.
In this case, the employees are required to work only from
Monday to Friday. Thus, the minimum allowable divisor is
263, which is arrived at by deducting 51 un-worked Sundays
and 51 un-worked Saturdays from 365 days. Considering

that petitioner used the 360-day divisor, which is clearly

above the minimum, indubitably, petitioner's employees are
being given their holiday pay. Thus, the Voluntary Arbitrator
should not have simply brushed aside petitioner's divisor
formula. In granting respondent's claim of non-payment of
holiday pay, a "double burden" was imposed upon petitioner
because it was being made to pay twice for its employees'
holiday pay when payment thereof had already been
included in the computation of their monthly salaries.
Bahia Shipping Services vs. Chua, G.R. No. 162195,
April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA
533 [1998]

Thereafter, on March 9, 1997, respondent was dismissed

from service on the strength of an unsigned and undated
notice of dismissal. Attached to the dismissal notice is the
alleged minutes or records of the investigation and hearing.
On March 24, 1997, respondent filed a complaint for illegal
dismissal and other monetary claims. He claims that he was
underpaid in the amount of US$110.00 per month for a
period of five (5) months, since he was only paid US$300.00
per month, instead of US$410.00 per month, which was
stipulated in his contract. Aside from underpayment, he
alleged that US$20.00 per month was also deducted from
his salary by petitioner for union dues.

Facts:
Reynaldo Chua, herein respondent, was under the employ
of Bahia Shipping Services, Inc., herein petitioner, as a
restaurant waiter on board the M/S Black Watch , a luxury
cruise ship liner. His employment is pursuant to a Philippine
Overseas Employment Administration (POEA) approved
employment contract dated October 9, 1996 for a period of
nine (9) months from October 18, 1996 to July 17, 1997.
On October 18, 1996, respondent, on board the cruise ship,
left Manila for Heathrow, England. About four months into
his employment, or on February 15, 1997, responded
reported to work an hour and a half (1 ) late. Due to the
incident, respondent was issued a warning-termination form
by the master of the cruise ship, Thor Fleten on February 17,
1997, who likewise conducted an inquisitorial hearing to
investigate the incident on March 8, 1997.

Issue:
In the computation of the award, should the guaranteed
overtime pay per month be included as part of his salary?
Ruling:
There is no factual or legal basis in the inclusion of his
"guaranteed overtime" pay into his monthly salary
computation for the entire unexpired period of his contract.
The Court ruled in Cagampan v. National Labor Relations
Commission, that although an overseas employment
contract may guarantee the right to overtime pay,
entitlement to such benefit must first be established,
otherwise the same cannot be allowed.

Petitioners contention that there is no factual or legal basis

for the inclusion of said amount since respondents
repatriation is well-taken.

PNCC Skyway Traffic Management and Security

Division Workers Organization, GR No. 171231, Feb.
17, 2010
Facts:

Petitioner PNCC Skyway Corporation Traffic Management

and Security Division Workers' Organization (PSTMSDWO) is
a labor union duly registered with the Department of Labor
and Employment (DOLE). Respondent PNCC Skyway
Corporation is a corporation duly organized and operating
under and by virtue of the laws of the Philippines. On
November 15, 2002, petitioner and respondent entered into
a Collective Bargaining Agreement (CBA) incorporating the
terms and conditions of their agreement which included
vacation leave and expenses for security license provisions.
A memorandum was passed by the respondents scheduling
the leaves of the laborers. Petitioner objected to the
implementation of this memorandum and contended that
their union members have the preference in scheduling their
vacation leave. On the other hand, respondent argued that
Article VIII, Section 1 (b) gives the management the final say
regarding the vacation leave schedule of its employees.
Respondent may take into consideration the employees'
preferred schedule, but the same is not controlling.
Issue: Whether or not it is the prerogative of PNCC to
schedule leaves of its employees.
Ruling:
Yes. The rule is that where the language of a contract is
plain and unambiguous, its meaning should be determined
without reference to extrinsic facts or aids. The intention of
the parties must be gathered from that language, and from
that language alone. Stated differently, where the language
of a written contract is clear and unambiguous, the contract
must be taken to mean that which, on its face, it purports to
mean, unless some good reason can be assigned to show

that the words used should be understood in a different

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

Respondents Domingo Z. Ybarola, Jr. and Alfonso E.

Rivera, Jr. were hired on June 15, 1977 and June 1, 1983,
respectively, by RMN. They eventually became account
managers, soliciting advertisements and servicing
various clients of RMN.
The respondents services were terminated as a result of
RMNs reorganization/restructuring; they were given their
separation pay P 631,250.00 for Ybarola, and P
481,250.00 for Rivera. Sometime in December 2002, they
executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents
filed separate complaints (which were later consolidated)
against RMN and its President, Eric S. Canoy, for illegal
dismissal with several money claims, including attorneys
fees. They indicated that their monthly salary rates were
P 60,000.00 for Ybarola and P 40,000.00 for Rivera.
The respondents argued that the release/quitclaim they
executed should not be a bar to the recovery of the full
benefits due them; while they admitted that they signed
release documents, they did so due to dire necessity.

Radio Mindanao Network, Inc. vs. Ybarola

Facts:

The petitioners denied liability, contending that the

amounts the respondents received represented a fair and
reasonable settlement of their claims, as attested to by
the release/quitclaim affidavits which they executed
freely and voluntarily. They belied the respondents
claimed salary rates, alleging that they each received a
monthly salary of P 9,177.00, as shown by the payrolls.

The Labor Arbiter Patricio Libo-on dismissed the illegal

dismissal complaint, but ordered the payment of
additional separation pay to the respondents P
490,066.00 for Ybarola and P 429,517.55 for Rivera.
On appeal by the petitioners to the National Labor
Relations Commission (NLRC), the NLRC set aside the
labor arbiters decision and dismissed the complaint for
lack of merit. It ruled that the withholding tax certificate
cannot be the basis of the computation of the
respondents separation pay as the tax document
included the respondents cost-of-living allowance and
commissions; as a general rule, commissions cannot be
included in the base figure for the computation of the
separation pay because they have to be earned by actual
market transactions attributable to the respondents From
the NLRC, the respondents sought relief from the CA
through a petition for certiorari under Rule 65 of the
Rules of Court.
The CA granted the petition and set aside the assailed
NLRC dispositions. It reinstated the labor arbiters
separation pay award, rejecting the NLRCs ruling that
the respondents commissions are not included in the
computation of their separation pay. It pointed out that in
the present case, the respondents earned their
commissions through actual market transactions
attributable to them; these commissions, therefore, were
part of their salary.
The appellate court declared the release/quitclaim
affidavits executed by the respondents invalid for being
against public policy, citing two reasons: (1) the terms of
the settlement are unconscionable; the separation pay

the respondents received was deficient by at least P

400,000.00 for each of them; and (2) the absence of
voluntariness when the respondents signed the
document, it was their dire circumstances and inability to
support their families that finally drove them to accept
the amount the petitioners offered. Significantly, they
dallied and it took them three months to sign the
release/quitclaim affidavits.
Issue:
Whether or not the release/quitclaim affidavits are invalid
for being against public policy.
Ruling:
Release/Quitclaim; Separation pay. The release/quitclaim
affidavits are invalid for being against public policy for
two reasons: (1) the terms of the settlement are
unconscionable; the separation pay for termination due
to
reorganization/restructuring
was
deficient
by
Php400,000.00 for each employee; they were given only
half of the amount they were legally entitled to; and (2)
the absence of voluntariness when the employees signed
the document, it was their dire circumstances and
inability to support their families that finally drove them
to accept the amount offered. Without jobs and with
families to support, they dallied in executing the
quitclaim instrument, but were eventually forced to sign
given their circumstances. To be sure, a settlement under
these terms is not and cannot be a reasonable one, given
especially the respondents length of service 25 years
for Ybarola and 19 years for Rivera. Radio Mindanao
Network, Inc. and Eric S. Canoy vs. Domingo Z. Ybarola,
et al. G.R. No. 198662. September 12, 2012.

Robina Farms Cebu vs. Villa, GR No. 175869, April

18, 2016
Facts:
Elizabeth Villa was employed by
petitioner Robina Farms as sales clerk since August 1981.
On the later part of 2001, the petitioner had enticed her
to avail herself of the company's special retirement
program.
On March 2, 2002, Villa had received a memorandum
from Lily Ngochua requiring her to explain her failure to
issue invoices for unhatched eggs in the months of
January to February 2002. She explained that the
invoices were not delivered on time because the delivery
receipts were delayed and overlooked. Despite her
explanation, she had been suspended for 10 days from
March 8, 2012 until March 19, 2002. Upon reporting back
to work, she had been advised to cease working because
her application for retirement had already been
approved. However, she had been subsequently informed
that her application had been disapproved, and had then
been advised to tender her resignation with a request for
financial assistance. She manifested her intention to
return to work but the petitioner had confiscated her gate
pass and that she had since then been prevented from
entering the company premises and had been replaced
by another employee.

Due to this, respondent Elizabeth Villa brought against

the petitioner her complaint for illegal suspension, illegal
dismissal, nonpayment of overtime pay, and nonpayment
of service incentive leave pay in the Regional Arbitration
Branch No. VII of the NLRC in Cebu City. The Labor Arbiter
ordered reinstatement of respondent Villa but without
payment of backwages. The NLRC reversed the ruling of
the Labor Arbiter and held the Villa had been illegally
dismissed and ordered Robina Farms to reinstate Villa
and to pay backwages, Service Incentive Leave, Overtime
Pay and Attorneys Fees. The Court of Appeals likewise
affirmed the decision of the NLRC.
Issue:
Whether or not respondent had been illegally dismissed
by petitioner Robina Farms Cebu.
Ruling:
The Supreme Court ruled in the affirmative. It was clear
that it was Robina Farms Cebu that wanted to severe the
employer-employee relationship. This can be gleamed
from the fact that after the suspension, Villa was not
anymore allowed to work and was also prevented from
entering the work premises. Ordinarily, after an employee
has served her suspension, she should be admitted back
to work and to continue to receive compensation for her
services. Neither did Villa's application for early
retirement manifest her intention to sever the employeremployee relationship. Although she applied for early
retirement, she did so upon the belief that she would
receive a higher benefit based on the petitioner's offer.
As such, her consent to be retired could not be fairly
deemed to have been knowingly and freely given.

However, the Supreme Court also ruled that the award of

overtime pay is improper. Firstly, entitlement to overtime
pay must first be established by proof that the overtime
work was actually performed before the employee may
properly claim the benefit. The burden of proving
entitlement to overtime pay rests on the employee
because the benefit is not incurred in the normal course
of business. Failure to prove such actual performance
transgresses the principles of fair play and equity. And,
secondly, the NLRC's reliance on the daily time records
(DTRs) showing that Villa had stayed in the company's
premises beyond eight hours was misplaced. The DTRs
did not substantially prove the actual performance of
overtime work. The petitioner correctly points out that
any employee could render overtime work only when
there was a prior authorization therefor by the
management. Without the prior authorization,
therefore, Villa could not validly claim having performed
work beyond the normal hours of work.

Reyes vs. NLRC et al., G.R. No. 160233; August 8,

2007
Facts:
Petitioner was employed as a salesman at private
respondent's Grocery Division in Davao City on August
12, 1977. He was eventually appointed as unit manager
of Sales Department-South Mindanao District, a position
he held until his retirement on November 30, 1997.
Thereafter, he received a letter regarding the
computation of his separation pay. Insisting that his
retirement benefits and 13th month pay must be based
on the average monthly salary of P42,766.19, which
consists of P10,919.22 basic salary and P31,846.97
average monthly commission, petitioner refused to
accept the check issued by private respondent in the
amount of P200,322.21. Instead, he filed a complaint
before the arbitration branch of the NLRC for retirement
benefits, 13th month pay, tax refund, earned sick and
vacation leaves, financial assistance, service incentive
leave pay, damages and attorney's fees.
Petitioner contends that the commissions form part of the
basic salary, citing the case of Philippine Duplicators, Inc.
v. National Labor Relations Commission, wherein the
Court held that commissions earned by salesmen form
part of their basic salary. Private respondent counters
that petitioner knew that the overriding commission is
not included in the basic salary because it had not been
considered as such for a long time in the computation of

the 13th month pay, leave commissions, absences and

tardiness.
Issue:
Whether or not the average monthly sales commission of
thirty one thousand eight hundred forty six and 97/100
(Php31,846.97) should be included in the computation of
his retirement benefits and 13th month pay.
Ruling:
This Court has held, in Philippine Duplicators that, the
salesmen's commissions, comprising a pre-determined
percentage of the selling price of the goods sold by each
salesman, were properly included in the term basic salary
for purposes of computing the 13th month pay. The
salesmen's commission are not overtime payments, nor
profit-sharing payments nor any other fringe benefit but
a portion of the salary structure which represents an
automatic increment to the monetary value initially
assigned to each unit of work rendered by a salesman.
Contrarily, in Boie-Takeda, the so-called commissions paid
to or received by medical representatives of Boie-Takeda
Chemicals or by the rank and file employees of Philippine
Fuji Xerox Co., were excluded from the term basic salary
because these were paid to the medical representatives
and rank-and-file employees as productivity bonuses,
which are generally tied to the productivity, or capacity
for revenue production, of a corporation and such
bonuses closely resemble profit-sharing payments and
have no clear direct or necessary relation to the amount
of work actually done by each individual employee.
Further, commissions paid by the Boie-Takeda Company

to its medical representatives could not have been sales

commissions in the same sense that Philippine
Duplicators paid the salesmen their sales commissions.
Medical representatives are not salesmen; they do not
effect any sale of any article at all.
In fine, whether or not a commission forms part of the
basic salary depends upon the circumstances or
conditions for its payment, which indubitably are factual
in nature for they will require a re-examination and
calibration of the evidence on record.
As to the main issue whether petitioner's commissions be
considered in the computation of his retirement benefits
and 13th month pay, we rule in the negative. Article 287
of the Labor Code, as amended by Republic Act No. 7641,
otherwise known as The New Retirement Law, 22
provides: Retirement. Any employee may be retired
upon reaching the retirement age established in the
collective bargaining agreement or other applicable
employment contract In the absence of a retirement
plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon
reaching the age of sixty (60) years or more, but not
beyond sixty five (65) years which is hereby declared the
compulsory retirement age, who has served at least five
(5) years in the said establishment, may retire and shall
be entitled to retirement pay equivalent to at least one
half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as
one whole year. Unless the parties provide for broader
inclusions, the term one half (1/2) month salary shall
mean fifteen (15) days plus one twelfth (1/12) of the 13th

month pay and the cash equivalent of not more than five
(5) days of service incentive leaves.
Petitioner filed for optional retirement upon reaching the
age of 60. However, the basis in computing his
retirement benefits is his latest salary rate of P10,919.22
as the commissions he received are in the form of profitsharing payments specifically excluded by the foregoing
rules. Case law has it that when these earnings and
remuneration are closely akin to fringe benefits, overtime
pay or profit-sharing statements, they are properly
excluded in computing retirement pay. However, sales
commissions which are effectively an integral portion of
the basic salary structure of an employee, shall be
included in determining the retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a
monthly sum of P10,919.22 as salary corresponding to
his position as Unit Manager. Thus, as correctly ruled by
public respondent NLRC, the "overriding commissions"
paid to him by Universal Robina Corp. could not have
been 'sales commissions' in the same sense that
Philippine
Duplicators
paid
its
salesmen
sales
commissions. Unit Managers are not salesmen; they do
not effect any sale of article at all. Therefore, any
commission which they receive is certainly not the basic
salary which measures the standard or amount of work of
complainant as Unit Manager. Accordingly, the additional
payments made to petitioner were not in fact sales
commissions but rather partook of the nature of profitsharing business. Certainly, from the foregoing, the
doctrine in Boie-Takeda Chemicals and Philippine Fuji
Xerox Corporation, which pronounced that commissions

are additional pay that does not form part of the basic
salary, applies to the present case. Aside from the fact
that as unit manager petitioner did not enter into actual
sale transactions, but merely supervised the salesmen
under his control, the disputed commissions were not
regularly received by him. Only when the salesmen were
able to collect from the sale transactions can petitioner
receive the commissions. Conversely, if no collections
were made by the salesmen, then petitioner would
receive no commissions at all. In fine, the commissions
which petitioner received were not part of his salary
structure but were profit-sharing payments and had no
clear, direct or necessary relation to the amount of work
he actually performed. The collection made by the
salesmen from the sale transactions was the profit of
private respondent from which petitioner had a share in
the form of a commission. Hence, petition is denied.

Arco Metal Products vs. Samahan ng Manggagawa

sa Arco-Metal-NAFLU, G.R. No. 170734; May 14,
2008
Facts:
Petitioner is a company engaged in the manufacture of
metal products, whereas respondent is the labor union of
petitioners rank and file employees.
Sometime in
December 2003, petitioner paid the 13th month pay,
bonus, and leave encashment of three union members in

amounts proportional to the service they actually

rendered in a year, which is less than a full twelve (12)
months. Respondent protested the prorated scheme,
claiming that on several occasions petitioner did not
prorate the payment of the same benefits to seven (7)
employees who had not served for the full 12 months.
According to respondent, the prorated payment violates
the rule against diminution of benefits under Article 100
of the Labor Code. Thus, they filed a complaint before the
National Conciliation and Mediation Board (NCMB). The
parties submitted the case for voluntary arbitration.
Issue:
Whether or not the prorated payment of the benefits
constitute a violation under Art. 100 of the Labor Code.
Ruling:
SC ruled in favor of the respondents. The voluntary grant
of the benefits has been an established company
practice. It has been a company practice which grants
full benefits to its employees regardless of the length of
service rendered.
There is no doubt that in order to be entitled to the full
monetization of sixteen (16) days of vacation and sick
leave, one must have rendered at least one year of
service. The clear wording of the provisions does not
allow any other interpretation. Anent the 13th month
pay and bonus, we agree with the findings of Labor
Arbiter Mangabat that the CBA provisions did not give
any meaning different from that given by the law, thus it
should be computed at 1/12 of the total compensation

which an employee receives for the whole calendar year.

The bonus is also equivalent to the amount of the 13th
month pay given, or in proportion to the actual service
rendered by an employee within the year.
Any benefit and supplement being enjoyed by employees
cannot be reduced, diminished, discontinued or
eliminated by the employer.
The principle of nondiminution of benefits is founded on the Constitutional
mandate to "protect the rights of workers and promote
their welfare, and to afford labor full protection. Said
mandate in turn is the basis of Article 4 of the Labor Code
which states that all doubts in the implementation and
interpretation of this Code, including its implementing
rules and regulations shall be rendered in favor of labor.
Jurisprudence is replete with cases which recognize the
right of employees to benefits which were voluntarily
given by the employer and which ripened into company
practice. Thus in Davao Fruits Corporation v. Associated
Labor Unions, et al. where an employer had freely and
continuously included in the computation of the 13th
month pay those items that were expressly excluded by
the law, we held that the act which was favorable to the
employees though not conforming to law had thus
ripened into a practice and could not be withdrawn,
reduced, diminished, discontinued or eliminated.
In
Sevilla Trading Company v. Semana, we ruled that the
employers act of including non-basic benefits in the
computation of the 13th month pay was a voluntary act
and had ripened into a company practice which cannot
be peremptorily withdrawn.
Meanwhile in Davao
Integrated Port Stevedoring Services v. Abarquez, the

Court ordered the payment of the cash equivalent of the

unenjoyed sick leave benefits to its intermittent workers
after finding that said workers had received these
benefits for almost four years until the grant was stopped
due to a different interpretation of the CBA provisions. We
held that the employer cannot unilaterally withdraw the
existing privilege of commutation or conversion to cash
given to said workers, and as also noted that the
employer had in fact granted and paid said cash
equivalent of the unenjoyed portion of the sick leave
benefits to some intermittent workers.

worked for URSUMCO as crane operation from 1976 up to

June 15, 1997.
John Gokongwei, Jr. President of URSUMCO issued a
memorandum establishing the company policy on
Compulsory Retirement. All employees corporate-wide
who attain 60 years of age on or before April 30, 1991
shall be considered retired on May 31, 1991.
Subsequently, on December 9, 1992, Republic Act No.
7641 was enacted into law and it took effect on January
7, 1993, amending Article 287 of the Labor Code.
Agripino and Alejandro having reached the age of 60,
were allegedly forced to retire by URSUMCO. They both
accepted their retirement benefits. Later on, Agripino
filed a complaint for illegal dismissal because his
compulsory retirement was in violation of the provisions
of RA 7641 and, was in effect, a form of illegal dismissal.
Issues:
(1)

Whether RA 7641 can be given retroactive effect?

(2)
Whether or not Agripino Caballeda and Alejandro
Cadalin voluntarily retired from the service?

Ruling:
Universal Robina Sugar Milling Corp., vs Caballeda, G.R.
156644. July 28, 2008

The issue of retroactivity has long been settled in the

case of Enriquez Security Services, Inc. vs. Cabotaje.

Facts:

RA 7641 is undoubtedly a social legislation. The law has

been enacted as a labor protection measure and as a
curative statute that absent a retirement plan devised by,
an agreement with, or a voluntary grant from, an

Agripino Caballeda worked as welder for URSUMCO from

March 1989 until June 23, 1997 while Alejandro Cadalin

employer can respond, in part at least, to the financial

wellbeing of workers during their twilight years soon
following their life of labor. There should be little doubt
about the fact that the law can apply to labor contracts
still existing at the time the statute has taken effect, and
that its benefits can be reckoned not only from the date
of the law's enactment but retroactively to the time said
employment contracts have started.
This doctrine has been repeatedly upheld and clarified in
several cases. Pursuant thereto, this Court imposed two
(2) essential requisites in order that R.A. 7641 may be
given retroactive effect: (1) the claimant for retirement
benefits was still in the employ of the employer at the
time the statute took effect; and (2) the claimant had
complied with the requirements for eligibility for such
retirement benefits under the statute.
When respondents were compulsorily retired from the
service, RA 7641 was already in full force and effect. The
petitioners failed to prove that the respondents did not
comply with the requirements for eligibility under the law
for such retirement benefits. In sum, the aforementioned
requisites were adequately satisfied, thus, warranting the
retroactive application of R.A. 7641 in this case.
Retirement is the result of a bilateral act of the parties, a
voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain
age, agrees to sever his or her employment with the
former. The age of retirement is primarily determined by
the existing agreement between the employer and the
employees. However, in the absence of such agreement,
the retirement age shall be fixed by law. Under Art. 287

of the Labor Code as amended, the legally mandated age

for compulsory retirement is 65 years, while the set
minimum age for optional retirement is 60 years.
In this case, it may be stressed that the CBA does not per
se specifically provide for the compulsory retirement age
nor does it provide for an optional retirement plan. It
merely provides that the retirement benefits accorded to
an employee shall be in accordance with law. Thus, we
must apply Art. 287 of the Labor Code which provides for
two types of retirement: (a) compulsory and (b) optional.
The first takes place at age 65, while the second is
primarily determined by the collective bargaining
agreement or other employment contract or employer's
retirement plan. In the absence of any provision on
optional retirement in a collective bargaining agreement,
other employment contract, or employer's retirement
plan, an employee may optionally retire upon reaching
the age of 60 years or more, but not beyond 65 years,
provided he has served at least five years in the
establishment concerned. That prerogative is exclusively
lodged in the employee.
Indubitably, the voluntariness of the respondents'
retirement is the meat of the instant controversy.
Generally, the law looks with disfavor on quitclaims and
releases by employees who have been inveigled or
pressured into signing them by unscrupulous employers
seeking to evade their legal responsibilities and frustrate
just claims of employees. They are frowned upon as
contrary to public policy. A quitclaim is ineffective in
barring recovery of the full measure of a worker's rights,

and the acceptance of benefits therefrom does not

amount to estoppel.
In exceptional cases, the Court has accepted the validity
of quitclaims executed by employees if the employer is
able to prove the following requisites: (1) the employee
executes a deed of quitclaim voluntarily; (2) there is no
fraud or deceit on the part of any of the parties; (3) the
consideration of the quitclaim is credible and reasonable;
and (4) the contract is not contrary to law, public order,
public policy, morals or good customs or prejudicial to a
third person with a right recognized by law. In this case,
petitioners failed to establish all the foregoing requisites.
To be precise, only Alejandro was able to claim a partial
amount of his retirement benefit. Thus, it is clear from
the decisions of the LA, NLRC and CA that petitioners are
still liable to pay Alejandro the differential on his
retirement benefits. On the other hand, Agripino was
actually and totally deprived of his retirement benefit. In
Becton Dickinson Phils., Inc. v. National Labor Relations
Commission, we held:
There is no nexus between intelligence, or even the
position which the employee held in the company when it
concerns the pressure which the employer may exert
upon the free will of the employee who is asked to sign a
release and quitclaim. The employee is confronted with
the same dilemma of whether signing a release and
quitclaim and accept what the company offers them, or
refusing to sign and walk out without receiving anything,
may do succumb to the same pressure, being very well
aware that it is going to take quite a while before he can
recover whatever he is entitled to, because it is only after

a protracted legal battle starting from the labor arbiter

level, all the way to this Court, can he receive anything at
all. The Court understands that such a risk of not
receiving anything whatsoever, coupled with the
probability of not immediately getting any gainful
employment or means of livelihood in the meantime,
constitutes enough pressure upon anyone who is asked
to sign a release and quitclaim in exchange of some
amount of money which may be way below what he may
be entitled to based on company practice and policy or
by law.
Absent any convincing proof of voluntariness in the
submission of the documentary requirements and the
execution of the quitclaim, we cannot simply assume that
respondents were not subjected to the very same
pressure. Respondents vigorously pursued this case all
the way up to the Supreme Court. Without doubt, this is a
manifestation that respondents had no intention of
relinquishing their employment, wholly incompatible to
petitioners' assertion that respondents voluntarily retired.
Respondents did not voluntarily retire but were forced to
retire, tantamount to illegal dismissal.

2.
Whether or not petitioner was validly retired
pursuant thereto
Lourdes Cercado vs Uniprom Inc., G.R. NO. 188154
October 13, 2010
Fact:
Petitioner Lourdes cerdaco was an employee of UNIPROM
Inc. for 22 years since December 15, 1978. When
respondent came up with a retirement plan, sometime in
1980 and then amended in 2001, which provides that any
employee with a minimum of 20 years of service,
regardless of age, may be retired at the option of the
employer. In December 2000, UNIPROM implemented a
company-wide retirement program, including herein
petitioner. She was offered an early retirement package
amounting to P171, 982.90 but Cercado rejected the
offer. UNIPROM exercised its option under the retirement
plan and decided to retire petitioner effective February
15, 2001 so she was no longer given any work
assignment after the said date. This prompted the
petitioner to file a complaint for illegal dismissal before
the Labor Arbiter, alleging that UNIPROM did not have
abona fide retirement plan, and even if there was, she
didnt consent thereto. Respondent averred that Cercado
was automatically covered by the retirement plan when
she agreed to the companys rules and regulations, and
that her retirement was an exercise of management
prerogative.
Issues:
1.
Whether or
retirement plan

not

UNIPROM

has

bona

fide

Ruling: Petition is meritorious.

Retirement is the result of a bilateral act of the parties, a
voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain
age, agrees to sever his or her employment with the
former.
1.
Yes, UNIPROM had a bona fide retirement plan.
Article 287 of the Labor Code, as amended by R.A 7641,
pegs the age for compulsory retirement at 65 years old,
while the minimum age for optional retirement is set at
60 years. However, an employer is free to impose a
retirement age earlier than the foregoing mandates. This
has been upheld in numerous cases as a valid exercise of
management prerogative.
In this case, petitioner was retired by UNIPROM at the age
of 47, after having served the company for 22 years,
pursuant to the companys retirement plan, which
provides that employees who have rendered at least 20
years of service can be retired at the option of the
copany. Respondents retirement plan can be expediently
stamped with validity and justified under the all
encompassing phrase management prerogative.
2.
No,
petitioner
was
not
validly
retired.
Jurisprudence has upheld that it is axiomatic that a
retirement plan giving the employer the option to retire
its employees below below the ages provided by law
must be assented to and accepted by the latter,
otherwise its adhesive imposition will amount to a

deprivation of property without due process. In decided

cases, the retirement plans were either embodied in the
CBA, or established after consultations and negotiations
with the emplyees bargaining representative. The cnsent
of the employees to be retired even before the statutory
retirement age of 65 years was thus clear and
unequivocal. Acceptance by the employees of an early
retirement age must be explicit, voluntary, free and
uncompelled.
WhHEREFORE, petition is granted.
Radio Mindanao Network, Inc. And Eric S. Canoy,
vs. Domingo Z. Ybarola, Jr. And Alfonso E. Rivera,
Jr., [G.R. No. 198662. September 12, 2012.]
Facts:
Respondents Domingo Z. Ybarola, Jr. and Alfonso E.
Rivera, Jr. were hired on June 15, 1977 and June 1, 1983,
respectively, by Radio Mindanao Network (RMN). They
eventually
became
account
managers,
soliciting
advertisements and servicing various clients of RMN.
On September 15, 2002, the respondents' services were
terminated
as
a
result
of
RMN's
reorganization/restructuring; they were given their
separation pay P631,250.00 for Ybarola, and
P481,250.00 for Rivera. Sometime in December 2002,
they executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents
filed separate complaints (which were later consolidated)
against RMN and its President, Eric S. Canoy, for illegal
dismissal with several money claims, including attorney's

fees. They indicated that their monthly salary rates were

P60,000.00 for Ybarola and P40,000.00 for Rivera.
Issue: Whether the amounts the respondents received
represented a fair and reasonable settlement of their
claims
Ruling:
The petitioners insist that the respondents' commissions
were not part of their salaries, because they failed to
present proof that they earned the commission due to
actual market transactions attributable to them. They
submit that the commissions are profit-sharing payments
which do not form part of their salaries. We are not
convinced. If these commissions had been really profitsharing bonuses to the respondents, they should have
received the same amounts, yet, as the NLRC itself
noted, Ybarola and Rivera received P372,173.11 and
P586,998.50 commissions, respectively, in 2002. The
variance in amounts the respondents received as
commissions supports the CA's finding that the salary
structure of the respondents was such that they only
received a minimal amount as guaranteed wage; a
greater part of their income was derived from the
commissions they get from soliciting advertisements;
these advertisements are the "products" they sell. As the
CA aptly noted, this kind of salary structure does not
detract from the character of the commissions being part
of the salary or wage paid to the employees for services
rendered to the company, as the Court held in Philippine
Duplicators, Inc. v. NLRC.
The petitioners' reliance on our ruling in Talam v. National
Labor Relations Commission, regarding the "proper

appreciation of quitclaims," as they put it, is misplaced.

While Talam, in the cited case, and Ybarola and Rivera, in
this case, are not unlettered employees, their situations
differ in all other respects.
In Talam, the employee received a valuable consideration
for his less than two years of service with the company;
he was not shortchanged and no essential unfairness
took place. In this case, as the CA noted, the separation
pay the respondents each received was deficient by at
least P400,000.00; thus, they were given only half of the
amount they were legally entitled to. To be sure, a
settlement under these terms is not and cannot be a
reasonable one, given especially the respondents' length
of service 25 years for Ybarola and 19 years for Rivera.
The CA was correct when it opined that the respondents
were in dire straits when they executed the
release/quitclaim affidavits. Without jobs and with
families to support, they dallied in executing the
quitclaim instrument, but were eventually forced to sign
given their circumstances.
Eleazar S. Padillo, Vs. Rural Bank Of Nabunturan,
Inc. And Mark S. Oropeza G.R. No. 199338. January
21, 2013
Facts:
On October 1, 1977, petitioner, the late Eleazar Padillo
(Padillo), was employed by respondent Rural Bank of
Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to
liquidity problems which arose sometime in 2003, the
Bank took out retirement/insurance plans with Philippine
American Life and General Insurance Company (Philam
Life) for all its employees in anticipation of its possible

closure and the concomitant severance of its personnel.

In this regard, the Bank procured Philam Plan Certificate
of Full Payment No. 88204, Plan Type 02FP10SC,
Agreement No. PP98013771 (Philam Life Plan) in favor of
Padillo for a benefit amount of P100,000.00 and which
was set to mature on July 11, 2009. .During the latter
part of 2007, Padillo suffered a mild stroke due to
hypertension which consequently impaired his ability to
effectively pursue his work. On September 10, 2007, he
wrote a letter addressed to respondent Oropeza, the
president of the bank, expressing his intention to avail of
an early retirement package. Despite several follow-ups,
his request remained unheeded. On October 3, 2007,
Padillo was separated from employment due to his poor
and failing health as reflected in a Certification dated
December 4, 2007 issued by the Bank. Not having
received his claimed retirement benefits, Padillo filed with
the NLRC a complaint for the recovery of unpaid
retirement benefits.
Ruling:
The Labor Code provision on termination on the ground of
disease under Article 297 does not apply in this case,
considering that it was the petitioner and not the Bank
who severed the employment relations. It was Padillo
who voluntarily retired and that he was not terminated by
the Bank.
Under article 300 of the labor code, in the absence of any
applicable agreement, an employee must (1) retire when
he is at least sixty (60) years of age and (2) serve at least
(5) years in the company to entitle him/her to a

retirement benefit of at least one-half (1/2) month salary

for every year of service, with a fraction of at least six (6)
months being considered as one whole year. Notably,
these age and tenure requirements are cumulative and
non-compliance with one negates the employee's
entitlement to the retirement benefits under Article 300
of the Labor Code.
In this case, it is undisputed that there exists no
retirement plan, collective bargaining agreement or any
other equivalent contract between the parties which set
out the terms and condition for the retirement of
employees, with the sole exception of the Philam Life
Plan which premiums had already been paid by the Bank.
In the absence of any applicable contract or any evolved
company policy, Padillo should have met the age and
tenure requirements set forth under Article 300 of the
Labor Code to be entitled to the retirement benefits
provided therein. Unfortunately, while Padillo was able to
comply with the five (5) year tenure requirement as he
served for twenty-nine (29) years he, however, fell
short with respect to the sixty (60) year age requirement
given that he was only fifty-five (55) years old when he
retired. Therefore, without prejudice to the proceeds due
under the Philam Life Plan, petitioners' claim for
retirement benefits must be denied.
Grace Christian High School vs. Lavandera, GR No.
177845, August 20, 2014
Facts:

Filipinas Lavandera was employed by petitioner Grace

Christian High School (GCHS) as high school
teacher since June 1977, with a monthly salary of
18,662.00 as of May 31, 2001.
On August 30, 2001, Filipinas filed a complaint for illegal
(constructive) dismissal, non-payment of service
incentive leave (SIL) pay, separation pay, service
allowance, damages, and attorneys fees against GCHS
and/or its principal, Dr. James Tan. She alleged that on
May 11, 2001, she was informed that her services were
to be terminated effective May 31, 2001, pursuant to
GCHS retirement plan which gives the school the option
to retire a teacher who has rendered at least 20 years of
service, regardless of age, with a retirement pay of onehalf () month for every year of service. At that time,
Filipinas was only 58 years old and still physically fit to
work. She pleaded with GCHS to allow her to continue
teaching but her services were terminated, contrary to
the provisions of Republic Act No. (RA) 7641, otherwise
known as the Retirement Pay Law.
LA dismissed the illegal dismissal case but found the
retirement benefits payable under GCHS plan to be
deficient. NLRC reversed LAs award and held that
retirement pay should be computed based on
her monthly salary at the time of her retirement. CA
modified NLRCs decision and ruled that
the computation of one-half month salary by equating
it to22.5 days.
Issue: Whether or not the multiplier 22.5 days is to be
used in computing the retirement pay differentials of
Filipinas.

Ruling: YES. RA 7641, which was enacted on December

9, 1992, amended Article 287 of the Labor Code,
providing for the rules on retirement pay to qualified
private sector employees in the absence of any
retirement plan in the establishment. The said law states
that an employees retirement benefits under
any collective bargaining agreement (CBA) and other
agreements shall not be less than those provided under
the same that is, at least one-half (1/2) month salary for
every year of service, a fraction of at least six (6) months
being considered as one whole year and that unless
the parties provide for broader inclusions, the term onehalf (1/2) month salary shall mean fifteen (15) days plus
one-twelfth (1/12) of the 13th month pay and
the cash equivalent of not more than five (5) days of
service incentive leaves.
Applicability of the 1/2 month salary provision:

There is no CBA or other applicable agreement

providing for retirement benefits to employees, or

There is a CBA or other applicable agreement

providing for retirement benefits but it is below the
requirement set by law.

Verily, the determining factor in choosing which

retirement scheme to apply is still superiority in terms of
benefits provided.
In the present case, GCHS has a retirement plan for its
faculty and non-faculty members, which gives it the
option to retire a teacher who has rendered at least 20
years of service, regardless of age, with a retirement pay
of one-half (1/2) month for every year of

service. Considering, however, that GCHS computed

Filipinas retirement pay without including one-twelfth
(1/12) of her 13th month pay and the cash equivalent of
her five (5) days SIL, both the NLRC and the CA correctly
ruled that Filipinas retirement benefits should be
computed in accordance with Article 287 of the Labor
Code, as amended by RA 7641, being the more
beneficent retirement scheme. They differ, however, in
the resulting benefit differentials due to divergent
interpretations of the term one-half (1/2) month salary
as used under the law.
Elegir v. Philippine Airlines, Inc.: one-half (1/2) month
salary means 22.5 days: 15 days plus 2.5 days
representing one-twelfth (1/12) of the 13th month pay
and the remaining 5 days for SIL.
The Court sees no reason to depart from this
interpretation. GCHS argument therefore that the 5 days
SIL should be likewise pro-rated to their 1/12 equivalent
must fail.
Moreover, the Court held that the award of legal interest
at the rate of 6% per annum on the amount of
P68,150.00 representing the retirement
pay differentials due Filipinas should be reckoned from
the rendition of the LAs Decision on March 26, 2002 and
not from the filing of the illegal dismissal complaint.

extended because he had an outstanding loan and his

children were still in college. He assured BDO that he was
healthy and could still perform his duties in the branch.
BDO denied Sagaysay's request.

Banco De Oro Unibank vs.Sagaysay,GR No. 214961,

Sept 16, 2015
Facts: On May 16, 2006, respondent Guillermo Sagaysay
(Sagaysay) was hired by petitioner Banco De Oro
Unibank, Inc., (BDO) as Senior Accounting Assistant 5 in
its San Jose, Nueva Ecija, branch as a result of a merger
with United Overseas Bank (UOB), with BDO as the
surviving bank. Sagaysay was previously employed in
UOB from 2004 to 2006 or for two (2) years. Prior thereto,
he worked for Metropolitan Bank and Trust Co.
(Metrobank) from 1976 to 2004 for a period of twentyeight (28) years.
In a letter dated January 8, 2010, BDO informed
Sagaysay that, pursuant to the retirement policy of the
bank which mandated its retirement age to be sixty (60),
he would be formally retired effective September 1, 2010,
a few days after his 60th birthday. The normal or
compulsory retirement age of the bank was based on its
retirement plan which was implemented on July 1, 1994
In an e-mail dated July 27, 2010, Sagaysay wrote that,
although the time had come that the BDO Retirement
Program would be implemented to those reaching the
age of sixty (60), he requested that his services be

In another e-mail, dated August 19, 2010, Sagaysay

appealed to BDO to extend his service for 8.5 months or
up to May 16, 2011 so that he could render at least five
(5) years of employment which would entitle him to 50%
of his basic pay for every year of service upon his
retirement. BDO denied Sagaysay's appeal and retired
him on September 1, 2010. As of his last day of work, he
was earning a monthly salary of P28,048.00.
On January 10, 2011, Sagaysay filed a complaint for
illegal dismissal with prayer for reinstatement and
payment of backwages, moral damages, exemplary
damages, and attorney's fee against BDO before the
Labor Arbiter (LA). He claimed that despite his appeal,
BDO compulsory retired him on September 1, 2010. As a
result, he and his family suffered damages in the amount
of P2,225,403.00 which he would have received if he was
made to retire at the age of sixty-five (65).

Issue:
The retirement plan of BDO is valid and effective and
consequently, the mandatory requirement age of 60
years old is also binding.

Ruling:
The Supreme Court ruled in the affirmative.
Retirement is the result of a bilateral act of the parties, a
voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain
age, agrees to sever his or her employment with the
former.
The retirement age is primarily determined by the
existing agreement or employment contract. Only in the
absence of such an agreement shall the retirement age
be fixed by law, which provides for a compulsory
retirement age at 65 years, while the minimum age for
optional retirement is set at 60 years.
Jurisprudence has also established that the employer can
lower the retirement age subject to the consent of its
employees. Acceptance by the employees of an early
retirement age option must be explicit, voluntary, free,
and uncompelled. While an employer may unilaterally
retire an employee earlier than the legally permissible
ages under the Labor Code, this prerogative must be
exercised pursuant to a mutually instituted early
retirement plan. In other words, only the implementation

and execution of the option may be unilateral, but not the

adoption and institution of the retirement plan containing
such option. For the option to be valid, the retirement
plan containing it must be voluntarily assented to by the
employees or at least by a majority of them through a
bargaining representative.
In this case, it was established that Sagaysay assented to
this retirement plan. The plan was established as early as
July 1, 1994 and not a single employee had questioned
its validity. BDO also reiterated this policy by issuing a
memorandum regarding its implementation to all
employees and officers of the establishment. The Court
also held that by accepting the employment offer of BDO,
Sagaysay was deemed to have assented to all existing
rules, regulations and policies of the bank, including the
retirement plan.