Labor Digests Midterm Vega PDF

University of San Carlos
School of Law and Governance
LABOR STANDARDS
Case Digest (S.Y. 2018-2019)
SUBMITTED BY:
ANGELIKA U. VEGA JD-2 EH405
SUBMITTED TO:
ATTY. JEFFERSON M. MARQUEZ

TABLE OF CONTENTS
I. THE APPLICABLE LAWS
II. BASIC PRINCIPLES

1. Sonza vs. ABS-CBN, G.R. No. 138051 June 10, 2004
2. Lazaro vs. Social Security Commission, G.R. No. 138254 July 30, 2004
3. Phil. Global Communication vs. De Vera, G.R. No. 157214 June 7, 2005
4. ABS-CBN vs. Nazareno, G.R. No. 164156, September 26, 2006
5. Francisco vs. NLRC, G.R. No. 170087 August 31, 2006
6. Nogales et al., vs. Capitol Medical Center et al., G.R. No. 142625 December 19, 2006
7. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881 February 15, 2007
8. Calamba Medical Center vs. NLRC et al., G.R. No. 176484 November 25, 2008
9. Escasinas et al., vs. Shangri-las Mactan Island Resort et al., G.R. No. 17882, March 4, 2009
10. Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al., G.R. No. 167622 January 25,
2011
11. Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426 August 15, 2011
12. Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084 September 14, 2011
13. Lirio vs. Genovia, G.R. No. 169757 November 23, 2011
14. Jao vs. BCC Products Sales Inc. G.R. No. 163700 April 18, 2012
15. Legend Hotel (Manila) vs. Realuyo G.R. No. 153511 July 18, 2012
16. The New Philippine Skylanders, Inc., vs. Dakila, G.r. No. 199547 Sept. 24, 2012
17. Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482 March 12, 2014
18. Royale Homes Marketing Corp., vs. Alcantara, GR No. 195190 July 28, 2014
19. Fuji Television Network Inc. vs. Espiritu, GR No. 204944-45 December 3, 2014
20. Cabaobas et al., vs. Pepsi Cola GR No.176908 March 25, 2015
21. Begino et al., vs. ABS-CBN Corp., GR No. 199166 April 20, 2015
22. Social Security System vs. Ubana, GR No. 200114 August 25, 2015
23. Century Properties Inc. vs. Babiano, et al., GR No. 220978 July 5, 2016
24. Lu vs. Enopia, GR No. 197899 March 6, 2017
III. HIRING OF EMPLOYEE:

1. PT&T vs. NLRC, G.R. No. 118978 May 23, 1997
2. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils., G.R. No. 162994 September
17, 2004
3. Star Paper Corp., vs. Simbol, G.R. No. 164774 April 12, 2006
4. Del Monte Phils vs. Velasco, G.R. No. 153477 March 6, 2007
5. Yrasuegui vs. Phil Air Lines, G.R. No. 168081 October 17, 2008
IV. WAGES & WAGE RATIONALIZATION ACT
IV-A. VIOLATION OF WAGE ORDER

1. S.I.P. Food House et al., vs. Batolina, GR No. 192473, October 11, 2010
2. SLL International Cables Specialist vs. NLRC, GR No. 172161, March 2, 2011
3. Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. G.R. No. 176985, April 1, 2013
4. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant, G.R. No. 198783,
April 15, 2013
5. The National Wages & Productivity Commission et al., vs. The Alliance of Progressive Labor
et al., GR No. 150326, March 12, 2014
6. David/Yiels Hog Dealer vs. Macasio, GR No. 195466, July 2, 2014
7. Our Haus Realty Development Corp., vs. Parian et al., GR No. 204651, August 6, 2014
8. Milan et al., vs. NLRC GR No. 202961, February 4, 2015
9. Toyota Pasig Inc vs. De Peralta, GR No. 213488, November 7, 2016
1 ANGELIKA U. VEGA JD - 2 EH405

10. Soriano et al vs. Secretary of Finance, GR No. 185234, January 24, 2017 EN BANC
V. WAGE ENFORCEMENT AND RECOVERY

1. Tiger Construction and Development Corp vs. Abay et al., GR No. 164141, Feb. 26, 2010
2. People‘s Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al., GR No. 179652, March 6,
2012 Resolution on the main Decision of May 8, 2009
3. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10, 2012
VI. WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES

1. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, October 13, 2010
2. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169, November
28, 2011
3. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013
4. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, February 26,
2014
5. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso., GR No.
181806, March 12, 2014
6. 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
7. Netlink Computer Inc. vs. Delmo, GR No. 160827, June 18, 2014
8. PLDT vs. Estranero, GR No. 192518, October 15, 2014
9. Milan et al vs. NLRC, GR No. 202961, February 4, 2015
10. Galang et al., vs. Boie Takeda Chemicals Inc. et al., GR No. 183934, July 20, 2016
VII. PAYMENT OF WAGES

1. Congson vs. NLRC, G.R. No. 114250 April 5, 1995
2. North Davao Mining vs. NLRC, G.R. No. 112546 March 13, 1996
3. Heirs of Sara Lee vs. Rey, G.R. No. 149013, August 31, 2006
VIII. CONDITIONS OF EMPLOYMENT

1. San Juan De Dios Hospital vs. NLRC, G.R. No. 126383 November 28, 1997
2. Simedarby vs. NLRC, G.R. No. 119205 April 15, 1998
3. Philippine Airlines vs. NLRC, G.R. No. 132805 February 2, 1999
4. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007
5. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
6. Dasco et al., vs. Phiktranco Service Enterprise, GR No. 211141, June 29, 2016
7. HSY Marketing Ltd., Villatique, GR No. 219569, August 17, 2016
8. A. Nate Casket Maker et al., vs. Arango, et al., GR No. 192282, October 5, 2016
IX. MINIMUM LABOR STANDARD BENEFITS

1. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002
2. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002
3. Lambo vs. NLRC, G.R. No. 111042 October 26, 1999
4. R&E Transport vs. Latag, G.R. No. 155214, Feb.ruary 13, 2004
5. Asian Transmission vs. CA, G.R. No. 144664 March 15, 2004
6. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005
7. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, December 13, 2005
8. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006
9. 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
10. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan vs.
NLRC, 195 SCRA 533 [1998]

11. PNCC Skyway Traffic Management and Security Division Workers Organization, G.R No.
171231, February 17, 2010
12. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, September 12, 2012
13. Robina Farms Cebu vs. Villa, G.R No. 175869, April 18, 2016
14. Dasco et al vs Philtranco Service Enterprise, GR No. 211141, June 29, 2016
15. HSY Marketing Ltd. Vs Villastique, GR No. 219569, August 17, 2016
16. Dela Salle Araneta University vs. Bernardo, G.R No. 190809, February 13, 2017
X. OTHER SPECIAL BENEFITS

1. Reyes vs. NLRC et al., G.R. No. 160233, August 8, 2007, citing Boie Takeda Chemicals vs.
Dela Serna, 228 SCRA 329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380 [1995]
2. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-
NAFLU, G.R. No. 170734, May 14, 2008
3. Universal Robina Sugar Milling Corp. vs. Caballeda, G.R. No. 156644, July 28, 2008
4. Cercado vs. Uniprom, Inc. G.R. No. 188154, October 13, 2010
5. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al., G.R. No. 198662, September 12,
2012
6. Padillo vs. Rural bank of Nabunturan Inc. G.R. No. 199338, January 21, 2013
7. Grace Christian High School vs. Lavandera, G.R No. 177845, August 20, 2014
8. Goodyear Philippines Inc. vs. Angus, G.R No. 185449, November 12, 2015
9. Banco De Oro Unibank vs.Sagaysay,G.R No. 214961, September 16, 2015
10. Perez vs. Camparts Industries Inc. GR No. 197557, October 5, 2016
11. Dela Salle Araneta University vs Bernardo, GR No. 190809, February 13, 2017
12. Catotocan vs. Lourdes School of Quezon City G.R No. 213486, April 26, 2017
13. Philippine Airlines vs. Hassaram, G.R. No. 217730, June 5, 2017
14. Laya vs Court of Appeals, GR No. 205813, January 10, 2018, EN BANC
15. Maria De Leon Transportation Inc. et al vs Marucay, GR No. 214940, June 6, 2018
XI. JURISDICTION OF THE LABOR ARBITER
XII. 2011 NLRC RULES OF PROCEDURE, AMENDED

1. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012
2. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012
3. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012
4. McBurnie vs. Ganzon, GR No. 178034/1718117, October 17, 2013, En Banc
5. Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014
6. Manila Mining Corp., vs. Amor GR No. 182800, April 20, 2015, citing 2015 Mcburnie
7. Toyota Alabang Inc vs. Games, GR No. 206612, Aug 17, 2015
8. Social Security System vs. Ubana, GR No. 200114, Aug 25, 2015
9. ILaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils, GR No. 198675, Sept 23, 2015
10. Quantum Foods, Inc. vs. Esloyo, GR. No. 213696, December 9, 2015, citing 2015 Mcburnie
11. Dela Rosa Liner Inc et vs. Borela et GR No. 207286, July 29, 2016
12. Fontana Development Corp., vs. Vukasinovic, GR No. 222424, September 21, 2016

Topic 2 - BASIC PRINCIPLES
1) JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING

CORPORATION, respondent.
G.R. No. 138051 June 10, 2004
Facts:
The respondent, ABS-CBN, signed an Agreement with Mel and Jay
Management and Development Corporation (MJMDC). Referred to in the
Agreement as AGENT, MJMDC agreed to provide petitioner Jose Y. Sonza‘s
services exclusively for ABS-CBN as talent for radio and television.
Two years later, petitioner Sonza wrote a letter to ABS-CBN‘s President on

his decision to irrevocably resign taking into consideration the recent events on his
programs and his career. This letter stated that petitioner Sonza is waiving and
renouncing recovery of the remaining amount stipulated in the Agreement, but he‘s
reserving the right to seek recovery of the other benefits under the Agreement.
After he gave the letter, on the same month, petitioner Sonza filed a
complaint against ABS-CBN in the Department of Labor and Employment. He
alleged that he wasn‘t paid his salary, separation pay, service incentive leave pay,
13th month pay, signing bonus, travel allowance and amounts due under the
Employees Stock Option Plan. ABS-CBN filed a Motion to Dismiss on the ground
that petitioner Sonza was merely an independent contractor, and that there was no
existence of employer-employee relationship.
The Labor Arbiter dismissed the complaint of Sonza stating that whatever
benefits petitioner Sonza received was based on the Agreement, and not because of
employer-employee relationship. The NLRC and the CA affirmed the decision of the
Labor Arbiter.
Issue:
Whether or not petitioner Sonza is an employee or an independent contractor.
Ruling:
Sonza is an independent contractor.
Selection and Engagement of Employees. Independent contractors often

present themselves to possess unique skills, expertise or talent to distinguish them
from ordinary employees. The specific selection and hiring of SONZA, because of his
unique skills, talent and celebrity status not possessed by ordinary employees, is a
circumstance indicative, but not conclusive, of an independent contractual
relationship. If SONZA did not possess such unique skills, talent and celebrity
status, ABS-CBN would not have entered into the Agreement with SONZA but

would have hired him through its personnel department just like any other
employee.
Payment of Wages. All the talent fees and benefits paid to SONZA were the
result of negotiations that led to the Agreement. If SONZA were ABS-CBN‘s
employee, there would be no need for the parties to stipulate on benefits such as
"SSS, Medicare, x x x and 13th month pay" which the law automatically
incorporates into every employer-employee contract. Whatever benefits SONZA
enjoyed arose from contract and not because of an employer-employee relationship.
SONZA‘s talent fees, amounting to P317,000 monthly in the second and third year,
are so huge and out of the ordinary that they indicate more an independent
contractual relationship rather than an employer-employee relationship.
Power of Dismissal. During the life of the Agreement, ABS-CBN agreed to pay
SONZA‘s talent fees as long as "AGENT and Jay Sonza shall faithfully and
completely perform each condition of this Agreement." Even if it suffered severe
business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained
obligated to pay SONZA‘s talent fees during the life of the Agreement. This
circumstance indicates an independent contractual relationship between SONZA
and ABS-CBN.
Power of Control. Applying the control test to the present case, the Court
found that SONZA is not an employee but an independent contractor. The control
test is the most important test our courts apply in distinguishing an employee from
an independent contractor. This test is based on the extent of control the hirer
exercises over a worker. The greater the supervision and control the hirer exercises,
the more likely the worker is deemed an employee. The converse holds true as well
– the less control the hirer exercises, the more likely the worker is considered an
independent contractor.

2) ANGELITO L. LAZARO, Proprietor of Royal Star Marketing, petitioner,
vs. SOCIAL SECURITY COMMISSION, ROSALINA LAUDATO, SOCIAL
SECURITY SYSTEM and THE HONORABLE COURT OF APPEALS,
respondents.
G.R. No. 138254 July 30, 2004
Facts:
The petitioner, Angelito L. Lazaro, is the owner of Royal Star Marketing. He
hired the services of the respondent Rosalina Laudato as sales supervisor of the
sales agents. Respondent Laudato filed a petition before the Social Security
Commission for social security coverage and remittance of unpaid monthly social
contributions against petitioner Lazaro. She alleged that she has been employed
from April 1979 to March 1986, and up until then, petitioner Lazaro failed to report
her to the Social Security Commission for compulsory coverage or remit her social
security contributions.
Petitioner Lazaro denied that respondent Laudato was his sales supervisor.
He alleged that respondent Laudato was hired as a mere sales agent paid purely on
commission basis, not subjected to definite hours and conditions of work.
The Social Security Commission ruled in favor of respondent Laudato. It held

that applying the control test, respondent Laudato was an employee, and it ordered
petitioner Lazaro to pay unremitted social security contributions plus damages. The
Court of Appeals affirmed the Social Security Commission‘s Ruling.
Issue:
Whether or not respondent Laudato is an employee, which entitles her to be
under the coverage of the Social Security Act.
Ruling:
Yes, respondent Laudato is an employee.
The fact that Laudato was paid by way of commission does not preclude the
establishment of an employer-employee relationship. Neither does it follow that a
person who does not observe normal hours of work cannot be deemed an employee.
The relevant factor remains whether the "employer" controls or has reserved
the right to control the "employee" not only as to the result of the work to be done
but also as to the means and methods by which the same is to be accomplished. As
emphasized by Social Security Commission, Laudato was a sales supervisor and not
a mere agent. As such, Laudato oversaw and supervised the sales agents of the
company, and thus was subject to the control of management as to how she
implements its policies and its end results.

The finding of the SSC that Laudato was an employee of Royal Star is
supported by substantial evidence such as the cash vouchers issued by Royal Star to
Laudato, calling cards of Royal Star denominating Laudato as a "Sales Supervisor"
of the company, and Certificates of Appreciation issued by Royal Star to Laudato in
recognition of her unselfish and loyal efforts in promoting the company. On the
other hand, Lazaro has failed to present any convincing contrary evidence, relying
instead on his bare assertions. Hence, the Supreme Court denied the petition and
affirmed the decision of CA.

3) PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs.
RICARDO DE VERA, respondent.
G.R. No. 157214 June 7, 2005
Facts:
Respondent Ricardo De Vera is a physician by profession. He offered his

services to petitioner Philippine Global Communications, Inc. (Philcom) and
proposed that he would attend to the medical needs of the employees of Philcom.
Both parties agreed and formalized the proposal through a document named
Retainership Contract. This contract was for a period of one year, subject to
renewal. The contract was renewed from 1981 to 1994, but on years 1995 and 1996
the contract was renewed verbally.
On December 1996, Philcom wrote a letter to respondent De Vera stating

that it would discontinue the Retainership Contract because it would be more
practical to provide medical services to its employees through accredited hospitals
located near the company. A year after Philcom sent the letter, respondent De Vera
filed a complaint for illegal dismissal in the National Labor Relations Commission
alleging that he was dismissed without due process.
The Labor Arbiter dismissed respondent De Vera‘s complaint stating that De

Vera was an independent contractor; he wasn‘t dismissed but his contract ended
when Philcom decided not to renew the contract. The National Labor Relations
Commission reversed the decision of the Labor Arbiter and stated that respondent
De Vera is a regular employee, and that he should be reinstated. The Court of
Appeals modified the decision of the National Labor Relations Commission that
instead of reinstatement, it ordered the payment of separation pay instead.
Issue:
Whether or not there is an employer-employee relationship between Philcom

and De Vera.
Ruling:
No, there is not employer-employee relationship. Instead, respondent De

Vera is an independent contractor.
The requirements of the four-fold test weren‘t established. It was De Vera

who sets the parameters of what his duties would be in offering his services to
petitioner. From the time he started to work with petitioner, he never was included
in its payroll; was never deducted any contribution for remittance to the Social
Security System (SSS); and was in fact subjected by petitioner to the ten (10%)
percent withholding tax for his professional fee. An ordinary employee would
consider the SSS payments important and thus make sure they would be paid. De
Vera never bothered to ask the respondent to remit his SSS contributions. This
clearly shows that the complainant never considered himself an employee of
PHILCOM. It was also noted that the power to terminate the parties‘ relationship
was mutually vested on both. Either may terminate the arrangement at will, with
or without cause.
Additionally, the element of control was missing. Philcom had no control over
the means and methods by which respondent De Vera would perform his work.
Respondent De Vera can embark in private practice of his profession.

4) ABS-CBN BROADCASTING CORPORATION, petitioner, vs. MARLYN
NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and
JOSEPHINE LERASAN, respondents.
G.R. No. 164156 September 26, 2006
Facts:
ABS-CBN (petitioner) hired respondents as production assistants (PAs). The

respondents were assigned at the news and public affairs for various radio
programs in the Cebu Broadcasting Station. The respondents were given employees‘
IDs, were required to work for a minimum of 8 hours a day (including Sundays and
holidays).
On December 19, 1996, ABS-CBN and the ABS-CBN rank-and-file employees

executed a Collective Bargaining Agreement. ABS-CBN refused to recognize
production assistants as part of the bargaining unit, therefore the respondents were
not included in the Collective Bargaining Agreement.
Four years after the execution of the Collective Bargaining Agreement, the
respondents filed a complaint in the National Labor Relations Commission for
recognition of employment status, underpayment of overtime pay, holiday pay,
premium pay, service incentive pay, sick leave pay, and 13th month pay with
damages against ABS-CBN. The alleged that they belonged to a ―work pool‖ from
which ABS-CBN chose persons to be given specific assignments at its discretion,
and were thus under its direct supervision and control regardless of nomenclature.
ABS-CBN maintained that the respondents were employed on program basis;

that their engagement is coterminous with the completion of the program and may
be extended or renewed provided that the program is on-going. Hence, their
compensation is a fixed amount for performance services irrespective of the time
consumed.
The Labor Arbiter ruled in favor of the respondents and ruled that they were
regular employees. The National Labor Relations Commission made a new order
ordering ABS-CBN to pay respondents their wage differentials and other benefits
arising from the Collective Bargaining Agreement. The Court of Appeals affirmed
the decision of the National Labor Relations Commission and stated that
respondents are not mere project employees, but regular employees who perform
tasks necessary and desirable in the usual trade and business of petitioner and not
just its project employees.

Issue:
Whether or not respondents are regular employees under Article 280 of the
Labor Code.
Ruling:
Yes, the respondents are regular employees.
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 services to be performed is seasonal in nature and
the employment is for the duration of the season.
Citing Article 280 of the Labor Code, the Supreme Court stated that any
employee who has rendered at least one year of service, whether continuous or
intermittent, is deemed regular with respect to the activity performed while such
activity actually exists.
There are two kinds of regular employees under the law: (1) those engaged to
perform activities which are necessary or desirable in the usual business or trade of
the employer; and (2) those casual employees who have rendered at least one year of
service, whether continuous or broken, with respect to the activities in which they
are employed.
What determines whether a certain employment is regular or otherwise is

the character of the activities performed in relation to the particular trade or
business taking into account all the circumstances, and in some cases the length of
time of its performance and its continued existence. It is obvious that one year after
they were employed by petitioner, respondents became regular employees by
operation of law.
Respondents cannot be considered "talents" because they are not actors or

actresses or radio specialists or mere clerks or utility employees. Additionally,
respondents cannot be considered as project or program employees. The principal
test is whether or not the project employees were assigned to carry out a specific
project or undertaking, the duration and scope of which were specified at the time

the employees were engaged for that project. In this case, it is undisputed that
respondents had continuously performed the same activities for an average of five
years. Their assigned tasks are necessary or desirable in the usual business or trade
of the petitioner.
Therefore, respondents are entitled to the benefits provided for in the existing
CBA between petitioner and its rank-and-file employees. As regular employees,
respondents are entitled to the benefits granted to all other regular employees of
petitioner under the CBA.

5) ANGELINA FRANCISCO, Petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO
TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS,
TRINIDAD LIZA and RAMON ESCUETA, Respondents.
G.R. No. 170087 August 31, 2006
Facts:
In 1995, Francisco was hired by Kasei. She was designated as Accountant

and Corporate Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of Makati to secure
business permits, construction permits and other licenses for the initial operation of
the company. In 1996, petitioner was designated as Acting Manager and has
performed her duties for 5 years.
In January 2001, petitioner was replaced but she was assured that she would
and still be connected with Kasei Corporation. Thereafter, Kasei Corporation
reduced her salary and did not pay her with mid-year bonus allegedly because the
company was not earning well. On October 2001, petitioner did not receive her
salary from the company. When she demanded for her salary, she was informed
that she is no longer connected with the company. Hence, she did not report for
work and filed an action for constructive dismissal before the labor arbiter.
Respondents, on the other, hand, maintained that she is not an employee of

Kasei. She was hired as a technical consultant and she performed her work at her
own discretion without control and supervision of the company. Her services are
only temporary in nature.
The Labor Arbiter ruled in favor of Francisco which decision as affirmed by

NLRC. CA, on the other hand, dismissed Francisco‘s complaint on the ground of
constructive dismissal.
Issue:
Whether or not an employer-employee relationship exists.
Ruling:
Yes, she is an employee of Kasei.
The Supreme Court applied the two-tiered test to determine the existence of
employer-employee relationship which involved: (1) the putative employer‘s power
to control the employee with respect to the means and methods by which the work
is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.

By applying the control test, there is no doubt that petitioner is an employee
of Kasei Corporation because she was under the direct control and supervision of
Seiji Kamura, the corporation‘s Technical Consultant. Under the broader economic
reality test, the petitioner can likewise be said to be an employee of Kasei because
she is economically dependent on the company for her continued employment in the
latter‘s line of business.
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. More importantly, Kasei had the power to control petitioner with the
means and methods by which the work is to be accomplished.
Therefore, the petition was granted.

6) ROGELIO P. NOGALES, for himself and on behalf of the minors,
ROGER ANTHONY, ANGELICA, NANCY, and MICHAEL
CHRISTOPHER, all surnamed NOGALES, petitioners, vs. CAPITOL
MEDICAL CENTER, DR. OSCAR ESTRADA, DR. ELY VILLAFLOR, DR.
ROSA UY, DR. JOEL ENRIQUEZ, DR. PERPETUA LACSON, DR. NOE
ESPINOLA, and NURSE J. DUMLAO, respondents.
G.R. No. 142625 December 19, 2006
Facts:
Pregnant with her fourth child, Corazon Nogales (37 years old) was under the
exclusive prenatal care of Dr. Oscar Estrada. While Corazon was on her last
trimester of pregnancy, Dr. Estrada noted an increase in her blood pressure and
development of leg edema indicating preeclampsia, which is a dangerous
complication of pregnancy.
On May 26, 1976, Corazon was admitted at the CMC for delivery of the child.
Dr. Estrada ordered the injection of 10 grams of magnesium sulfate. However, Dr.
Ely Villaflor, who was assisting Dr. Estrada, administered only 2.5 grams of
magnesium sulfate. Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to
extract Corazon's baby. In the process, piece of cervical tissue was allegedly torn.
The baby came out in an apnic, cyanotic, weak and injured condition. Corazon
began to manifest moderate vaginal bleeding which rapidly became profuse. Dr. Noe
Espinola, head of the Obstetrics-Gynecology Department of the CMC, was apprised
of Corazon's condition by telephone. Upon being informed that Corazon was
bleeding profusely, Dr. Espinola ordered immediate hysterectomy. Despite Dr.
Espinola's efforts, Corazon died.
Petitioners filed a complaint for damages with the Regional Trial Court.
Petitioners mainly contended that defendant physicians and CMC personnel were
negligent in the treatment and management of Corazon's condition. Petitioners
charged CMC with negligence in the selection and supervision of defendant
physicians and hospital staff. Trial court rendered judgment finding Dr. Estrada
solely liable for damages.
The Court of Appeals upheld the trial court's ruling, finding Dr. Estrada as
an independent contractor-physician. The Court of Appeals applied the "borrowed
servant" doctrine considering that Dr. Estrada was an independent contractor who
was merely exercising hospital privileges. This doctrine provides that once the
surgeon enters the operating room and takes charge of the proceedings, the acts or
omissions of operating room personnel, and any negligence associated with such
acts or omissions, are imputable to the surgeon.
Issues:

1.) Whether or not there is employer-employee relationship between Dr.
Estrada and CMC;
2.) Whether CMC is vicariously liable for the negligence of Dr. Estrada
Ruling:
Dr. Estrada is not an employee of CMC, but an independent contractor.
However, CMC is still vicariously liable. The Court finds no single evidence pointing
to CMC's exercise of control over Dr. Estrada's treatment and management of
Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she was
under the exclusive prenatal care of Dr. Estrada. Dr. Estrada is not an employee of
CMC, but an independent contractor.
In general, a hospital is not liable for the negligence of an independent

contractor-physician. There is, however, an exception to this principle. The hospital
may be liable if the physician is the "ostensible" agent of the hospital. This
exception is also known as the "doctrine of apparent authority." The doctrine
essentially involves two factors to determine the liability of an independent-
contractor physician. The first factor focuses on the hospital's manifestations and is
sometimes described as an inquiry whether the hospital acted in a manner which
would lead a reasonable person to conclude that the individual who was alleged to
be negligent was an employee or agent of the hospital. In this regard, the hospital
need not make express representations to the patient that the treating physician is
an employee of the hospital; rather a representation may be general and implied.
The doctrine of apparent authority is a specie of the doctrine of estoppel. Article
1431 of the Civil Code provides that "through estoppel, an admission or
representation is rendered conclusive upon the person making it, and cannot be
denied or disproved as against the person relying thereon." CMC impliedly held out
Dr. Estrada as a member of its medical staff.
Through CMC's acts, CMC clothed Dr. Estrada with apparent authority
thereby leading the Spouses Nogales to believe that Dr. Estrada was an employee or
agent of CMC. CMC cannot now repudiate such authority. First, CMC granted staff
privileges to Dr. Estrada. Second, CMC made Rogelio sign consent forms printed on
CMC letterhead. Third, Dr. Estrada's referral of Corazon's profuse vaginal bleeding
to Dr. Espinola, who was then the Head of the Obstetrics and Gynecology
Department of CMC, gave the impression that Dr. Estrada as a member of CMC's
medical staff was collaborating with other CMC-employed specialists in treating
Corazon. Hence, CMC is also liable.

7) COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager,
Petitioners, vs. DR. DEAN N. CLIMACO, Respondent.
G.R. No. 146881 February 5, 2007
Facts:
Dr. Dean Climaco (respondent), a medical doctor, was hired by Coca-cola
Bottlers Phil. (petitioner) by virtue of a Retainer Agreement. The terms and
conditions are as follows:
1. That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31,
1988. Either party may terminate the contract upon giving a 30-day written
notice to the other;
2. That petitioner shall compensate respondent a retainer fee of
P3,800/month. The DOCTOR may charge professional fee for hospital
services rendered in line with his specialization;
3. That in consideration of the retainer‘s fee, the DOCTOR agrees to perform
the duties and obligations in the COMPREHENSIVE MEDICAL PLAN,
made an integral part of this retainer agreement;
4. That the DOCTOR shall observe clinic hours at the company‘s premises
from Monday to Saturday of a minimum of two (2) hours each day or a
maximum of TWO (2) hours each day or treatment from 7:30 a.m. to 8:30
a.m. and 3:00pm to 4:00pm. It is further understood that the DOCTOR shall
be on call at all times during the other work shifts to attend to emergency
case(s);
5. That no employee-employer relationship shall exist between the company
and the DOCTOR.
The retainer agreement expired after 1 year. However, despite the non-
renewal of the agreement, respondent continued to perform his functions as
company doctor to petitioner until he received a letter dated March 9, 1995 from the
company ending their retainership agreement. Respondent thereafter filed a
complaint before the NLRC seeking recognition as a regular employee of petitioner
and thus prayed from payment of all the benefits of a regular employee including
13th month pay, COLA, holiday pay, service incentive leave, and Christmas bonus.
Also, respondent filed another complaint for illegal dismissal against petitioner.
In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant
complaint was dismissed by the Labor Arbiters and subsequently affirmed by the
NLRC on the ground that no employer-employee relationship existed between
petitioner-company and respondent. However when it was elevated to CA for
review, the latter ruled that employer-employee relationship existed between the
parties after applying the four-fold test: (1) power to hire employee (2) payment of
wages (3) power to dismissal (4) and power to control over the employee with
respect to the means and methods by which the work is to be accomplished.

Issue:
Whether or not there exists an employer-employee relationship between the
parties.
Ruling:
The Court agrees with the finding of the Labor Arbiter and the NLRC. The
Court held that the Labor Arbiter and the NLRC correctly found that Petitioner
Company lacked the power of control over the performance by respondent of his
duties.
The Court citing the case of Neri vs. NLRC said, petitioner, through the
Comprehensive Medical Plan, provided guidelines merely to ensure that the end
result was achieved. In other words, what was sought to be controlled by the
petitioner company was actually the end result of the task. The guidelines or the
Comprehensive Medical Plan were laid down merely to ensure that the desired end
result was achieved but did not control the means and methods by which
respondent performed his assigned tasks.
The Supreme Court further held that, an employee is required to stay in the
employer‘s workplace or proximately close thereto that he cannot utilize his time
effectively and gainfully for his own purpose. Such is not the prevailing situation
here. The respondent does not dispute that fact that outside of the two (2) hours
that he is required to be at petitioner company‘s premises, he is not at all further
required to just sit around in the premises and wait for an emergency to occur so as
to enable him from using such hours for his own benefit and advantage. In fact,
respondent maintains his own private clinic attending his private practice in the
city, where he services his patients and bills them accordingly.
The Court finds that the requirement to be on call for emergency cases does
not amount to such control, but are necessary incidents to the Retainership
Agreement. The Supreme Court also notes that the Agreement granted to both
parties the power to terminate their relationship upon giving a 30-day notice.
Hence, petitioner did not wield the sole power of dismissal or termination.
Therefore, the petition was GRANTED.

8) CALAMBA MEDICAL CENTER, INC., petitioner vs. NATIONAL LABOR
RELATIONS COMMISSION, RONALDO LANZANAS AND
MERCEDITHA* LANZANAS, respondents.
G.R. No. 176484 November 25, 2008
Facts:
Calamba Medical Center, engaged the services of medical doctors-spouses Dr.
Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians.
Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents
were paid a monthly "retainer" of P4,800.00 each. Also resident physicians were
also given a percentage share out of fees charged for out-patient treatments,
operating room assistance and discharge billings, in addition to their fixed monthly
retainer.
The work schedules of the members of the team of resident physicians were
fixed by petitioner's medical director Dr. Desipeda, and they were issued ID,
enrolled in the SSS and withheld tax from them.
After an incident where Dr. Trinidad overheard a phone conversation

between Dr. Ronaldo and a fellow employee Diosdado Miscala, the former was given
a preventive suspension and his wife Dr. Merceditha was not given any schedule
after sending the Memorandum. On March 1998, Dr. Ronaldo filed a complaint for
illegal suspension and Dr. Merceditha for illegal dismissal.
Issue:
Whether or not there exists an employer-employee relationship between
petitioner and the spouses-respondents.
Ruling:
Drs. Lanzanas are declared employee by the petitioner hospital. Under the
"control test," an employment relationship exists between a physician and a
hospital if the hospital controls both the means and the details of the process by
which the physician is to accomplish his task.
That petitioner exercised control over respondents gains light from the
undisputed fact that in the emergency room, the operating room, or any department
or ward for that matter, respondents' work is monitored through its nursing
supervisors, charge nurses and orderlies. Without the approval or consent of
petitioner or its medical director, no operations can be undertaken in those areas.
For control test to apply, it is not essential for the employer to actually supervise
the performance of duties of the employee, it being enough that it has the right to
wield the power.
With respect to respondents' sharing in some hospital fees, this scheme does not
sever the employment tie between them and petitioner as this merely mirrors

additional form or another form of compensation or incentive similar to what
commission-based employees receive as contemplated in Article 97 (f) of the Labor
Code.
Moreover, respondents were made subject to petitioner-hospital's Code of

Ethics - the provisions of which cover administrative and disciplinary measures on
negligence of duties, personnel conduct and behavior, and offenses against persons,
property and the hospital's interest.
More importantly, petitioner itself provided incontrovertible proof of the

employment status of respondents, namely, the identification cards it issued them,
the pay slips and BIR W-2 (now 2316) Forms which reflect their status as
employees, and the classification as "salary" of their remuneration. Moreover, it
enrolled respondents in the SSS and Medicare (Philhealth) program. It bears noting
at this juncture that mandatory coverage under the SSS Law is premised on the
existence of an employer-employee relationship, except in cases of compulsory
coverage of the self-employed.

9) JEROMIE D. ESCASINAS and EVAN RIGOR SINGCO, Petitioners, vs.
SHANGRI-LA'S MACTAN ISLAND RESORT and DR. JESSICA J.R.
PEPITO, Respondents.
G.R. No. 178827 March 4, 2009
Facts:
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners)
were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito
(respondent doctor) to work in her clinic at respondent Shangri-la‘sMactan Island
Resort (Shangri-la) in Cebu of which she was a retained physician.
In late 2002, petitioners filed with the National Labor Relations Commission
(NLRC) a complaint for regularization, underpayment of wages, non-payment of
holiday pay, night shift differential and 13th month pay differential against
respondents, claiming that they are regular employees of Shangri-la.
Shangri-la claimed, however, that petitioners were not its employees but of
respondent doctor, that Article 157 of the Labor Code, as amended, does not make it
mandatory for a covered establishment to employ health personnel, that the
services of nurses is not germane nor indispensable to its operations, and that
respondent doctor is a legitimate individual contractor who has the power to hire,
fire and supervise the work of nurses under her.
Issues:
1.) Whether or not there was an employee-employer relationship between
Shangri-La and the petitioners.
2.) Whether or not Dr. Pepito is an independent contractor
Ruling:
SC ruled that there no such relationship. The petitioners are under the direct
supervision of Dr. Pepito, an independent contractor.
 On the first issue
The resolution of the case hinges, in the main, on the correct interpretation of
Art. 157 vis a vis Art. 280 and the provisions on permissible job contracting of the
Labor Code, as amended. 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. 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[9] in order to vest employer-employee relationship on the
employer and the person so engaged. 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 company‘s premises and to its employees, not the manner of his
engagement.
 On the second issue
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 employer's power with respect to the hiring, firing and
payment of the contractor's 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.
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 do not necessarily prove
that respondent doctor lacks substantial capital and investment. Besides, the
maintenance of a clinic and provision of medical services to its employees is
required under Art. 157, which are not directly related to Shangri-la‘s principal
business – operation of hotels and restaurants.

10) GREGORIO V. TONGKO, Petitioner, vs. THE MANUFACTURERS
LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE
DIOS, Respondents.
G.R. No. 167622 January 25, 2011 [see June 29, 2010 Main Decision]
Facts:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic
corporation engaged in life insurance business.Renato A. Vergel De Dios was,
during the period material, its President and Chief Executive Officer. Gregorio V.
Tongko started his professional relationship with Manulife on July 1, 1977 by virtue
of a Career Agent's Agreement (Agreement) he executed with Manulife. In the
Agreement, it is provided that: It is understood and agreed that the Agent is an
independent contractor and nothing contained herein shall be construed or
interpreted as creating an employer-employee relationship between the Company
and the Agent. The Company may terminate this Agreement for any breach or
violation of any of the provisions hereof by the Agent by giving written notice to the
Agent within fifteen (15) days from the time of the discovery of the breach. No
waiver, extinguishment, abandonment, withdrawal or cancellation of the right to
terminate this Agreement by the Company shall be construed for any previous
failure to exercise its right under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any
time without cause, by giving to the other party fifteen (15) days‘ notice in writing.
In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency
Organization.In 1990, he became a Branch Manager. As the CA found, Tongko's
gross earnings from his work at Manulife, consisting of commissions, persistency
income, and management overrides. The problem started sometime in 2001, when
Manulife instituted manpower development programs in the regional sales
management level. Relative thereto, De Dios addressed a letter dated November 6,
2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers
Meeting. Stating that Tongko‘s Region was the lowest performer (on a per Manager
basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the
laggards in this area.
Other issues were: "Some Managers are unhappy with their earnings and
would want to revert to the position of agents." And "Sales Managers are doing
what the company asks them to do but, in the process, they earn less." Tongko was
then terminated. Therefrom, Tongko filed a Complaint dated November 25, 2002
with the NLRC against Manulife for illegal dismissal in the Complaint. In a
Decision dated April 15, 2004, Labor Arbiter dismissed the complaint for lack of an
employer-employee relationship. The NLRC's First Division, while finding an
employer-employee relationship between Manulife and Tongko applying the four-
fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an appeal
with the CA. Thereafter, the CA issued the assailed Decision dated March 29, 2005,

finding the absence of an employer-employee relationship between the parties and
deeming the NLRC with no jurisdiction over the case.
Issues:
1.) Whether or not Tongko was an employee of Manulife;
2.) Whether or not Tongko was illegally dismissed.
Ruling:
 On the first issue:
Yes. In the instant case, Manulife had the power of control over Tongko that
would make him its employee. Several factors contribute to this conclusion. In the
Agreement dated July 1, 1977 executed between Tongko and Manulife, it is
provided that: The Agent hereby agrees to comply with all regulations and
requirements of the Company as herein provided as well as maintain a standard of
knowledge and competency in the sale of the Company's products which satisfies
those set by the Company and sufficiently meets the volume of new business
required of Production Club membership.Under this provision, an agent of Manulife
must comply with three (3) requirements: (1) compliance with the regulations and
requirements of the company; (2) maintenance of a level of knowledge of the
company's products that is satisfactory to the company; and (3) compliance with a
quota of new businesses. Among the company regulations of Manulife are the
different codes of conduct such as the Agent Code of Conduct, Manulife Financial
Code of Conduct, and Manulife Financial Code of Conduct Agreement, which
demonstrate the power of control exercised by the company over Tongko. The fact
that Tongko was obliged to obey and comply with the codes of conduct was not
disowned by respondents. Thus, with the company regulations and requirements
alone, the fact that Tongko was an employee of Manulife may already be
established. Certainly, these requirements controlled the means and methods by
which Tongko was to achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was
tasked to perform administrative duties that establishes his employment with
Manulife. Additionally, it must be pointed out that the fact that Tongko was tasked
with recruiting a certain number of agents, in addition to his other administrative
functions, leads to no other conclusion that he was an employee of Manulife.
 On the second issue:
In its Petition for Certiorari dated January 7, 2005[26] filed before the CA,
Manulife argued that even if Tongko is considered as its employee, his employment
was validly terminated on the ground of gross and habitual neglect of duties,
inefficiency, as well as willful disobedience of the lawful orders of Manulife.
Manulife stated: In the instant case, private respondent, despite the written
reminder from Mr. De Dios refused to shape up and altogether disregarded the
latter's advice resulting in his laggard performance clearly indicative of his willful
disobedience of the lawful orders of his superior. As private respondent has patently

failed to perform a very fundamental duty, and that is to yield obedience to all
reasonable rules, orders and instructions of the Company, as well as gross failure to
reach at least minimum quota, the termination of his engagement from Manulife is
highly warranted and therefore, there is no illegal dismissal to speak of. It is readily
evident from the above-quoted portions of Manulife's petition that it failed to cite a
single iota of evidence to support its claims. Manulife did not even point out which
order or rule that Tongko disobeyed.
More importantly, Manulife did not point out the specific acts that Tongko was
guilty of that would constitute gross and habitual neglect of duty or disobedience.
Manulife merely cited Tongko's alleged "laggard performance," without
substantiating such claim, and equated the same to disobedience and neglect of
duty. Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit
terms that the burden of proving the validity of the termination of employment
rests on the employer. Failure to discharge this evidential burden would necessarily
mean that the dismissal was not justified, and, therefore, illegal. The Labor Code
provides that an employer may terminate the services of an employee for just cause
and this must be supported by substantial evidence. The settled rule in
administrative and quasi-judicial proceedings is that proof beyond reasonable doubt
is not required in determining the legality of an employer's dismissal of an
employee, and not even a preponderance of evidence is necessary as substantial
evidence is considered sufficient. Substantial evidence is more than a mere scintilla
of evidence or relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds, equally reasonable, might conceivably
opine otherwise. Here, Manulife failed to overcome such burden of proof. It must be
reiterated that Manulife even failed to identify the specific acts by which Tongko's
employment was terminated much less support the same with substantial evidence.
To repeat, mere conjectures cannot work to deprive employees of their means of

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

11) MARTICIO SEMBLANTE and DUBRICK PILAR, Petitioners, vs.
COURT OF APPEALS, 19th DIVISION, now SPECIAL FORMER 19th
DIVISION, GALLERA DE MANDAUE / SPOUSES VICENTE and MARIA
LUISA LOOT, Respondents.
G.R. No. 196426 August 15, 2011
Facts:
Petitioners assert that they were hired by respondents, as the official
masiador and sentenciador, respectively, of the cockpit sometime in 1993.
A masiador calls and takes the bets from the gamecock owners and other
bettors and orders the start of the cockfight. He also distributes the winnings after
deducting the arriba, or the commission for the cockpit. Meanwhile, as the
sentenciador oversees the proper gaffing of fighting cocks, determines the fighting
cocks' physical condition and capabilities to continue the cockfight, and eventually
declares the result of the cockfight.
For their services as masiador and sentenciador, Semblante receives

PhP2,000 per week or a total of PhP8,000 per month, while Pilar gets PhP3,500 a
week or PhP14,000 per month. They work every Tuesday, Wednesday, Saturday,
and Sunday every week, excluding monthly derbies and cockfights held on special
holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or
until the early hours of the morning depending on the needs of the cockpit.
Petitioners had both been issued employees' identification cards that they wear
every time they report for duty. They alleged never having incurred any infraction
and/or violation of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the
cockpit upon the instructions of respondents, and were informed of the termination
of their services effective that date. This prompted petitioners to file a complaint for
illegal dismissal against respondents.
Issue:
Whether or not there existed an employer-employee relationship between the
petitioners and respondent.
Ruling:
Petitioners are NOT employees of respondents, since their relationship fails
to pass the four-fold test of employment. The Court have repeatedly mentioned in
countless decisions: (1) the selection and engagement of the employee; (2) the

payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct, which is the most important element.
As found by both the NLRC and the CA, respondents had no part in
petitioners' selection and management; petitioners' compensation was paid out of
the arriba(which is a percentage deducted from the total bets), not by petitioners;
and petitioners performed their functions as masiador and sentenciador free from
the direction and control of respondents. In the conduct of their work, petitioners
relied mainly on their "expertise that is characteristic of the cockfight gambling,"
and were never given by respondents any tool needed for the performance of their
work.
Respondents, not being petitioners' employers, could never have dismissed,

legally or illegally, petitioners, since respondents were without power or prerogative
to do so in the first place. 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.

12) JOSE MEL BERNARTE, Petitioner, vs. PHILIPPINE BASKETBALL
ASSOCIATION (PBA), JOSE EMMANUEL M. EALA, and PERRY
MARTINEZ, Respondents.
G.R. No. 192084 September 14, 2011
Facts:
Complainants, Jose Mel Bernarte and Renato Guevarra, aver that they were
invited to join the PBA as referees. During the leadership of Commissioner Emilio
Bernardino, they were made to sign contracts on a year-to-year basis. During the
term of Commissioner Eala, however, changes were made on the terms of their
employment.
Bernarte, was not made to sign a contract during the first conference of the
All-Filipino Cup which was from February 23, 2003 to June 2003. It was only
during the second conference when he was made to sign a one and a half month
contract for the period July 1 to August 5, 2003.
January 15, 2004, Bernarte received a letter from the Office of the
Commissioner advising him that his contract would not be renewed citing his
unsatisfactory performance on and off the court. It was a total shock for Bernarte
who was awarded Referee of the year in 2003. He felt that the dismissal was caused
by his refusal to fix a game upon order of Ernie De Leon.
Guevarra alleges that he was invited to join the PBA pool of referees in
February 2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002,
he signed a yearly contract as Regular Class C referee. On May 6, 2003, respondent
Martinez issued a memorandum to Guevarra expressing dissatisfaction over his
questioning on the assignment of referees officiating out-of-town games. Beginning
February 2004, he was no longer made to sign a contract.
Labor Arbiter‘s decision, on 31 March 2005, declared petitioner an employee

whose dismissal by respondents was illegal. Accordingly, the Labor Arbiter ordered
the reinstatement of petitioner and the payment of back wages, moral and
exemplary damages and attorney‘s fees.
In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiter‘s
judgment. The NLRC agreed that the PBA has no control over the referees‘ acts of
blowing the whistle and making calls during basketball games, it, nevertheless,
theorized that the said acts refer to the means and methods employed by the
referees in officiating basketball games for the illogical reason that said acts refer
only to the referees‘ skills. How could a skilled referee perform his job without
blowing a whistle and making calls? Worse, how can the PBA control the
performance of work of a referee without controlling his acts of blowing the whistle
and making calls?

The Court of Appeals found petitioner an independent contractor since
respondents did not exercise any form of control over the means and methods by
which petitioner performed his work as a basketball referee.
The Court of Appeals denied the motion for reconsideration.
Issue:
Whether petitioner is an employee of respondents, which in turn determines
whether petitioner was illegally dismissed.
Ruling:
At any rate, the NLRC declared the issue on the finality of the Labor
Arbiter‘s decision moot as respondents‘ appeal was considered in the interest of
substantial justice. We agree with the NLRC. The ends of justice will be better
served if we resolve the instant case on the merits rather than allowing the
substantial issue of whether petitioner is an independent contractor or an employee
linger and remain unsettled due to procedural technicalities.
The existence of an employer-employee relationship is ultimately a question

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

has consistently applied the four-fold test, to wit: (a) the selection and engagement
of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer‘s power to control the employee on the means and methods by which the
work is accomplished. The so-called ―control test‖ is the most important indicator of
the presence or absence of an employer-employee relationship.
We agree with respondents that once in the playing court, the referees
exercise their own independent judgment, based on the rules of the game, as to
when and how a call or decision is to be made. The referees decide whether an
infraction was committed, and the PBA cannot overrule them once the decision is
made on the playing court. The referees are the only, absolute, and final authority
on the playing court. Respondents or any of the PBA officers cannot and do not
determine which calls to make or not to make and cannot control the referee when
he blows the whistle because such authority exclusively belongs to the referees. The
very nature of petitioner‘s job of officiating a professional basketball game
undoubtedly calls for freedom of control by respondents.

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

13) CESAR C. LIRIO, doing business under the name and style of
CELKOR AD SONICMIX, Petitioner, vs. WILMER D. GENOVIA,
Respondent.
G.R. No. 169757 November 23, 2011
Facts:
On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against
petitioner Cesar Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal
dismissal, non-payment of commission and award of moral and exemplary damages.
Genovia (respondent) alleged that on August 15, 2001, he was hired as studio
manager by petitioner Lirio (petitioner), owner of Celkor Ad Sonicmix Recording
Studio (Celkor). He was employed to manage and operate Celkor and to promote
and sell the recording studio's services to music enthusiasts and other prospective
clients. He received a monthly salary of P7,000.00. They also agreed that he was
entitled to an additional commission of P100.00 per hour as recording technician
whenever a client uses the studio for recording, editing or any related work. He was
made to report for work from Monday to Friday from 9:00 a.m. to 6 p.m. On
Saturdays, he was required to work half-day only, but most of the time, he still
rendered eight hours of work or more. All the employees of petitioner, including
respondent, rendered overtime work almost every day, but petitioner never kept a
daily time record to avoid paying the employees overtime pay.
Respondent stated that a few days after he started working as a studio

manager, petitioner approached him and told him about his project to produce an
album for his 15-year-old daughter, Celine Mei Lirio, a former talent of ABS-CBN
Star Records. Petitioner asked respondent to compose and arrange songs for Celine
and promised that he (Lirio) would draft a contract to assure respondent of his
compensation for such services. As agreed upon, the additional services that
respondent would render included composing and arranging musical scores only,
while the technical aspect in producing the album, such as digital editing, mixing
and sound engineering would be performed by respondent in his capacity as studio
manager for which he was paid on a monthly basis. Petitioner instructed
respondent that his work on the album as composer and arranger would only be
done during his spare time, since his other work as studio manager was the priority.
Respondent then started working on the album.
Respondent alleged that before the end of September 2001, he reminded

petitioner about his compensation as composer and arranger of the album.
Petitioner verbally assured him that he would be duly compensated. By mid-
November 2001, respondent finally finished the compositions and musical
arrangements of the songs to be included in the album. Before the month ended, the
lead and back-up vocals in the ten (10) songs were finally recorded and completed.
From December 2001 to January 2002, respondent, in his capacity as studio

manager, worked on digital editing, mixing and sound engineering of the vocal and
instrumental audio files.
Thereafter, respondent was tasked by petitioner to prepare official

correspondence, establish contacts and negotiate with various radio stations, malls,
publishers, record companies and manufacturers, record bars and other outlets in
preparation for the promotion of the said album. By early February 2002, the album
was in its manufacturing stage. ELECTROMAT, manufacturer of CDs and cassette
tapes, was tapped to do the job. The carrier single of the album, which respondent
composed and arranged, was finally aired over the radio on February 22, 2002.
On February 26, 2002, respondent again reminded petitioner about the

contract on his compensation as composer and arranger of the album. Petitioner
told respondent that since he was practically a nobody and had proven nothing yet
in the music industry, respondent did not deserve a high compensation, and he
should be thankful that he was given a job to feed his family. Petitioner informed
respondent that he was entitled only to 20% of the net profit, and not of the gross
sales of the album, and that the salaries he received and would continue to receive
as studio manager of Celkor would be deducted from the said 20% net profit share.
Respondent objected and insisted that he be properly compensated. On March 14,
2002, petitioner verbally terminated respondent‘s services, and he was instructed
not to report for work.
Respondent asserts that he was illegally dismissed as he was terminated

without any valid grounds, and no hearing was conducted before he was
terminated, in violation of his constitutional right to due process. Having worked for
more than six months, he was already a regular employee. Although he was a so
called ―studio manager,‖ he had no managerial powers, but was merely an ordinary
employee. He prayed for his reinstatement without loss of seniority rights, or, in the
alternative, that he be paid separation pay, back wages and overtime pay; and that
he be awarded unpaid commission in the amount of P2,000.00 for services rendered
as a studio technician as well as moral and exemplary damages.
Respondent‘s evidence consisted of the Payroll dated July 31, 2001 to March 15,
2002, which was certified correct by petitioner, and Petty Cash Vouchers evidencing
receipt of payroll payments by respondent from Celkor.
In defense, petitioner averred that his relationship with respondent is one of

an informal partnership under Article 1767of the New Civil Code, since they agreed
to contribute money, property or industry to a common fund with the intention of
dividing the profits among themselves. Allegedly, both agreed to co-produce the
album based on the following terms and conditions: (1) petitioner shall provide all
the financing, equipment and recording studio; (2) Celine Mei Lirio shall sing all
the songs; (3) respondent shall act as composer and arranger of all the lyrics and the
music of the five songs he already composed and the revival songs; (4) petitioner

shall have exclusive right to market the album; (5) petitioner was entitled to 60% of
the net profit, while respondent and Celine Mei Lirio were each entitled to 20% of
the net profit; and (6) respondent shall be entitled to draw advances of P7,000.00 a
month, which shall be deductible from his share of the net profits and only until
such time that the album has been produced.
Petitioner insisted that had no control over the time and manner by which
respondent composed or arranged the songs, except on the result thereof.
Respondent reported to the recording studio between 10:00 a.m. and 12:00 noon.
Hence, petitioner contended that no employer-employee relationship existed
between him and the respondent, and there was no illegal dismissal to speak of.
Issue:
Whether or not employer-employee relationship exists?
Ruling:
Yes. The elements to determine the existence of an employment relationship
are: (a) the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer‘s power to control the employee‘s
conduct. The most important element is the employer‘s control of the employee‘s
conduct, not only as to the result of the work to be done, but also as to the means
and methods to accomplish it.
It is settled that no particular form of evidence is required to prove the

existence of an employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted.
In this case, the documentary evidence presented by respondent to prove that

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

and he was paid monthly wages of P7,000.00. Petitioner wielded the power to
dismiss as respondent stated that he was verbally dismissed by petitioner, and
respondent, thereafter, filed an action for illegal dismissal against petitioner. The
power of control refers merely to the existence of the power. It is not essential for
the employer to actually supervise the performance of duties of the employee, as it
is sufficient that the former has a right to wield the power. Nevertheless, petitioner
stated in his Position Paper that it was agreed that he would help and teach

respondent how to use the studio equipment. In such case, petitioner certainly had
the power to check on the progress and work of respondent.

14) CHARLIE JAO, Petitioner, vs.BCC PRODUCTS SALES INC., and
TERRANCE TY, Respondents.
G.R. No. 163700 April 18, 2012
Facts:
Petitioner offered the following: (a) BCC Identification Card (ID) issued to
him stating his name and his position as ―comptroller,‖ and bearing his picture, his
signature, and the signature of Ty; (b) a payroll of BCC for the period of October 1-
15, 1996 that petitioner approved as comptroller; (c) various bills and receipts
related to expenditures of BCC bearing the signature of petitioner; (d) various
checks carrying the signatures of petitioner and Ty, and, in some checks, the
signature of petitioner alone; (e) a court order showing that the issuing court
considered petitioner‘s ID as proof of his employment with BCC; (f) a letter of
petitioner dated March 1, 1997 to the Department of Justice on his filing of a
criminal case for estafa against Ty for non-payment of wages; (g) affidavits of some
employees of BCC attesting that petitioner was their co-employee in BCC; and (h) a
notice of raffle dated December 5, 1995 showing that petitioner, being an employee
of BCC, received the notice of raffle in behalf of BCC.
But respondent countered the evidences presented by the petitioner by

proving that Charlie Jao is not their employee, as SFC had installed petitioner as
its comptroller in BCC to oversee and supervise SFC‘s collections and the account of
BCC to protect SFC‘s interest; that their issuance of the ID to petitioner was only
for the purpose of facilitating his entry into the BCC premises in relation to his
work of overseeing the financial operations of BCC for SFC; that the ID should not
be considered as evidence of petitioner‘s employment in BCC; that petitioner
executed an affidavit in March 1996, stating, among others, that he is a CPA
presently employed at SFC.
Issue:
Whether or not there exist an employee-employer relationship between the
petitioner and respondent.
Ruling:
The Supreme Court held that there exist no employee-employer relationship
between the two based on the affidavits made by the petitioner that he is an
employee of SFC to oversee and supervise SFC's collection.
Moreover, in determining the presence or absence of an employer-employee

relationship, the Court has consistently looked for the following incidents, to wit:
(a) the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer‘s power to control the employee on the

means and methods by which the work is accomplished. The last element, the so-
called control test, is the most important element.
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.

15) LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION,
and/or, NELSON NAPUD, in his capacity as the President of Petitioner
Corporation, Petitioner, vs. HERNANI S. REALUYO, also known as
JOEY ROA, Respondent.
G.R. No. 153511 July 18, 2012
Facts:
This labor case for illegal dismissal involves a pianist employed to perform in
the restaurant of a hotel.
On August 9, 1999, Realuyo, 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 13th month pay. He prayed for attorney‘s fees, moral
damages of P100,000.00 and exemplary damages for P100,000.00 - Roa averred that
he had worked as a pianist at the Legend Hotel‘s Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night; and that it had increased to
P750.00/night. During his employment, he could not choose the time of
performance, which had been fixed from 7:00PM to 10:00pm for three to six times a
week. 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.
In its defense, petitioner denied the existence of an employer-employee

relationship with Roa, insisting that he had been only a talent engaged to provide
live music at Legend Hotel‘s Madison Coffee Shop for three hours/day on two days
each week; and stated that the economic crisis that had hit the country constrained
management to dispense with his services. - December 29, 1999: the Labor Arbiter
(LA) dismissed the complaint for lack of merit upon finding that the parties had no
employer-employee relationship, because Roa was receiving talent fee and not
salary, which was reinforced by the fact that Roa received his talent fee nightly,
unlike the regular employees of the hotel who are paid monthly.
NLRC affirmed the LA‘s decision on May 31, 2001.
CA set aside the decision of the NLRC, saying CA failed to take into
consideration that in Roa‘s line of work, he was supervised and controlled by the
hotel‘s restaurant manager who at certain times would require him to perform only
tagalong songs or music, or wear barong tagalong to conform with the Filipinana
motif of the place and the time of his performance is fixed. As to the status of Roa,
he is considered a regular employee of the hotel since his job was in furtherance of
the restaurant business of the hotel. Granting that Roa was initially a contractual
employee, by the sheer length of service he had rendered for the company, he had
been converted into a regular employee. - CA held that the dismissal was due to

retrenchment in order to avoid or minimize business losses, which is recognized by
law under Art. 283 of the Labor Code.
Issues:
1.) Whether or not there was employer-employee relationship between the
two?
2.) Whether or not Roa was validly terminated?
Ruling:
1. Employer-employee relationship existed between the parties.
Roa was undeniably employed as a pianist of the restaurant. The hotel

wielded the power of selection at the time it entered into the service contract dated
Sept. 1, 1992 with Roa. The hotel could not seek refuge behind the service contract
entered into with Roa. It is the law that defines and governs an employment
relationship, whose terms are not restricted to those fixed in the written contract,
for other factors, like the nature of the work the employee has been called upon to
perform, are also considered.
The law affords protection to an employee, and does not countenance any
attempt to subvert its spirit and intent. Any stipulation in writing can be ignored
when the employer utilizes the stipulation to deprive the employee of his security of
tenure. The inequality that characterizes employer-employee relationship generally
tips the scales in favor of the employer, such that the employee is often scarcely
provided real and better options.
The argument that Roa was receiving talent fee and not salary is baseless.
There is no denying that the remuneration denominated as talent fees was fixed on
the basis of his talent, skill, and the quality of music he played during the hours of
his performance. Roa‘s remuneration, albeit denominated as talent fees, was still
considered as included in the term wage in the sense and context of the Labor Code,
regardless of how petitioner chose to designate the remuneration, as per Article
97(f) of the Labor Code.
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.
Lastly, petitioner claims that it had no power to dismiss respondent due to

his not being even subject to its Code of Discipline, and that the power to
terminate the working relationship was mutually vested in the parties, in
that either party might terminate at will, with or without cause. This claim is

contrary to the records. Indeed, the memorandum informing respondent of
the discontinuance of his service because of the financial condition of
petitioner showed the latter had the power to dismiss him from employment.-
2. No, Roa was not validly terminated.
The conclusion that Roa‘s termination was by reason of retrenchment due to

an authorized cause under the labor Code is inevitable.
Retrenchment is one of the authorized causes for the dismissal of employees

recognized by the Labor Code. It is a management prerogative resorted to by
employers to avoid ro to minimize business losses. On this matter, Article 283 of the
Labor Code states:
Article 283. Closure of establishment and reduction of personnel.

The employer may also terminate the employment of any employee due
to the installation of labor-saving devices, redundancy, retrenchment
to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. xxx. In case of
retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to
one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall
be considered one (1) whole year.
Justifications for retrenchment: a. The expected losses should be substantial

and not merely de minimis in extent; b. The substantial losses apprehended must
be reasonably imminent; c. The retrenchment must be reasonably necessary and
likely to effectively prevent the expected losses; and d. The alleged losses, if already
incurred, and the expected imminent losses sought to be forestalled must be proved
by sufficient and convincing evidence.
In termination cases, the burden of proving that the dismissal was for a valid
or authorized cause rests upon the employer. Here, petitioner did not submit
evidence of the losses to its business operations and the economic havoc it would
thereby imminently sustain. It only claimed that Roa‘s termination was due to its
―present business/financial condition.‖ This bare statement fell short of the norm to
show a valid retrenchment. Hence, there was no valid cause for the retrenchment of
respondent. Since the lapse of time since the retrenchment might have rendered
Roa‘s reinstatement to his former job no longer feasible, Legend Hotel should pay

him separation pay at the rate of one month pay for every year of service computed
from September 1992 until the finality of this decision, and full back wages from the
time his compensation was withheld until the finality of this decision. Petition
denied.

16) THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER M.
ENANO-BOTE, Petitioners, vs. FRANCISCO N. DAKILA, Respondent.
G.R. No. 199547 September 24, 2012
Facts:
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.
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.
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 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?
Ruling:
Yes. Dakila was illegally dismissed. 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.
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.

17) ASHMOR M. TESORO, PEDRO ANG and GREGORIO SHARP,
Petitioners, vs. METRO MANILA RETREADERS, INC. (BANDAG) and/or
NORTHERN LUZON RETREADERS, INC. (BANDAG) and/or POWER
TIRE AND RUBBER CORP. (BANDAG), Respondent.
G.R. No. 171482 March 12, 2014
Facts:
On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro,
Pedro Ang, and Gregorio Sharp used to work as salesmen for respondents Metro
Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or Power Tire and
Rubber Corporation. These are sister companies collectively called ―Bandag‖.
Bandag offered repair and retread services for used tires.
In 1998, however, Bandag developed a franchising scheme that would enable

others to operate tire and retreading businesses using its trade name and service
system. Petitioners quit their jobs as salesmen and entered into separate Service
Franchise Agreements (SFAs) with Bandag for the operation of their respective
franchises. Under this SFA, Bandag would provide funding with the petitioners
subject to regular liquidation of revolving funds. The expenses of these funds will be
deducted from their sale in order to determine their income. After some time,
petitioners began to default on their obligations to submit periodic liquidations of
their operational expenses in relation to the revolving funds Bandag provided them.
Bandag terminated their SFA.
Aggrieved, petitioners filed a complaint for constructive dismissal, non–

payment of wages, incentive pay, 13th month pay and damages against Bandag
with the National Labor Relations Commission (NLRC). Petitioners contend that
despite the SFA, they remained employees of Bandag.
For its part, Bandag pointed out that petitioners freely resigned from their
employment and decided to avail themselves of the opportunity to be independent
entrepreneurs under the franchise scheme that Bandag had. Thus, no employer–
employee relationship existed between petitioners and Bandag.
Issue:
Whether or not petitioners remained to be Bandag‘s salesmen under the
franchise scheme it entered into with them.
Ruling:
No, petitioners were no longer employees of Bandag the moment they entered
into the SFA. Franchising is a business method of expansion that allows an
individual or group of individuals to market a product or a service and to use of the
patent, trademark, trade name and the systems prescribed by the owner.

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

over petitioners‘ work. It points out that Bandag: (a) retained the right to adjust the
price rates of products and services; (b) imposed minimum processed tire
requirement (MPR); (c) reviewed and regulated credit applications; and (d) retained
the power to suspend petitioners‘ services for failure to meet service standards. But
uniformity in prices, quality of services, and good business practices are the essence
of all franchises. A franchisee will damage the franchisor‘s business if he sells at
different prices, renders different or inferior services, or engages in bad business
practices. These business constraints are needed to maintain collective
responsibility for faultless and reliable service to the same class of customers for the
same prices. This is not the ―control‖ contemplated in employer–employee
relationships. Control in such relationships addresses the details of day to day work
like assigning the particular task that has to be done, monitoring the way tasks are
done and their results, and determining the time during which the employee must
report for work or accomplish his assigned task. Petitioners cannot use the
revolving funds feature of the SFAs as evidence of their employer–employee
relationship with Bandag. These funds do not represent wages. They are more in
the nature of capital advances for operations that Bandag conceptualized to attract
prospective franchisees. Petitioners‘ incomes depended on the profits they make,
controlled by their individual abilities to increase sales and reduce operating costs.

18) ROYALE HOMES MARKETING CORPORATION, Petitioner, vs.
FIDEL P. ALCANTARA [deceased], substituted by his heirs,
Respondent.
G.R. No. 195190 July 28, 2014
Facts:
Royale Homes, a corporation engaged in marketing real estates, appointed
Alcantara as its Marketing Director for a fixed period of one year. His work
consisted mainly of marketing Royale Homes' real estate inventories on an
exclusive basis. Royale Homes reappointed him for several consecutive years.
On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal

against Royale Homes alleging that he was dismissed from work without any valid
or just cause and in gross disregard of the proper procedure for dismissing
employees. He prayed to be reinstated to his former position without loss of
seniority rights and other privileges, as well as to be paid backwages, moral and
exemplary damages, and attorney's fees.
Royale Homes denied that Alcantara is its employee because:

(1) it engaged his services as an independent sales contract for one year only;
(2) he never received any salary, 13th month pay, overtime pay or holiday
pay;
(3) he was paid on commission basis;
(4) it had no control on how Alcantara would accomplish his tasks
Labor Arbiter rendered a Decision holding that Alcantara is an employee of

Royale Homes. NLRC rendered its Decision ruling that Alcantara is not an
employee but a mere independent contractor of Royale Homes. It based its ruling
mainly on the contract. CA promulgated its Decision reversing the NLRC's Decision
pointing out that Royale Homes exercised some degree of control over Alcantara
since his jobis subject to company rules, regulations, and periodic evaluations.
Issue:
Whether or not Alcantara was an independent contractor or an employee of
Royale Homes
Ruling:
Alcantara is not an employee of Royal Home but a mere independent
contractor.
The juridical relationship of the parties based on their written contract:

The primary evidence of the nature of the parties' relationship in this case is
the written contract that they signed. While the existence of employer-employee
relationship is a matter of law, the characterization made by the parties in their

contract as to the nature of their juridical relationship cannot be simply ignored,
particularly in this case where the parties' written contract unequivocally states
their intention at the time they entered into it. In this case, the contract duly signed
and not disputed by the parties, conspicuously provides that "no employer-employee
relationship exists between" Royale Homes and Alcantara, as well as his sales
agents. It is clear that they did not want to be bound by employer-employee
relationship at the time of the signing of the contract. The stipulation of the
contract is clear and no construction is needed, as per SC.
The juridical relationship of the parties based on Control Test:

The Supreme Court noted that the four-fold test is wanting in this case.
The CA ratiocinated that since the performance of his tasks is subject to

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

19) FUJI TELEVISION NETWORK, INC., Petitioner, vs. ARLENE S.
ESPIRITU, Respondent.
G.R. No. 204944-45 December 3, 2014
Facts:
Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc.
(Fuji) as a news correspondent/producer tasked to report Philippine news to Fuji
through its Manila Bureau field office. The employment contract was initially for
one year, but was successively renewed on a yearly basis with salary adjustments
upon every renewal.
In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji
about her condition, and the Chief of News Agency of Fuji, Yoshiki Aoki, informed
the former that the company had a problem with renewing her contract considering
her condition. Arlene insisted she was still fit to work as certified by her attending
physician.
After a series of verbal and written communications, Arlene and Fuji signed a
non-renewal contract. In consideration thereof, Arlene acknowledged the receipt of
the total amount of her salary from March-May 2009, year-end bonus, mid-year
bonus and separation pay. However, Arlene executed the non-renewal contract
under protest.
Arlene filed a complaint for illegal dismissal with the NCR Arbitration
Branch of the NLRC, alleging that she was forced to sign the non-renewal contract
after Fuji came to know of her illness. She also alleged that Fuji withheld her
salaries and other benefits when she refused to sign, and that she was left with no
other recourse but to sign the non-renewal contract to get her salaries.
The Labor Arbiter dismissed the complaint and held that Arlene was not a
regular employee but an independent contractor. The NLRC reversed the Labor
Arbiter‘s decision and ruled that Arlene was a regular employee since she
continuously rendered services that were necessary and desirable to Fuji‘s business.
The Court of Appeals affirmed that NLRC ruling with modification that Fuji
immediately reinstate Arlene to her position without loss of seniority rights and
that she be paid her backwages and other emoluments withheld from her. The
Court of Appeals agreed with the NLRC that Arlene was a regular employee,
engaged to perform work that was necessary or desirable in the business of Fuji,
and the successive renewals of her fixed-term contract resulted in regular
employment. The case of Sonza does not apply in the case because Arlene was not
contracted on account of a special talent or skill. Arlene was illegally dismissed
because Fuji failed to comply with the requirements of substantive and procedural

due process. Arlene, in fact, signed the non-renewal contract under protest as she
was left without a choice.
Issues:
1.) Was Arlene an independent contractor?
2.) Was Arlene a regular employee?
3.) Was Arlene illegally dismissed?
Ruling:
1. ARLENE WAS NOT AN INDEPENDENT CONTRACTOR.
Fuji alleged that Arlene was an independent contractor citing the Sonza case.
She was hired because of her skills. Her salary was higher than the normal rate.
She had the power to bargain with her employer. Her contract was for a fixed term.
It also stated that Arlene was not forced to sign the non-renewal agreement,
considering that she sent an email with another version of her non-renewal
agreement.
Arlene argued (1) that she was a regular employee because Fuji had control
and supervision over her work; (2) that she based her work on instructions from
Fuji; (3) that the successive renewal of her contracts for four years indicated that
her work was necessary and desirable; (4) that the payment of separation pay
indicated that she was a regular employee; (5) that the Sonza case is not applicable
because she was a plain reporter for Fuji; (6) that her illness was not a ground for
her dismissal; (7) that she signed the non-renewal agreement because she was not
in a position to reject the same.
DISTINCTIONS AMONG FIXED-TERM EMPLOYEES, INDEPENDENT

CONTRACTORS, AND REGULAR EMPLOYEES:
Fixed Term Employment

1) The fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure being brought
to bear upon the employee and absent any other circumstances vitiating his
consent;
2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised by the
former or the latter. These indications, which must be read together, make the
Brent doctrine applicable only in a few special cases wherein the employer and
employee are on more or less in equal footing in entering into the contract. The
reason for this is evident: when a prospective employee, on account of special skills
or market forces, is in a position to make demands upon the prospective employer,
such prospective employee needs less protection than the ordinary worker. Lesser

limitations on the parties‘ freedom of contract are thus required for the protection of
the employee.
For as long as the guidelines laid down in Brent are satisfied, this court will
recognize the validity of the fixed-term contract.
Independent Contractor
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. No employer-employee relationship exists between
the independent contractors and their principals.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a

contract with another person for the performance of the former‘s work, the
employees of the contractor and of the latter‘s subcontractor, if any, shall be paid in
accordance with the provisions of this Code.
The Secretary of Labor and Employment may, by appropriate regulations,

restrict or prohibit the contracting-out of labor to protect the rights of workers
established under this Code. In so prohibiting or restricting, he may make
appropriate distinctions between labor-only contracting and job contracting as
well as differentiations within these types of contracting and determine who among
the parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code. There is
―labor-only‖ contracting where the person supplying workers to an employer does
not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent 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.
Department Order No. 18-A, Series of 2011, Section 3

(c) . . . an arrangement whereby a principal agrees to put out or farm out with a
contractor the performance or completion of a specific job, work or service within a
definite or predetermined period, regardless of whether such job, work or service is
to be performed or completed within or outside the premises of the principal.
This department order also states that there is a trilateral relationship in

legitimate job contracting and subcontracting arrangements among the principal,

contractor, and employees of the contractor. There is no employer-employee
relationship between the contractor and principal who engages the contractor‘s
services,but there is an employer-employee relationship between the contractor
and workers hired to accomplish the work for the principal.
Jurisprudence has recognized another kind of independent contractor:

individuals with unique skills and talents that set them apart from ordinary
employees. There is no trilateral relationship in this case because the independent
contractor himself or herself performs the work for the principal. In other words,
the relationship is bilateral.
There are different kinds of independent contractors: those engaged in

legitimate job contracting and those who have unique skills and talents that set
them apart from ordinary employees. Since no employer-employee relationship
exists between independent contractors and their principals, their contracts are
governed by the Civil Code provisions on contracts and other applicable laws.
Regular Employees
Contracts of employment are different and have a higher level of regulation
because they are impressed with public interest. Article 13, Section 3 of the 1987
Constitution provides full protection to labor.
Apart from the Constitutional guarantee, Article 1700 of the Civil Code
states that: The relations between capital and labor are not merely contractual. They
are so impressed with public interest that labor contracts must yield to the common
good. Therefore, such contracts are subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed shop, wages, working conditions,
hours of labor and similar subjects.
In contracts of employment, the employer and the employee are not on equal
footing. Thus, it is subject to regulatory review by the labor tribunals and courts of
law. The law serves to equalize the unequal. The labor force is a special class that is
constitutionally protected because of the inequality between capital and labor. This
presupposes that the labor force is weak.
The level of protection to labor should vary from case to case. When a
prospective employee, on account of special skills or market forces, is in a position to
make demands upon the prospective employer, such prospective employee needs
less protection than the ordinary worker.
The level of protection to labor must be determined on the basis of the nature
of the work, qualifications of the employee, and other relevant circumstances such
as but not limited to educational attainment and other special qualifications.

Fuji‘s argument that Arlene was an independent contractor under a fixed-
term contract is contradictory. Employees under fixed-term contracts cannot be
independent contractors because in fixed-term contracts, an employer-employee
relationship exists. The test in this kind of contract is not the necessity and
desirability of the employee‘s activities, ―but the day certain agreed upon by the
parties for the commencement and termination of the employment relationship.‖
For regular employees, the necessity and desirability of their work in the usual
course of the employer‘s business are the determining factors. On the other hand
independent contractors do not have employer-employee relationships with their
principals.
To determine the status of employment, the existence of employer-employee

relationship must first be settled with the use of the four-fold test, especially the
qualifications for the power to control.
The distinction is in this guise:

Rules that merely serve as guidelines towards the achievement of a mutually
desired result without dictating the means or methods to be employed creates no
employer-employee relationship; whereas those that control or fix the methodology
and bind or restrict the party hired to the use of such means creates the
relationship.
In application, Arlene was hired by Fuji as a news producer, but there was no
evidence that she was hired for her unique skills that would distinguish her from
ordinary employees. Her monthly salary appeared to be a substantial sum. Fuji had
the power to dismiss Arlene, as provided for in her employment contract. The
contract also indicated that Fuji had control over her work as she was required to
report for 8 hours from Monday to Friday. Fuji gave her instructions on what to
report and even her mode of transportation in carrying out her functions was
controlled. Therefore, Arlene could not be an independent contractor.
1. ARLENE WAS A REGULAR EMPLOYEE WITH A FIXED-TERM

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

However, there may be a situation where an employee‘s work is necessary but is
not always desirable in the usual course of business of the employer. In this
situation, there is no regular employment. Fuji‘s Manila Bureau Office is a small
unit and has a few employees. Arlene had to do all activities related to news
gathering.
A news producer ―plans and supervises newscast [and] works with reporters in
the field planning and gathering information, including monitoring and getting
news stories, reporting interviewing subjects in front of a video camera, submission
of news and current events reports pertaining to the Philippines, and traveling to
the regional office in Thailand.‖ She also had to report for work in Fuji‘s office in
Manila from Mondays to Fridays, eight per day. She had no equipment and had to
use the facilities of Fuji to accomplish her tasks.
The successive renewals of her contract indicated the necessity and desirability
of her work in the usual course of Fuji‘s business. Because of this, Arlene had
become a regular employee with the right to security of tenure.
Arlene‘s contract indicating a fixed term did not automatically mean that she
could never be a regular employee. For as long as it was the employee who
requested, or bargained, that the contract have a ―definite date of termination,‖ or
that the fixed-term contract be freely entered into by the employer and the
employee, then the validity of the fixed-term contract will be upheld.
2. ARLENE WAS ILLEGALLY DISMISSED

As a regular employee, Arlene was entitled to security of tenure under Article
279 of the Labor Code and could be dismissed only for just or authorized causes and
after observance of due process.
The expiration of the contract does not negate the finding of illegal dismissal.
The manner by which Fuji informed Arlene of non-renewal through email a month
after she informed Fuji of her illness is tantamount to constructive dismissal.
Further, Arlene was asked to sign a letter of resignation prepared by Fuji. The
existence of a fixed-term contract should not mean that there can be no illegal
dismissal. Due process must still be observed.
Moreoever, disease as a ground for termination under Article 284 of the Labor
Code and Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor
Code require two requirements to be complied with: (1) the employee‘s disease
cannot be cured within six months and his continued employment is prohibited by
law or prejudicial to his health as well as to the health of his co-employees; and (2)
certification issued by a competent public health authority that even with proper
medical treatment, the disease cannot be cured within six months. The burden of

proving compliance with these requisites is on the employer. Non-compliance leads
to illegal dismissal.
Arlene was not accorded due process. After informing her employer of her lung
cancer, she was not given the chance to present medical certificates. Fuji
immediately concluded that Arlene could no longer perform her duties because of
chemotherapy. Neither did it suggest for her to take a leave. It did not present any
certificate from a competent public health authority.

20) PURISIMO M. CABAOBAS, EXUPERIO C. MOLINA, GILBERTO V.
OPINION, VICENTE R. LAURON, RAMON M. DE PAZ, JR., ZACARIAS
E. CARBO, JULITO G. ABARRACOSO, DOMINGO B. GLORIA, and
FRANCISCO P. CUMPIO, Petitioners, vs. PEPSI-COLA PRODUCTS,
PHILIPPINES, INC., Respondents.
G.R. No. 176908 November 11, 2015
Facts:
Pepsi-Cola Products Philippines, Inc.‘s Tanauan Plant in Tanauan, Leyte
incurred business losses in the total amount of 29,167,390.00. To avert further
losses, PCPPI implemented a company-wide retrenchment program and retrenched
47 employees of its Tanauan Plant.
Petitioners, who are permanent and regular employees of the Tanauan Plant,
received their respective letters, informing them of the cessation of their
employment. Petitioners then filed their respective complaints for illegal dismissal
before the National Labor Relations Commission Regional Arbitration Branch No.
VIII in Tacloban City.
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.
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 Labor Arbiter ruled that the dismissal of the petitioners was illegal. On
appeal of both parties, the Fourth Division of the NLRC reversed the decision of the
labor arbiter.
The petitioners‘ appeal was dismissed and the CA affirmed the NLRC‘s
Fourth Division‘s decision. However, acting on the petition for certiorari filed by
Molon, et al., the CA reversed its own decision and declaring that the retrenchment
was contrary to the prescribed rules and procedure and declaring that petitioners

were illegally terminated. Their reinstatement to their former positions or its
equivalent is hereby ordered, without loss of seniority rights and privileges and
PEPSI-COLA is also ordered the payment of their backwages from the time of their
illegal dismissal up to the date of their actual reinstatement. If reinstatement is not
feasible because of strained relations or abolition of their respective positions, the
payment of separation pay equivalent to 1 month salary for every year of service, a
fraction of at least 6 months shall be considered a whole year. The monetary
considerations received by some of the employees shall be deducted from the total
amount they ought to receive from the company.
Issue:
Whether or not the dismissal was legal and valid.
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.
REQUISITES:
(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 (½) 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.
In due regard of these requisites, the Court observes that Pepsi had validly
implemented its retrenchment program.
It is axiomatic that absent any clear showing of abuse, arbitrariness or

capriciousness, the findings of fact by the NLRC, especially when affirmed by the
CA – as in this case – are binding and conclusive upon the Court. Thus, given that
there lies no discretionary abuse with respect to the foregoing findings, the Court
sees no reason to deviate from the same.
Moreover, it must be underscored that Pepsi‘s management exerted conscious

efforts to incorporate employee participation during the implementation of its
retrenchment program. Records indicate that Pepsi had initiated sit-downs with its
employees to review the criteria on which the selection of who to be retrenched
would be based.

21) NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN
AND MA. CRISTINA SUMAYAO, Petitioners, vs. ABS-CBN
CORPORATION (FORMERLY, ABS-CBN BROADCASTING
CORPORATION) AND AMALIA VILLAFUERTE, Respondents.
G.R. No. 199166 April 20, 2015
Facts:
Respondent ABS-CBN is a television and radio broadcasting company with
Amalia Villafuerte as the manager. Thru Villafuerte, ABS-CBN engaged in the
services of petitioners Benigno and Del Valle who were cameramen/editors for TV
broadcasting. Petitioners Ma. Cristina Sumayao and Llorin were likewise reporters
sometime in 1996-2002. Their services were engaged thru talent contracts that
provided terms ranging from 3 months to 1 year. They were also given Project
Assignment Forms which detailed the duration of a p[articular project as well as
the budget and the daily technical requirements thereof. Petitioners were tasked to
cover news items for subsequent daily airings in respondents‘ TV Patrol Bicol
Program.
While specifically providing that nothing therein shall be deemed or

construed to establish an employer-employee relationship between the parties, the
aforesaid Talent Contracts included, among other matters, provisions on the
following matters:
(a) the Talent‘s creation and performance of work in accordance with the
ABS-CBN‘s 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 Broadcasters sa
Pilipinas (KBP) and other regulatory agencies;
(b) the Talent‘s 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 non-promotion of any product or service without prior
written consent;
(c) the results-oriented nature of the talent‘s work which did not require them
to observe normal or fixed working hours.3 Subjected to contractor‘s tax,
petitioners‘ remunerations were denominated as Talent Fees which, as of last
renewal, were admitted to be pegged per airing day at P273.35 for Begino, P
302.92 for Del Valle, P 323.08 for Sumayao and P 315.39 for Llorin.
Petitioners claim for regularization, underpayment of overtime pay, holiday

pay, 13th month pay and service incentive leave pay. They also claim that their
work is necessary in the business of ABS CBN. They further allege that they were
working under the direct supervision and control of ABSCBN.

Respondent 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, who
offered their services in relation to a particular program.
Petitioners filed a 2nd complaint for the same cause of action due to the fact
that ABS CBN terminated their services during the pendency of the first case.
Issue:
Whether or not petitioners may claim from ABS-CBN? Whether or not there
is an employer – employee relationship?
Ruling:
To determine the existence of said relation, case law has consistently applied
the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to
control the employee on the means and methods by which the work is
accomplished.23 Of these criteria, the so-called ―control test‖ is generally regarded
as the most crucial and determinative indicator of the presence or absence of an
employer-employee relationship. Under this test, an employer-employee
relationship is said to exist where the person for whom the services are performed
reserves the right to control not only the end result but also the manner and means
utilized to achieve the same.
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.
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. As cameramen/editors and reporters,
petitioners were undoubtedly performing functions necessary and essential to ABS-
CBN‘s business of broadcasting television and radio content. It matters little that
petitioners‘ services were engaged for specified periods for TV Patrol Bicol and that
they were paid according to the budget allocated therefor. Aside from the fact that
said program is a regular weekday fare of the ABS-CBN‘s Regional Network Group
in Naga City, the record shows that, from their initial engagement in the aforesaid
capacities, petitioners were continuously re-hired by respondents over the years. To
the mind of the Court, respondents‘ repeated hiring of petitioners for its long-
running news program positively indicates that the latter were ABS-CBN‘s regular
employees.
Also, the court finds that petitioners were under the direct control and
supervision of the network. Thus, SC ruled in favor of petitioners.

22) SOCIAL SECURITY SYSTEM, Petitioner, v. DEBBIE UBAÑA,
Respondent.
G.R. No. 200114 August 24, 2015
Facts:
Respondent Debbie Ubana filed a civil case for damages against the DBP
Service Corporation, petitioner Social Security System (SSS), and the SSS Retirees
Association before the RTC. She alleged that after she applied for employment,
passed the examinations and accomplished all the requirements, she was instead
referred to DBP Service Corporation for "transitory employment." She claimed she
was qualified for her position as Processor, having completed required training and
passed the SSS qualifying examination for Computer Operations Course given by
the National Computer Institute, U.P. Diliman yet she was not given the proper
salary. When she can no longer stand the exploitation of being transeferred from
one department to another without being absorbed permanently as an employee
and without proper payment of wage, she was then forced to resign.She averred
that she suffered actual losses because of it for six years while working for the
petitioner. Citing Civil Service Commission Memorandum Circular No. 40,
respondent contended that the performance of functions outside of the nature
provided in the appointment and receiving salary way below that received by
regular SSS employee‘s amount to an abuse of rights.
Petitioner and its co-defendants SSS Retirees Association and DBP Service
Corporation filed their respective motions to dismiss, arguing that the subject
matter of the case and respondent's claims arose out of employer-employee
relations, which are beyond the RTC's jurisdiction and properly cognizable by the
National Labor Relations Commission (NLRC).
RTC dismissed the complaint on the ground of lack of jurisdiction, stating

that the complaint filed is clearly a case of unfair labor practice, therefore should be
filed with the Labor Arbiter of the NLRC. This was however set aside by the same
court during reconsideration because SSS was created under an original charter
pursuant to R.A. No. 1161as amended by R.A. 8282, which means that the said
agency is governed by the Civil Service Commission. However, since the SSS denied
the existence of an employer-employee 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.
CA affirmed this decision of RTC agreeing that a careful perusal of the

complaint shows that it is one action for damages which the regular courts have
jurisdiction. It is the nature of action of the subject of the controversy that must be
based on in determining which body has jurisdiction. Where the claim to the
principal relief sought is to be resolved not by reference to the Labor Code or other
labor relations statute or a collective bargaining agreement but by the general civil

law, the jurisdiction over the dispute belongs to the regular courts of justice and not
to the Labor Arbiter and the NLRC.
Issue:
Whether or not Labor Code has any relevance to the principal relief sought in
the complaint, giving NLRC jurisdiction over it?
RULING:
No. Labor Code does not apply in this case, therefore NLRC has no
jurisdiction to try and hear the case. Jurisdiction should be with the regular courts.
During respondent's stint with petitioner, she never became an SSS

employee, as she remained an employee of DBP Service Corporation and SSS
Retirees Association - the two being independent contractors with legitimate service
contracts with SSS. Petitioner denied the existence of employer-employee
relationship but in fact insists on the validity of the service agreements with DBP
Service Corporation and SSS Retirees Association, meaning that SSS is not the true
employer. In order for the Labor Arbiter to acquire jurisdiction over a dispute, there
must be an employer-employee relation between the parties thereto. 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.
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. Because of this, case is remanded to RTC for the
continuation of proceedings.

23) CENTURY PROPERTIES, INC., Petitioner, vs EDWIN J. BABIANO
and EMMA B. CONCEPCION, Respondents.
G.R. No. 220978 July 5, 2016
Facts:
Concepcion was initially hired as a sales agent by Century Properties, Inc.
(CPI) and was eventually promoted as project director on September 1, 2007. As
such, she signed an employment agreement, denominated as ―Contract of Agency
for Project Director‖ which provided, among others, that she would directly report to
Edwin J. Babiano and receive a monthly subsidy of P60, 000.00, 0.5 percent
commission, and cash incentives.
On March 31, 2008, she executed a similar contract anew with CPI in which
she would receive a monthly subsidy of P50, 000.00, 0.5 percent commission, and
cash incentives as per company policy. It was stipulated in both contracts that no
employer-employee relationship exists between her and CPI.
She resigned as CPI‘s project director through a letter dated Feb. 23, 2009,
effective immediately. On August 8, 2011, she and Babiano filed a complaint before
the NLRC for non-payment of commissions and damages against CPI and its
executive vice president claiming that their repeated demands for their payment
remained unheeded. CPI invoked the defense that the NLRC had no jurisdiction to
hear the complaint because there was no employer-employee a relationship between
them, and thus, she should have litigated the same in an ordinary civil action.
Issue:
Whether or not employer-employee relationship exists.
Ruling:
No. Anent the nature of Concepcion‘s engagement, based on case law, the
presence of the following elements evince the existence of an employer-employee
relationship: (a) the power to hire, i.e., the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer‘s power to control the employee‘s conduct, or the so called ―control test.‖
The control test is commonly regarded as the most important indicator of the
presence or absence of an employer-employee relationship. Under this test, an
employer-employee relationship exists where the person for whom the services are
performed reserves the right to control not only the end achieved, but also the
manner and means to be used in reaching that end. Guided by these parameters,
the Court finds that Concepcion was an employee of CPI considering that:
(a) CPI continuously hired and promoted Concepcion from October 2002 until
her resignation on February 23, 2009, thus, showing that CPI exercised the

power of selection and engagement over her person and that she performed
functions that were necessary and desirable to the business of CPI;
(b) the monthly ―subsidy‖ and cash incentives that Concepcion was receiving
from CPI are actually remuneration in the concept of wages as it was
regularly given to her on a monthly basis without any qualification, save for
the ―complete submission of documents on what is a sale policy‖;
(c) CPI had the power to discipline or even dismiss Concepcion as her
engagement contract with CPI expressly conferred upon the latter ―the right
to discontinue her service anytime during the period of engagement should
she fail to meet the performance standards,‖ among others, and that CPI
actually exercised such power to dismiss when it accepted and approved
Concepcion‘s resignation letter; and most importantly,
(d) as aptly pointed out by the CA, CPI possessed the power of control over
Concepcion because in the performance of her duties as Project Director -
particularly in the conduct of recruitment activities, training sessions, and
skills development of Sales Directors - she did not exercise independent
discretion thereon, but was still subject to the direct supervision of CPI,
acting through Babiano. Besides, while the employment agreement of
Concepcion was denominated as a ―Contract of Agency for Project Director,‖ it
should be stressed that the existence of employer-employee relations could
not be negated by the mere expedient of repudiating it in a contract.

24) JOAQUIN LU, Petitioner vs TIRSO ENOPIA, et.al.
G.R. No. 197899 March 6, 2017
Facts:
Enopia and others were hired from January 20, 1994 to March 20, 1996 as
crew members of the fishing mother boat FIB MG-28 owned by Joaquin ―Jake‖ Lu
who is the sole proprietor of Mommy Gina Tuna Resources [MGTR] based in
General Santos City.
Parties had an income-sharing arrangement wherein 55% goes to Lu, 45% to

the crew members, with an additional 4% as ―backing incentive‖; they also equally
share the expenses for the maintenance and repair of the mother boat, and for the
purchase of nets, ropes and payaos.
Sometime in August 1997, Lu proposed the signing of a Joint Venture

Fishing Agreement between them, but complainants refused to sign the same as
they opposed the one-year term provided in the agreement.
According to complainants, during their dialogue on August 18, 1997, Lu

terminated their services right there and then because of their refusal to sign the
agreement. On the other hand, Lu alleged that the master fisherman (piado) Ruben
Salili informed him that complainants still refused to sign the agreement and have
decided to return the vessel FIB MG-28.
On August 25, 1997, complainants filed their complaint for illegal dismissal,
monetary claims and damages. Despite serious efforts made by Labor Arbiter (LA),
the case was not amicably settled.
The LA rendered a Decision dismissing the case for lack of merit finding that
there was no employer-employee relationship existing between petitioner and the
respondents but a joint venture.
Complainants appealed to the National Labor Relations Commission (NLRC).
The NLRC affirmed the LA Decision in its Resolution. Complainants’

motion for reconsideration was denied in a Resolution.
Complainants filed a petition for certiorari with the CA
The CA dismissed the petition for having been filed beyond the 60-day
reglementary period as provided under Rule 65 of the Rules of Court, and that the
sworn certification of non-forum shopping was signed only by two (2) of the
complainants who had not shown any authority to sign in behalf of the other
crewmembers. As their motion for reconsideration was denied, they went to the

Supreme Court via a petition for certiorari assailing the dismissal which the SC
granted and remanded the case to the CA for further proceedings.
In a remanded case, the CA rendered its assailed Decision reversing the

NLRC awarding separation pay, full backwages, exemplary damages, and
attorney‘s fees. The CA found that Lu exercised control over respondents. Lu‘s
motion for reconsideration was denied by the CA. Aggrieved, he filed the instant
petition for review on certiorari.
Issues:
1.) Whether or not there was employer-employee relationship between the
parties;
2.) Whether or not the CA can pass upon the evidence in a petition for
certiorari.
Ruling:
The judicial function of the CA in the exercise of its certiorari jurisdiction
over the NLRC extends to the careful review of the NLRC‘s evaluation of the
evidence because the factual findings of the NLRC are accorded great respect and
finality only when they rest on substantial evidence. Accordingly, the CA is not to
be restrained from revising or correcting such factual findings whenever warranted
by the circumstances simply because the NLRC is not infallible. Indeed, to deny to
the CA this power is to diminish its corrective jurisdiction through the writ of
certiorari.
In determining the existence of an employer-employee relationship, the

following elements are considered: (1) the selection and engagement of the workers;
(2) the power to control the worker‘s conduct; (3) the payment of wages by whatever
means; and (4) the power of dismissal.
The Court found all these elements present in this case.

Topic 3- HIRING OF EMPLOYEE
1) PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, *

petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and
GRACE DE GUZMAN, respondents.
G.R. No. 118978 May 23, 1997
Facts:
Grace de Guzman was initially hired by petitioner as a reliever for a fixed

period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went
on maternity leave. Under the Reliever Agreement which she signed with
Petitioner Company, her employment was to be immediately terminated upon
expiration of the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and
from July 19, 1991 to August 8, 1991, private respondent‘s services as reliever were
again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who
went on leave during both periods. After August 8, 1991, and pursuant to their
Reliever Agreement, her services were terminated.
It now appears that private respondent had made the a representation that
she was single even though she contracted marriage months before, in the two
successive reliever agreements which she signed on June 10, 1991 and July 8, 1991.
When petitioner supposedly learned about the same later, its branch supervisor
sent to private respondent a memorandum requiring her to explain the discrepancy.
In that memorandum, she was reminded about the company‘s policy of not
accepting married women for employment.
Private respondent was dismissed from the company effective January 29,
1992, which she readily contested by initiating a complaint for illegal dismissal.
Labor Arbiter handed down a decision declaring that private respondent, who had
already gained the status of a regular employee, was illegally dismissed by
petitioner. On appeal to the National Labor Relations Commission (NLRC), said
public respondent upheld the labor arbiter and it ruled that private respondent had
indeed been the subject of an unjust and unlawful discrimination by her employer,
PT&T.
Issue:
Whether or not discrimination merely by reason of the marriage of a female

employee is expressly prohibited by Article 136.
Ruling:
SC ruled that the stipulation is violative of Art. 136 of the Labor Code. An
employer is free to regulate, according to his discretion and best business judgment,
all aspects of employment, ―from hiring to firing,‖ except in cases of unlawful
discrimination or those which may be provided by law. Petitioner‘s policy of not
accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination,
afforded all women workers by our labor laws and by no less than the Constitution.
Respondent‘s act of concealing the true nature of her status from PT&T could
not be properly characterized as willful or in bad faith as she was moved to act the
way she did mainly because she wanted to retain a permanent job in a stable
company. In other words, she was practically forced by that very same illegal
company policy into misrepresenting her civil status for fear of being disqualified
from work.
The government, to repeat, abhors any stipulation or policy in the nature of

that adopted by petitioner PT&T. Under American jurisprudence, job requirements
which establish employer preference or conditions relating to the marital status of
an employee are categorized as a ―sex-plus‖ discrimination where it is imposed on
one sex and not on the other. Further, the same should be evenly applied and must
not inflict adverse effects on a racial or sexual group which is protected by federal
job discrimination laws.
Petitioner‘s policy is not only in derogation of the provisions of Article 136 of

the Labor Code on the right of a woman to be free from any kind of stipulation
against marriage in connection with her employment, but it likewise assaults good
morals and public policy, tending as it does to deprive a woman of the freedom to
choose her status, a privilege that by all accounts inheres in the individual as an
intangible and inalienable right.
Hence, while it is true that the parties to a contract may establish any
agreements, terms, and conditions that they may deem convenient, the same should
not be contrary to law, morals, good customs, public order, or public policy. Carried
to its logical consequences, it may even be said that petitioner‘s policy against
legitimate marital bonds would encourage illicit or common-law relations and
subvert the sacrament of marriage.

2) DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.
TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES, INC.,
Respondent.
G.R. No. 162994 September 17, 2004
Facts:
Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome Philppines
(Glaxo) as medical representative on October 24, 1994 thereafter signed a contract
of employment which stipulates among others that he agrees to study and abide
existing company rules; to disclose to management any existing of future
relationship by consanguinity or affinity with co-employees or employees of
competing drug companies and if ever that such management find such conflict of
interest, he must resign. The Employee Code of Conduct of Glaxo similarly provides
that an employee is expected to inform management of any existing or future
relationship by consanguinity or affinity with co-employees or employees of
competing drug companies. If management perceives a conflict of interest or a
potential conflict between such relationship and the employee‘s employment with
the company, the management and the employee will explore the possibility of a
―transfer to another department in a non-counterchecking position‖ or preparation
for employment outside the company after six months.
Reminders from Tecson‘s district manager did not stop him from marrying.
Tecson married Bettsy, an Astra‘s Branch Coordinatior in Albay. She supervised
the district managers and medical representatives of her company and prepared
marketing strategies for Astra in that area.
Tecson was reassigned to another place and was not given products that the
Astra Company has and he was not included in products seminars and training.
Tecson requested for time in complying said policy by asking for a transfer in the
Glaxo‘s milk division in which the other company had no counterpart. Thereafter,
he bought the matter to Grievance Committee but the parties failed to resolve such
issue, Glaxo offered Tecson a separation pay of one-half (½) month pay for every
year of service, or a total of P50,000.00 but he declined the offer. On November 15,
2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision
declaring as valid Glaxo‘s policy on relationships between its employees and persons
employed with competitor companies, and affirming Glaxo‘s right to transfer Tecson
to another sales territory.
Tecson filed for a petition for review on the CA and the CA promulgated that the
NCMB did not err in rendering its decision. A recon was filed in appellate court but
it was denied, hence this petition for certiorari. Petitioner‘s 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 its management prerogatives.
Issue:
Whether or not the policy of a pharmaceutical company prohibiting its
employees from marrying employees of another pharmaceutical company is valid.
Ruling:
This petition was denied.Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and
information from competitors, especially so that it and Astra are rival companies in
the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of

competitor companies upon Glaxo‘s employees is reasonable under the
circumstances because relationships of that nature might compromise the interests
of the company. In laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor company will gain
access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be
denied. No less than the Constitution recognizes the right of enterprises to adopt
and enforce such a policy to protect its right to reasonable returns on investments
and to expansion and growth.
The challenged company policy does not violate the equal protection clause of the
Constitution as petitioners erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed only to the state or those
acting under color of its authority.
From the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against
relationships between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and marry persons of their own
choosing. What the company merely seeks to avoid is a conflict of interest between
the employee and the company that may arise out of such relationships.
There was no merit in Tecson‘s contention that he was constructively dismissed

when he was transferred from the Camarines Norte-Camarines Sur sales area to
the Butuan City-Surigao City-Agusan del Sur sales area, and when he was excluded
from attending the company‘s seminar on new products which were directly
competing with similar products manufactured by Astra. Constructive dismissal is
defined as a quitting, an involuntary resignation resorted to when continued
employment becomes impossible, unreasonable, or unlikely; when there is a

demotion in rank or diminution in pay; or when a clear discrimination, insensibility
or disdain by an employer becomes unbearable to the employee. The record does not
show that Tecson was demoted or unduly discriminated upon by reason of such
transfer.

3) STAR PAPER CORPORATION, JOSEPHINE ONGSITCO &
SEBASTIAN CHUA, Petitioners, vs. RONALDO D. SIMBOL,
WILFREDA N. COMIA & LORNA E. ESTRELLA, Respondents.
G.R. No. 164774 April 12, 2006
Facts:
Star Paper Corporation employed Ronaldo Simbol on October 1993. He met
Alma Dayrit, also an employee of the company, whom he married. Before marriage,
Josephine Ongsitco, the manager, advised the couple that one of them must resign
if they decided to get married pursuant to a company policy to which Simbol
complied. Simbol resigned on June 20, 1998 pursuant to the company policy.
On February 5, 1997, Comia was hired by the company. She met Howard Comia,
a co-employee, whom she married on June 1, 2000. Ongsitco likewise reminded
them the company policy, Comia resigned on June 30, 2000.
Estrella was also hired on July 29, 1994. She met Luisito Zuñiga, also a co-
worker. Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The
company allegedly could have terminated her services due to immorality but she
opted to resign on December 21, 1999.
The Labor Arbiter dismissed the complaint and stated that the company policy
was decreed pursuant to what the respondent corporation perceived as management
prerogative. On appeal to the NLRC, the Commission affirmed the decision of the
Labor Arbiter. In its assailed Decision dated August 3, 2004, the Court of Appeals
reversed the NLRC decision.
Issue:
Whether or not the questioned policy violates the rights of the employee under
the Constitution and the Labor Code?
Ruling:
The Court ruled on the side of the respondents.
Article 136 of the Labor Code which provides:

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

It is significant to note that 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 to Alma Dayrit could be detrimental to
its business operations. It must be reasonable under the circumstances to qualify as
a valid exercise of management prerogative.
The questioned policy may not facially violate Article 136 of the Labor Code but
it creates a disproportionate effect. The failure of petitioners to prove a legitimate
business concern in imposing the questioned policy cannot prejudice the employee‘s
right to be free from arbitrary discrimination based upon stereotypes of married
persons working together in one company.

4) DEL MONTE PHILIPPINES, INC., Petitioner, vs.LOLITA VELASCO,
Respondent.
G.R. No. 153477 March 6, 2007
Facts:
Lolita Velasco was hired by Del Monte as seasonal employee and was
subsequently regularized by Del Monte. On June 1987, petitioner warned Velasco of
its absences and was repeatedly reminded that her absence without permission may
result to forfeiture of her vacation leave.
Another warning was sent due to her absences without permission which
eventually led to the forfeiture of her vacation entitlement. On September 1994, a
notice of hearing was sent to Velasco informing her of the charges filed against her
for violating the Absence without leave rule. On January 1995, after the hearing,
Del Monte terminated the services of Velasco due to excessive absence without
leave. Feeling aggrieved, Velasco filed a case for illegal dismissal. She asserted that
she was absent since she was suffering urinary tract infection and she was
pregnant.
She sent an application for leave to the supervisor. Upon check-up of the
company doctor, Velasco was advised to rest. On the following check-ups, she was
again advised to rest where this time, she was not able to get secure a leave.
The Labor Arbiter rendered decision that she was an incorrigible absentee.
Respondent appealed to the NLRC. NLRC vacated the decision of the Labor Arbiter.
It decided that respondent was illegally dismissed and was entitled to
reinstatement. Petitioner appealed to CA where it dismissed its claim and affirmed
NLRC, thus, this petition.
Issue:
Whether or not the dismissal was illegal.
Ruling:
Yes. In this case, by the measure of substantial evidence, what is controlling is
the finding of the NLRC and the CA that respondent was pregnant and suffered
from related ailments. It would be unreasonable to isolate such condition strictly to
the dates stated in the Medical Certificate or the Discharge Summary. It can be
safely assumed that the absences that are not covered by, but which nonetheless
approximate, the dates stated in the Discharge Summary and Medical Certificate,
are due to the continuing condition of pregnancy and related illnesses, and, hence,
are justified absences.

The termination was illegal since it comes within the purview of the prohibited
acts provided in Article 137 of the Labor Code. Based on Article 137, it shall be
unlawful for any employer to:
1. 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. Discharge such woman on account of her pregnancy, or while on leave or in

confinement due to her pregnancy; and
3. 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.

5) ARMANDO G. YRASUEGUI, petitioners, vs. PHILIPPINE AIRLINES,
INC., respondents.
G.R. No. 168081 October 17, 2008
Facts:
Petitioner Armando G. Yrasuegui was a former international flight steward
of Philippine Airlines, Inc. (PAL). He stands 5‘8‘‘ tall and the proper weight for a
man of his height and body structure is from 147 to 166 pounds, as mandated by the
Cabin and Crew Administration Manual of PAL.
The weight problems of petitioner dates back to 1984 and was advised go on
an extended vacation leave for several occasions to meet the company‘s weight
standards. On February 25, 1989, petitioner underwent weight check. It was
discovered that he gained, instead of losing, weight. He was overweight at 215
pounds, He was formally requested to trim down to his ideal weight and report for
weight checks on several dates and was also told that he may avail of the services of
the company physician should he wish to do so.
On November 13, 1992, PAL finally served petitioner a Notice of

Administrative Charge for violation of company standards on weight requirements
for not attending to his weight checks and not losing weight.
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.
On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled that petitioner
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. However, the weight
standards need not be complied with under pain of dismissal since his weight did
not hamper the performance of his duties. Assuming that it did, petitioner could be
transferred to other positions where his weight would not be a negative factor.
Notably, other overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios,
were promoted instead of being disciplined.
They appealed to the NLRC and on June 23, 2000, the NLRC rendered
judgment affirming the Labor Arbiter‘s decision. NLRC agree with the findings of
the Labor Arbiter but it found as unnecessary to hold that petitioner was not remiss
in the performance of his duties as flight steward despite being overweight and
should have limited himself to the issue of whether the failure of petitioner to attain
his ideal weight constituted willful defiance of the weight standards of PAL. Both
appeal of respondent PAL was dismissed.

In its appeal to the CA, the decision of the NLRC was reversed and set aside
and opined that there was grave abuse of discretion on the part of the NLRC
because it looked at wrong and irrelevant considerations in evaluating the evidence
of the parties. Contrary to the NLRC ruling, the weight standards of PAL are meant
to be a continuing qualification for an employee‘s position. The failure to adhere to
the weight standards is an analogous cause for the dismissal of an employee under
Article 282(e) of the Labor Code in relation to Article 282(a). On petitioner‘s motion,
the CA held that the weight standards of PAL are a bona fide occupational
qualification which, in case of violation, justifies an employee‘s separation from the
service.
Issue:
Whether or not petitioner‘s dismissal is valid and can be predicated on the
bona fide occupational qualification defense.
Ruling:
SC upheld the legality of dismissal. Separation pay, however, should be
awarded in favor of the employee as an act of social justice or based on equity. This
is so because his dismissal is not for serious misconduct and neither it ia reflective
of his moral character.
The obesity of petitioner, when placed in the context of his work as flight
attendant, becomes an analogous cause under Article 282(e) of the Labor Code. His
obesity may not be unintended, but is nonetheless voluntary. ―[v]oluntariness
basically means that the just cause is solely attributable to the employee without
any external force influencing or controlling his actions. This element runs through
all just causes under Article 282, whether they be in the nature of a wrongful action
or omission. Gross and habitual neglect, a recognized just cause, is considered
voluntary although it lacks the element of intent found in Article 282(a), (c), and
(d).‖
Likewise petitioner‘s claim of discrimination must fail. The Constitution, the

Labor Code, and RA No. 7277 or the Magna Carta for Disabled Persons contains
provisions similar to Bona fide occupational qualification (BFOQ).
In Star Paper Corporation v. Simbol, this Court held that in order to justify a
BFOQ, the employer must prove:
(1) The employment qualification is reasonably related to the essential

operation of the job involved; and

(2) That there is factual basis for believing that all or substantially all
persons meeting the qualification would be unable to properly perform the duties
of the job.
In short, the test of reasonableness of the company policy is used because it is

parallel to BFOQ.
BFOQ is valid ―provided it reflects an inherent quality reasonably necessary

for satisfactory job performance.‖
The weight standards of PAL are reasonable. A common carrier, from the
nature of its business and for reasons of public policy, is bound to observe
extraordinary diligence for the safety of the passengers it transports. The primary
objective of PAL in the imposition of the weight standards for cabin crew is flight
safety It cannot be gainsaid that cabin attendants must maintain agility at all times
in order to inspire passenger confidence on their ability to care for the passengers
when something goes wrong.
The business of PAL is air transportation. As such, it has committed itself to

safely transport its passengers. In order to achieve this, it must necessarily rely on
its employees, most particularly the cabin flight deck crew who are on board the
aircraft. The weight standards of PAL should be viewed as imposing strict norms of
discipline upon its employees. On board an aircraft, the body weight and size of a
cabin attendant are important factors to consider in case of emergency. Aircrafts
have constricted cabin space, and narrow aisles and exit doors.
Thus, the arguments of respondent that whether the airlines flight

attendants are overweight or not has no direct relation to its mission of
transporting passengers to their destination; and that the weight standards has
nothing to do with airworthiness of respondents airlines, must fail. The court is also
of view that the biggest problem with an overweight cabin attendant is the
possibility of impeding passengers from evacuating the aircraft, should the occasion
call for it. The job of a cabin attendant during emergencies is to speedily get the
passengers out of the aircraft safely. Being overweight necessarily impedes mobility
and evacuation might slow down just because a wide-bodied cabin attendant is
blocking the narrow aisles.

Topic 4 - WAGES & WAGE RATIONALIZATION ACT
Topic 4-A -VIOLATION of WAGE ORDER
1) S.I.P. FOOD HOUSE and MR. and MRS. ALEJANDRO PABLO,

Petitioners, vs. RESTITUTO BATOLINA, ALMER CALUMPISAN,
ARIES MALGAPO, ARMANDO MALGAPO, FLORDELIZA MATIAS,
PERCIVAL MATIAS, ARWIN MIRANDA, LOPE MATIAS, RAMIL
MATIAS, ALLAN STA. INES, Respondents.
G.R. No. 192473 October 11, 2010
Facts:
The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the
employees of the Government Service Insurance System (GSIS). Incidental to its
purpose, GMPC wanted to operate a canteen in the new GSIS Building, but had no
capability and expertise in this area. Thus, it engaged the services of the petitioner
S.I.P. Food House (SIP), owned by the spouses Alejandro and Esther Pablo, as
concessionaire. The respondents Restituto Batolina and nine (9) others (the
respondents) worked as waiters and waitresses in the canteen.
In February 2004, GMPC terminated SIP‘s ―contract as GMPC

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

The CA ruled out SIP‘s claim that it was a labor-only contractor or a mere
agent of GMPC. We agree with the CA; SIP and its proprietors could not be
considered as mere agents of GMPC because they exercised the essential elements
of an employment relationship with the respondents such as hiring, payment of
wages and the power of control, not to mention that SIP operated the canteen on its
own account as it paid a fee for the use of the building and for the privilege of
running the canteen. The fact that the respondents applied with GMPC in February
2004 when it terminated its contract with SIP, is another clear indication that the

two entities were separate and distinct from each other. We thus see no reason to
disturb the CA‘s findings.
The respondent’s money claims

We likewise affirm the CA ruling on the monetary award to Batolina and the
other complainants. The free board and lodging SIP furnished the employees
cannot operate as a set-off for the underpayment of their wages. We held in Mabeza
v. National Labor Relations Commission that the employer cannot simply deduct
from the employee‘s wages the value of the board and lodging without satisfying the
following requirements: (1) proof that 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 re-compute 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.‖

2) SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON,
Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, 4th
DIVISION, ROLDAN LOPEZ, EDGARDO ZUÑIGA and DANILO
CAÑETE, Respondents.
G.R. No. 172161 March 2, 2011
Facts:
Sometime in 1996, and January 1997, private respondents were hired by
petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the
full minimum wage and other benefits but since they were only trainees, they did
not report for work regularly but came in as substitutes to the regular workers or in
undertakings that needed extra workers to expedite completion of work. Soon after,
they were engaged as private employees for their Islacom project in Bohol. Private
respondents started on March 15, 1997 until December 1997. Upon the completion
of their project, their employment was also terminated. Private respondents
received the amount of P145.00, the minimum prescribed daily wage for Region VII.
In July 1997, the amount of P145 was increased to P150.00 and in October of the
same year, the latter was increased to P155.00.
On May 21, 1999, private respondents for the 4th time worked with Lagon's
project in Camarin, Caloocan City with Furukawa Corporation as the general
contractor. Their contract would expire on February 28, 2000, the period of
completion of the project. From May 21, 1997-December 1999, private respondents
received the wage of P145.00. At this time, the minimum prescribed rate for Manila
was P198.00. In January to February 28, the three received the wage of P165.00.
The existing rate at that time was P213.00.
For reasons of delay on the delivery of imported materials from Furukawa

Corporation, the Camarin project was not completed on the scheduled date of
completion. Face[d] with economic problem[s], Lagon was constrained to cut down
the overtime work of its worker[s][,] including private respondents. Thus, when
requested by private respondents on February 28, 2000 to work overtime, Lagon
refused and told private respondents that if they insist, they would have to go home
at their own expense and that they would not be given any more time nor allowed to
stay in the quarters. This prompted private respondents to leave their work and
went home to Cebu. On March 3, 2000, private respondents filed a complaint for
illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and
1998 and service incentive leave pay as well as damages and attorney's fees
Issues:
1.) Whether or not the respondent should be allowed to recover the
differential due to the failure of the petitioner to pay the minimum wage.
2.) 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.
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 lie 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.

3) RICARDO E. VERGARA, JR., Petitioner, vs.COCA-COLA BOTTLERS
PHILIPPINES, INC., Respondent.
G.R. No. 176985 April 1, 2013
Facts:
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola
Bottlers Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a
District Sales Supervisor (DSS) for Las Piñas City, Metro Manila. As stipulated in
respondent's existing Retirement Plan Rules and Regulations at the time, the
Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in
the computation of retirement benefits, as follows: Basic Monthly Salary + Monthly
Average Performance Incentive (which is the total performance incentive earned
during the year immediately preceding 12 months) No. of Years in Service.
Claiming his entitlement to an additional PhP 474, 600.00 as Sales

Management Incentives (SMI) and to the amount of PhP 496, 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."
(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. They claimed that the SMI was included in their retirement package even
if they did not meet the sales and collection qualifiers. Therefore, the failure of
employer to grant him his SMI is a violation on the principle of non-diminution of
benefits.)
Issue:
Whether or not 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. 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.

4) ROYAL PLANT WORKERS UNION, Petitioner, vs. COCA-COLA
BOTTLERS PHILIPPINES, INC.-CEBU PLANT, Respondent.
G.R. No. 198783 April 15, 2013
Facts:
Under the employ of each bottling plant of Coca-Cola are bottling operators.
In the case of the plant in Cebu City, there are 20 bottling operators who work for
its Bottling Line 1 while there are 12-14 bottling operators who man its Bottling
Line 2. All of them are male and they are members of herein respondent Royal
Plant Workers Union (ROPWU).
In 1974, the bottling operators of then Bottling Line 2 were provided with
chairs upon their request. In 1988, the bottling operators of then Bottling Line 1
followed suit and asked to be provided also with chairs. Their request was likewise
granted. Sometime in September 2008, the chairs provided for the operators were
removed pursuant to a national directive of petitioner. This directive is in line with
the "I Operate, I Maintain, I Clean" program of petitioner for bottling operators,
wherein every bottling operator is given the responsibility to keep the machinery
and equipment assigned to him clean and safe. The program reinforces the task of
bottling operators to constantly move about in the performance of their duties and
responsibilities.
With this task of moving constantly to check on the machinery and

equipment assigned to him, a bottling operator does not need a chair anymore,
hence, petitioner‘s directive to remove them. Furthermore, CCBPI rationalized that
the removal of the chairs is implemented so that the bottling operators will avoid
sleeping, thus, prevent injuries to their persons. As bottling operators are working
with machines which consist of moving parts, it is imperative that they should not
fall asleep as to do so would expose them to hazards and injuries. In addition,
sleeping will hamper the efficient flow of operations as the bottling operators would
be unable to perform their duties competently.
Issue:
Whether or not the removal of the bottling operators‘ chairs was a valid
exercise of management prerogative.
Ruling:
Yes. According to the Union, such removal constitutes a violation of the 1)
Occupational Health and Safety Standards which provide that every worker is
entitled to be provided by the employer with appropriate seats, among others; 2)
policy of the State to assure the right of workers to a just and humane condition of
work as provided for in Article 3 of the Labor Code;8 3) Global Workplace Rights

Policy of CCBPI which provides for a safe and healthy workplace by maintaining a
productive workplace and by minimizing the risk of accident, injury and exposure to
health risks; and 4) diminution of benefits provided in Article 100 of the Labor
Code.
The Court has held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers, and discipline, dismissal and recall of workers. The
exercise of management prerogative, however, is not absolute as it must be
exercised in good faith and with due regard to the rights of labor.
In the present controversy, it cannot be denied that CCBPI removed the

operators‘ chairs pursuant to a national directive and in line with its "I Operate, I
Maintain, I Clean" program, launched to enable the Union to perform their duties
and responsibilities more efficiently. The chairs were not removed indiscriminately.
They were carefully studied with due regard to the welfare of the members of the
Union. The removal of the chairs was compensated by: a) a reduction of the
operating hours of the bottling operators from a two-and-one-half (2 ½)-hour
rotation period to a one-and-a-half (1 ½) hour rotation period; and b) an increase of
the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as
CCBPI wanted to avoid instances of operators sleeping on the job while in the
performance of their duties and responsibilities and because of the fact that the
chairs were not necessary considering that the operators constantly move about
while working. In short, the removal of the chairs was designed to increase work
efficiency. Hence, CCBPI‘s exercise of its management prerogative was made in
good faith without doing any harm to the workers‘ rights.
The rights of the Union under any labor law were not violated. There is no
law that requires employers to provide chairs for bottling operators. There was no
violation either of the Health, Safety and Social Welfare Benefit provisions under
Book IV of the Labor Code of the Philippines. As shown in the foregoing, the
removal of the chairs was compensated by the reduction of the working hours and
increase in the rest period. The directive did not expose the bottling operators to
safety and health hazards.
The Union should not complain too much about standing and moving about
for one and one-half (1 ½) hours because studies show that sitting in workplaces for
a long time is hazardous to one‘s health. The CBA between the Union and CCBPI
contains no provision whatsoever requiring the management to provide chairs for
the operators in the production/manufacturing line while performing their duties
and responsibilities.

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

covered in Article 10016 of the Labor Code. In the Court‘s view, the term "benefits"
mentioned in the non-diminution rule refers to monetary benefits or privileges
given to the employee with monetary equivalents.
Such benefits or privileges form part of the employees‘ wage, salary or

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

5) The National Wages & Productivity Commission et al., vs. The
Alliance of Progressive Labor et al.
GR No. 150326, March 12, 2014
Facts:
On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to
rationalize wages throughout the Philippines, Republic Act No. 6727 created the
NWPC and the RTWPBs of the different regions.
Article 121 of the Labor Code, as amended by Section 3 of Republic Act No.
6727, empowered the NWPC to formulate policies and guidelines on wages, incomes
and productivity improvement at the enterprise, industry and national levels; to
prescribe rules and guidelines for the determination of appropriate minimum wage
and productivity measures at the regional, provincial or industry levels; and to
review regional wage levels set by the RTWPBs to determine whether the levels
were in accordance with the prescribed guidelines and national development plans,
among others.
On the other hand, Article 122(b) of the Labor Code, also amended by Section
3 of Republic Act No. 6727, tasked the RTWPBs to determine and fix minimum
wage rates applicable in their region, provinces or industries therein; and to issue
the corresponding wage orders, subject to the guidelines issued by the NWPC.
Consequently, the RTWPB–NCR issued Wage Order No. NCR–07 on October

14, 1999 imposing an increase of P25.50/day on the wages of all private sector
workers and employees in the NCR and pegging the minimum wage rate in the
NCR at P223.50/day.6 However, Section 2 and Section 9 of Wage Order No. NCR–07
exempted certain sectors and industries from its coverage.
Feeling aggrieved by their non–coverage by the wage adjustment, the

Alliance of Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa
sa Royal (TNMR) filed an appeal with the NWPC assailing Section 2(A) and Section
9(2) of Wage Order No. NCR–07. They contended that neither the NWPC nor the
RTWPB–NCR had the authority to expand the non–coverage and exemptible
categories under the wage order; hence, the assailed sections of the wage order
should be voided.
The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage
Order No. NCR–07. It observed that the RTWPB‘s power to determine exemptible
categories was adjunct to its wage fixing function conferred by Article 122(e) of the
Labor Code, as amended by Republic Act No. 6727; that such authority of the
RTWPB was also recognized in NWPC Guidelines No. 01, Series of 1996.

The APL and TNMR assailed the decisions of the NWPC on certiorari in the
CA, contending that the power of the RTWPB–NCR to determine exemptible
categories was not an adjunct to its wage fixing function. CA favored the
respondents and granted the petition for certiorari.
Hence, this appeal by petition for review on certiorari by the NWPC and
RTWPB–NCR.
Issue:
Whether or not the RTWPB–NCR had authority.
Ruling:
The RTWPB–NCR had the authority to provide additional exemptions from
the minimum wage adjustments embodied in Wage Order No. NCR–07.
The NWPC promulgated NWPC Guidelines No. 001–95 (Revised Rules of

Procedure on Minimum Wage Fixing) to govern the proceedings in the NWPC and
the RTWPBs in the fixing of minimum wage rates by region, province and industry.
Section 1 of Rule VIII of NWPC Guidelines No. 001–95 recognized the power of the
RTWPBs to issue exemptions from the application of the wage orders subject to the
guidelines issued by the NWPC (this is the rationale behind exemption)
SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS

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

with and as determined by the Board:
1. Distressed establishments;
2. New business enterprises (NBEs);
3. Retail/Service establishments employing not more than ten (10) workers;
4. Establishments adversely affected by natural calamities.
Under the guidelines, the RTWPBs could issue exemptions from the
application of the wage orders as long as the exemptions complied with the rules of
the NWPC. In its rules, the NWPC enumerated four exemptible establishments, but
the list was not exclusive. The RTWPBs had the authority to include in the wage

orders establishments that belonged to, or to exclude from the four enumerated
exemptible categories.
If the exemption was outside of the four exemptible categories, like here, the
exemptible category should be: (1) in accord with the rationale for exemption; (2)
reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the
wage order must submit a strong and justifiable reason or reasons for the inclusion
of such category. It is the compliance with the second requisite that is at issue here.
The NWPC, in arriving at its decision, weighed the arguments of the parties
and ruled that the RTWPB–NCR had substantial and justifiable reasons in
exempting the sectors and establishments enumerated in Section 2(A) and Section
9(2) based on the public hearings and consultations, meetings, social–economic data
and informations gathered prior to the issuance of Wage Order No. NCR–07. The
very fact that the validity of the assailed sections of Wage Order No. NCR–07 had
been already passed upon and upheld by the NWPC meant that the NWPC had
already given the wage order its necessary legal imprimatur. Accordingly, the
requisite approval or review was complied with.
The RTWPBs are the thinking group of men and women guided by statutory
standards and bound by the rules and guidelines prescribed by the NWPC. In the
nature of their functions, the RTWPBs investigate and study all the pertinent facts
to ascertain the conditions in their respective regions. Hence, they are logically
vested with the competence to determine the applicable minimum wages to be
imposed as well as the industries and sectors to exempt from the coverage of their
wage orders.
Lastly, Wage Order No. NCR–07 is presumed to be regularly issued in the

absence of any strong showing of grave abuse of discretion on the part of RTWPB–
NCR. The presumption of validity is made stronger by the fact that its validity was
upheld by the NWPC upon review.

6) ARIEL L. DAVID, doing business under the name and style "YIELS
HOG DEALER," Petitioner, vs. JOHN G. MACASIO, Respondent.
G.R. No. 195466 July 2, 2014
Facts:
On January 2009, Macasio filed before the LA a complaint against petitioner
Ariel L. David, doing business under the name and style "Yiels Hog Dealer," for
non-payment of overtime pay, holiday pay and 13th month pay. He also claimed
payment for moral and exemplary damages and attorney‘s fees. Macasio also
claimed payment for service incentive leave (SIL).
Macasio alleged before the LA that he had been working as a butcher for
David since January 6, 1995. Macasio claimed that David exercised effective control
and supervision over his work, pointing out that David: (1) set the work day,
reporting time and hogs to be chopped, as well as the manner by which he was to
perform his work; (2) daily paid his salary of P700.00, which was increased from
P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3) approved and
disapproved his leaves. Macasio added that David owned the hogs delivered for
chopping, as well as the work tools and implements; the latter also rented the
workplace. Macasio further claimed that David employs about twenty-five (25)
butchers and delivery drivers.
In his defense, David claimed that he started his hog dealer business in 2005
and that he only has ten employees. He alleged that he hired Macasio as a butcher
or chopper on "pakyaw" or task basis who is, therefore, not entitled to overtime pay,
holiday pay and 13th month pay pursuant to the provisions of the Implementing
Rules and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1)
usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or
earlier, depending on the volume of the delivered hogs; (2) received the fixed
amount of P700.00 per engagement, regardless of the actual number of hours that
he spent chopping the delivered hogs; and (3) was not engaged to report for work
and, accordingly, did not receive any fee when no hogs were delivered.
Issue:
Whether or not Respondent Macasio is entitled to overtime pay, holiday pay,
13th month pay, and service incentive leave (SIL).
Ruling:
Respondent Macasio is entitled to such monetary claims except 13th month
pay.

Macasio is engaged on "pakyaw" or task basis. At this point, we note that all
three tribunals – the LA, the NLRC and the CA – found that Macasio was engaged
or paid on "pakyaw" or task basis. This factual finding binds the Court under the
rule that factual findings of labor tribunals when supported by the established facts
and in accord with the laws, especially when affirmed by the CA, is binding on this
Court.
A distinguishing characteristic of "pakyaw" or task basis engagement, as

opposed to straight-hour wage payment, is the non-consideration of the time spent
in working. In a task-basis work, the emphasis is on the task itself, in the sense
that payment is reckoned in terms of completion of the work, not in terms of the
number of time spent in the completion of work. Once the work or task is completed,
the worker receives a fixed amount as wage, without regard to the standard
measurements of time generally used in pay computation.
In Macasio‘s case, the established facts show that he would usually start his
work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the
workplace or of the total number of the hogs assigned to him for chopping, Macasio
would receive the fixed amount of P700.00 once he had completed his task. Clearly,
these circumstances show a "pakyaw" or task basis engagement that all three
tribunals uniformly found.
In determining whether workers engaged on "pakyaw" or task basis" is

entitled to holiday and SIL pay, the presence (or absence) of employer supervision
as regards the worker‘s time and performance is the key: if the worker is simply
engaged on pakyaw or task basis, then the general rule is that he is entitled to a
holiday pay and SIL pay unless exempted from the exceptions specifically provided
under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code. However,
if the worker engaged on pakyaw or task basis also falls within the meaning of
"field personnel" under the law, then he is not entitled to these monetary benefits.
As with holiday and SIL pay, 13th month pay benefits generally cover all
employees; an employee must be one of those expressly enumerated to be exempted.
Section 3 of the Rules and Regulations Implementing P.D. No. 851 enumerates the
exemptions from the coverage of 13th month pay benefits. Under Section 3(e),
"employers of those who are paid on xxx task basis, and those who are paid a fixed
amount for performing a specific work, irrespective of the time consumed in the
performance thereof" are exempted.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section
3(e) of the Rules and Regulations Implementing PD No. 851 exempts employees
"paid on task basis" without any reference to "field personnel." This could only mean
that insofar as payment of the 13th month pay is concerned, the law did not intend

to qualify the exemption from its coverage with the requirement that the task
worker be a "field personnel" at the same time.

7) OUR HAUS REALTY DEVELOPMENT CORPORATION, Petitioner,
vs. ALEXANDER PARIAN, JAY C. ERINCO, ALEXANDER CANLAS,
BERNARD TENEDERO and JERRY SABULAO, Respondents.
G.R. No. 204651 August 6, 2014
Facts:
Respondents are laborers of petitioner-corporation (construction business).
Because of financial distress, the corporation suspended some projects, which
resulted in giving vacation leaves to the affected workers, including respondents.
Instead of going back to work after their vacation leaves, respondents filed a
complaint with the Labor Arbiter, citing underpayment of wages and Our Haus‘
failure to pay their holiday, SIL, 13th month and overtime pays.
One of their contentions, respondent-laborers claim that value of their meals

should not be considered in determining their wage total amount since Our Haus
failed to comply with the requirement of agreement in writing under DOLE
Memorandum Circular No. 2 and that the value of the facilities was not fair and
reasonable. Labor Arbiter ruled in favor of Our Haus, stating that respondents
failed to substantiate their claims and if the values of board and lodging would be
taken into consideration, respondent‘s wages would meet the minimum wage rate.
On appeal to the NLRC, the decision was reversed, stating that respondents did not
authorize Our Haus in writing to charge the values of their board and lodging to
their wages.
Our Haus moved to reconsider but was denied, so they filed a petition for
certiorari with the CA with a new theory regarding a significant distinction between
‗deduction‘ and ‗charging‘. They contended that a written authorization is only
necessary if the facility's value will be ‗deducted‘ and will not be needed if it will
merely be ‗charged‘/included in the computation of wages. Thus according to them,
they did not actually deduct the values of the meals and housing benefits. They only
considered these in computing the total amount of wages paid to the respondents for
purposes of compliance with the minimum wage law. CA denied this contention
citing no difference between ‗deduction‘ and ‗charging‘. Our Haus filed a petition for
review on certiorari under Rule 45 after their motion for reconsideration was
denied.
Issue:
Whether or not the facilities value will be deducted or merely included in the
computation of the wages.
Ruling:
Petition is denied.

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

a. proof must be shown that such facilities are customarily furnished by the trade;
b. the provision of deductible facilities must be voluntarily accepted in writing by
the employee; and
c. The facilities must be charged at fair and reasonable value.
For the first requisite:

The sinumpaang salaysay presented by Our Haus is (1) self-serving; (2) on a
per project basis; and (3) cannot prove that it was enjoyed by other employees thus
negating its claimed customary nature. Even if the benefit is customarily provided
by the trade, it must still pass the purpose test set by jurisprudence. Under this
test, if a benefit or privilege granted to the employee is clearly for the employer's
convenience, it will not be considered as a facility but a supplement.
Our Haus is engaged in the construction business, a labor-intensive

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

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

Our Haus never explained how it came up with the values it assigned for the
benefits it provided; it merely listed its supposed expenses without any supporting

document. The records however, are bereft of any evidence to support Our Haus'
meal expense computation. Without any corroborative evidence, it cannot be said
that Our Haus complied with this third requisite.
Respondents are entitled to other monetary benefits. A party who alleges

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

8) EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER,
RONALDO DAVID, BONIFACIO MATUNDAN, NORA MENDOZA, et
al., Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
·SOLID MILLS, INC., and/or PHILIP ANG, Respondents.
G.R. No. 202961 February 4, 2015
Facts:
Petitioners are the employees of respondent Solid Mills Inc. They are
represented by their collective bargaining agent, NAFLU.
Petitioners were allowed to occupy SMI Village (property owned by Solid

Mills) out of liberality and for the convenience of its employees. They further agreed
that petitioners would vacate the lot anytime the company deems fit. On October
2003, Solid Mills would cease operations due to serious business losses.
Petitioners were sent individual notices to vacate SMI Village. They were
asked to sign a Memorandum of Agreement with Release and Quitclaim; employees
who signed it were considered to have agreed to vacate SMI Village as a condition
for the release of their termination benefits and separation pay. Petitioners however
refused to sign it and demanded their benefits and separation pay.
Thereafter Petitioners Milan, et al filed a complaint before the Labor Arbiter

on the ground that their accrued benefits and separation pay cannot be withheld
because it is based on company policy and practice. Solid Mills countered by saying
the complaint was premature because they have not vacated the property in view of
the Memorandum of Agreement.
The Labor Arbiter favored the petitioners, stating Solid Mills‘ illegality of the
withholding of benefits. Solid Mills appealed to the NLRC and reversed pertinent
parts of the decision. Petitioners moved to reconsider but was denied, so they file a
petition for certiorari with the CA. This was dismissed, hence their present petition.
Issue:
Whether or not the benefits of Petitioners may be validly and legally
withheld by Solid Mills Inc.
Ruling:
Petition is denied; Solid Mills may validly and legally withhold the benefits.
The Civil Code provides that the employer is authorized to withhold wages
for debts due: Article 1706. Withholding of the wages, except for a debt due, shall
not be made by the employer.

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

representing petitioners, agreed that the release of petitioners' benefits shall be
"less accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The

ordinary meaning of the term "accountability" does not limit the definition of
accountability to those incurred in the worksite. As long as the debt or obligation
was incurred by virtue of the employer-employee relationship, it shall be included in
the employee's accountabilities that are subject to clearance procedures.
Petitioners do not categorically deny respondent Solid Mills' ownership of the

property, and they do not claim superior right to it. What can be gathered from the
findings of the Labor Arbiter, NLRC, and the CA is that respondent Solid Mills
allowed the use of its property for the benefit of petitioners as its employees.
Petitioners were merely allowed to possess and use it out of respondent Solid Mills'
liberality. The employer may, therefore, demand the property at will.
Withholding of payment by the employer does not mean that the employer
may renege on its obligation to pay employees their wages, termination payments,
and due benefits. The employees' benefits are also not being reduced. It is only
subjected to the condition that the employees return properties properly belonging
to the employer. This is only consistent with the equitable principle that "no one
shall be unjustly enriched or benefited at the expense of another."

9) Toyota Pasig Inc vs. Vilma S. De Peralta
GR No. 213488, November 7, 2016
Facts:
Respondent was an employee of Toyota. She was initially hired as a cashier
and attained the position of Insurance sales executive due to her excellence in the
work as was shown when she was awarded Best Sales Insurance Executive from
2007 to 2011. Issue came when her husband, who was also an employee of
petitioner, organized a collective bargaining unit the members of which, including
her husband, were later dismissed from service. She also suffered the same fate,
and according to respondent, she was then accused of fraud in the processing of
several insurance transactions in that she claimed commissions in those
transactions instead of considering such under the marketing department‘s new
business accounts. With this, she was preventively suspended and was later
terminated upon her receipt of the notice of termination.
Respondent then filed a case claiming payment of her earned substantial

commissions, tax rebates, and other benefits dating back from July 2011 to January
2012, amounting to P617,248.08. Petitioner in defense, contended that respondent
was terminated with just cause and that the claims she is asking are unfounded
and unsupported by documents and that such claims do not partake of unpaid
wages/salaries.
Labor Arbiter found respondent liable for the accusations against her and did
not order the payment of the benefits claimed by respondent, instead it merely
required petitioner to pay the unpaid salary.
NLRC and CA agreed with LA that respondent is guilty of the accusations

but it ordered petitioner to pay the claim of P617, 248.08 of respondent.
Issue:
1.) Whether or not the claims of respondent is included in the definition of
―wages‖ in the labor code.
2.) Whether or not the claims will be discarded for failure of respondent to
substantiate such claims.
Ruling:
On the first issue:

Yes, respondent‘s claims fall within the definition of ―wages‖. Under Art. 97
(f) of the labor code, ―wage paid to an employee shall mean the remuneration of
earnings, however designated, capable of being expressed in terms of money,
whether ascertained on a time, task, piece, or commission basis‖. The claims of
commissions, tax rebates for achieved monthly targets, and success share/profit

sharing, are given to respondent as incentives or forms of encouragement in order
for her to put extra effort in performing her duties as an insurance sales executive
are included in the term ―commission‖ which falls within the definition of ―wages‖
under Art. 97(f) of the labor code. This is for the reason that the nature of the work
of a salesman is to stimulate growth in sales which can be achieved by encouraging
such employees to put more effort in their jobs through commissions. Hence,
commissions are indubitably included in a sales employee‘s wages.
On the second issue:

No, the claims will not be discarded just because respondent was not able to
produce supporting documents. Under law, once an employee alleges non-payment
of specific claims in his/her complaint with particularity, the one who pleads
payment has the burden of proving it and even if the employee alleges non-
payment, it is still the employer who has to prove payment rather than the
employee to prove non-payment. Here, the petitioner did not allege payment of the
claims or at least allege that respondent is not entitled to such claims. Hence, since
petitioner failed to overcome the burden, the claims will not be discarded.

10) [G.R. No. 184450. January 24, 2017.]
JAIME N. SORIANO, MICHAEL VERNON M. GUERRERO,

MARY ANN L. REYES, MARAH SHARYN M. DE CASTRO and
CRIS P. TENORIO, petitioners, vs. SECRETARY OF FINANCE
and the COMMISSIONER OF INTERNAL REVENUE,
respondents.
[G.R. No. 184508. January 24, 2017.]
SENATOR MANUEL A. ROXAS, petitioner, vs. MARGARITO B.

TEVES, in his capacity as Secretary of the Department of
Finance and LILIAN B. HEFTI, in her capacity as
Commissioner of the Bureau of Internal Revenue, respondents.
[G.R. No. 184538. January 24, 2017.]
TRADE UNION CONGRESS OF THE PHILIPPINES (TUCP),

represented by its President, DEMOCRITO T. MENDOZA,
petitioner, vs. MARGARITO B. TEVES, in his capacity as
Secretary of the Department of Finance and LILIAN B. HEFTI,
in her capacity as Commissioner of the Bureau of Internal
Revenue, respondents.
[G.R. No. 185234. January 24, 2017.]
SENATOR FRANCIS JOSEPH G. ESCUDERO, TAX

MANAGEMENT ASSOCIATION OF THE PHILIPPINES, INC.
and ERNESTO G. EBRO, petitioners, vs. MARGARITO B.
TEVES, in his capacity as Secretary of the Department of
Finance and SIXTO S. ESQUIVIAS IV, in his capacity as
Commissioner of the Bureau of Internal Revenue, respondents.
||| (Soriano v. Secretary of Finance, G.R. Nos. 184450, 184508,

184538 & 185234, [January 24, 2017])
Facts:
Congress created a new law, RA 9504, amending some sections of the

National Internal Revenue Code of 1997. This law granted, among others, income
tax exemption for minimum wage earners, as well as an increase in personal and

additional exemptions for individual taxpayers. Not long after the law was signed,
the Bureau of Internal Revenue created Revenue Regulation 10-2008 in order to
implement the new law.
The petitioners in this case then filed a case alleging that the new Revenue
Regulation departed from the legislative intent of the law. Instead of ―full taxable
year treatment‖ on the application of the personal and additional exemptions, it
provided for a prorated application of the law. Aside from this, the petitioners
contended that the Revenue Regulation provided for an unqualified tax exemption
on the income of the minimum wage earners regardless of other benefits they
receive.
The respondent, the Office of the Solicitor General filed a Consolidated

Comment and took the position that the new law was intended to be prospective,
and not retroactive. Therefore, the prorating of the personal and additional
exemptions were proper.
Issue:
1. Whether or not he increased personal and additional exemptions provided by

R.A. 9504 should be applied to the entire taxable year 2008 or prorated,
considering that R.A. 9504 took effect only on 6 July 2008.
2. Whether or not a minimum wage earner is exempt for the whole taxable year.
3. Whether or not Sections 1 and 3 of RR 10-2008 are consistent with the law in
providing that an MWE who receives other benefits in excess of the statutory
limit of P30,000 19 is no longer entitled to the exemption provided by R.A.
9504.
Ruling:
1. Yes, the personal and additional exemptions should be applied to the entire
taxable year.
The case of Umali vs Estanislao is applicable. This case is a piece of social

legislation clearly intended to afford immediate tax relief to individual
taxpayers, particularly low-income compensation earners. Indeed, if R.A. 9504
was to take effect beginning taxable year 2009 or half of the year 2008 only, then
the intent of Congress to address the increase in the cost of living in 2008 would
have been negated.

Aside from this, full taxable year treatment has always been the case in this
jurisdiction. An example would be the treatment of income taxes once there is a
change in status, or if there is a deceased dependent member of the family.
2. Yes, minimum wage earners are also exempt for the whole taxable year since
there is no reason not to uphold the Umali vs Estanislao case when this too is
a piece of social legislation.
3. No, they are not consistent with the law. Sections 1 and 3 of RR 10-2008 add
a requirement not found in the law by effectively declaring that an MWE who
receives other benefits in excess of the statutory limit of P30,000 is no longer
entitled to the exemption provided by R.A. 9504.
First are the different items of compensation subject to tax prior to

R.A. 9504. These are included in the pertinent items of gross income in
Section 31. "Gross income" in Section 32 includes, among many other items,
"compensation for services in whatever form paid, including, but not limited
to salaries, wages, commissions, and similar items." R.A. 9504 particularly
exempts the minimum wage and its incidents; it does not provide exemption
for the many other forms of compensation.
Second are the other items of income that, prior to R.A. 9504, were
excluded from gross income and were therefore not subject to tax. Among
these are other payments that employees may receive from employers
pursuant to their employer-employee relationship, such as bonuses and other
benefits. These are either mandated by law (such as the 13th month pay) or
granted upon the employer's prerogative or are pursuant to collective
bargaining agreements (as productivity incentives). These items were not
changed by R.A. 9504.
It becomes evident that the exemption on benefits granted by law in

1994 are now extended to wages of the least paid workers under R.A. 9504.
Benefits not beyond P30,000 were exempted; wages not beyond the SMW are
now exempted as well. Conversely, benefits in excess of P30,000 are subject
to tax and now, wages in excess of the SMW are still subject to tax.

What the legislature is exempting is the MWE's minimum wage and
other forms of statutory compensation like holiday pay, overtime pay, night
shift differential pay, and hazard pay. These are not bonuses or other
benefits; these are wages. Respondents seek to frustrate this exemption
granted by the legislature.
In respondents' view, anyone receiving 13th month pay and other

benefits in excess of P30,000 cannot be an MWE. They seek to impose their
own definition of "MWE.‖ However, nothing to this effect can be read from
R.A. 9504. The amendment is silent on whether compensation-related
benefits exceeding the P30,000 threshold would make an MWE lose
exemption. R.A. 9504 has given definite criteria for what constitutes an
MWE, and R.R. 10-2008 cannot change this.
An administrative agency may not enlarge, alter or restrict a provision

of law. It cannot add to the requirements provided by law. To do so
constitutes lawmaking, which is generally reserved for Congress.

Topic 5 - WAGE ENFORCEMENT AND RECOVERY
1) Tiger Construction and Development Corp vs. Abay et al.

GR No. 164141 February 26, 2010
Facts:
On the basis of a complaint filed by respondents Reynaldo Abay and fifty-
nine (59) others before the Regional Office of the Department of Labor and
Employment (DOLE), an inspection was conducted by DOLE officials at the
premises of petitioner TCDC. Several labor standard violations were noted, such as
deficiencies in record keeping, non-compliance with various wage orders, non-
payment of holiday pay, and underpayment of 13th month pay. The case was then
set for summary hearing.
Consistent with Article 129 of the Labor Code of the Philippines in relation to
Article 217 of the same Code, this instant case should be referred back to the
National Labor Relations Commission (NLRC) Sub-Arbitration Branch V, Naga
City, on the ground that the aggregate money claim of each worker exceeds the
jurisdictional amount of this Office [which] is (sic) Five Thousand Pesos Only
(P5,000.00).
Before the NLRC could take any action, DOLE Secretary Patricia A. Sto.
Tomas (Secretary Sto. Tomas), in an apparent reversal of Director Manalo‘s
endorsement, issued another inspection authority on August 2, 2002 in the same
case. Pursuant to such authority, DOLE officials conducted another investigation of
petitioner‘s premises and the same violations were discovered.
According to petitioner, this July 25, 2002 Order was tantamount to a

dismissal on the ground of lack of jurisdiction, which dismissal had attained
finality; hence, all proceedings before the DOLE regional office after July 25, 2002
were null and void for want of jurisdiction.
aving the case in her office once more, Director Manalo finally issued an Order
dated January 29, 2003 denying petitioner‘s motion for reconsideration for lack of
merit
Issue:
Whether or not the petitioner can still assail the January 29, 2003 Order of
Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has
attained finality and is already in the execution stage.
Ruling:
The petition lacks merit. Petitioner admits that it failed to appeal the
January 29, 2003 Order within the period prescribed by law. It likewise admits that

the case was already in the execution process when it resorted to a belated appeal to
the DOLE Secretary. Petitioner, however, excuses itself from the effects of the
finality of the Order by arguing that it was allegedly issued without jurisdiction and
may be assailed at any time.
Director Manalo‘s initial endorsement of the case to the NLRC, on the

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

endorsement of the case to the NLRC served as a dismissal of the case, which
prevented her from subsequently assuming jurisdiction over the same. The said
endorsement was evidently not meant as a final disposition of the case; it was a
mere referral to another agency, the NLRC, on the mistaken belief that jurisdiction
was lodged with the latter. It cannot preclude the regional director from
subsequently deciding the case after the mistake was rectified and the case was
returned to her by the DOLE Secretary, particularly since it was a labor case where
procedural lapses may be disregarded in the interest of substantial justice.
In view of the Court‘s ruling above that the January 29, 2003 Order was
rendered with jurisdiction and can no longer be questioned (as it is final and
executory), we can no longer entertain petitioner‘s half-hearted and
unsubstantiated arguments that the said Order was allegedly based on erroneous
computation and included non-employees. Likewise, we find no more need to
address petitioner‘s contention that the CA erred in dismissing its petition on the
ground of its belated compliance with the requirement of certification against
forum-shopping.

2) People’s Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al.
GR No. 179652, March 6, 2012 Resolution on the main Decision of May 8,
2009
Facts:
Jandeleon Juezan (―Juezan‖) filed a complaint before the DOLE against
Bombo Radyo Phils. (―Bombo Radyo‖) for illegal deduction, non-payment of service
incentive leave, 13th month pay, premium pay for holiday and rest day and illegal
diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-
IBIG and Philhealth. On the basis of the complaint, the DOLE conducted a plant
level inspection.
The Labor Inspector in his report wrote,Management representative

informed that (Juezan) complainant is a drama talent hired on a per drama
‗participation basis‘ hence no employer-employer relationship existed between them.
As proof of this, management presented photocopies of cash vouchers, billing
statement, employments of specific undertaking, etc. The management has no
control of the talent if he ventures into another contract with other broadcasting
industries.
Issue:
Whether or not the Secretary of Labor has the power to determine the
existence of an employer-employee relationship.
Ruling:
Yes. No limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No procedure was
laid down where the DOLE would only make a preliminary finding, that the power
was primarily held by the NLRC.
The law did not say that the DOLE would first seek the NLRC‘s
determination of the existence of an employer-employee relationship, or that should
the existence of the employer-employee relationship be disputed, the DOLE would
refer the matter to the NLRC. The DOLE must have the power to determine
whether or not an employer-employee relationship exists, and from there to decide
whether or not to issue compliance orders in accordance with Art. 128(b) of the
Labor Code, as amended by RA 7730.
The DOLE, in determining the existence of an employer-employee

relationship, has a ready set of guidelines to follow, the same guide the courts
themselves use. The elements to determine the existence of an employment
relationship are: (1) the selection and engagement of the employee; (2) the payment
of wages; (3) the power of dismissal; (4) the employer‘s power to control the
employee‘s conduct. The use of this test is not solely limited to the NLRC. The

DOLE Secretary, or his or her representatives, can utilize the same test, even in the
course of inspection, making use of the same evidence that would have been
presented before the NLRC.
The determination of the existence of an employer-employee relationship by

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

relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The
DOLE would have no jurisdiction only if the employer-employee relationship has
already been terminated, or it appears, upon review, that no employer-employee
relationship existed in the first place.
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 will make the determination that no employer-
employee relationship exists, thus divesting itself of jurisdiction over the case. It
must not be precluded from being able to reach its own conclusions, not by the
parties, and certainly not by this Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is
fully empowered to make a determination as to the existence of an employer-
employee relationship in the exercise of its visitorial and enforcement power,
subject to judicial review, not review by the NLRC.
To recapitulate, if a complaint is brought before the DOLE to give effect to

the labor standards provisions of the Labor Code or other labor legislation, and
there is a finding by the DOLE that there is an existing employer-employee
relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the
DOLE finds that there is no employer-employee relationship, the jurisdiction is
properly with the NLRC. If a complaint is filed with the DOLE, and it is
accompanied by a claim for reinstatement, the jurisdiction is properly with the
Labor Arbiter, under Art. 217(3) of the Labor Code, which provides that the Labor
Arbiter has original and exclusive jurisdiction over those cases involving wages,
rates of pay, hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement.

If a complaint is filed with the NLRC, and there is still an existing employer-
employee relationship, the jurisdiction is properly with the DOLE. The findings of
the DOLE, however, may still be questioned through a petition for certiorari under
Rule 65 of the Rules of Court.

3) Superior Packaging Corp., vs. Balagsay et al.
G.R. No. 178909, October 10, 2012
Facts:
Petitioner engaged services of Lancer Staffing and Services (provided
respondents as laborers for petitioner). Herein respondents were engaged for 4
months and included tasks such as loading, unloading and segregation of boxes.
Pursuant to a complaint filed by respondents against petitioner Superior Package,
DOLE conducted an inspection of petitioners workplace and found several violations
(non-presentation of payrolls and daily time records; non-submission of annual
report of safety organization; medical/illness reports; no trained first aid) Because
petitioners failed to appear in the summary investigations conducted by DOLE, an
order was issued ordering petitioners to pay PHP840,463.38.
Petitioners moved to reconsider, stating that the respondents are not their
employees, but of Lancer Staffing and Services, but this was denied. The DOLE
stated that petitioners failed to support their claim and even if they were employees
of Lancer they could not escape liability as Section 13 of the Department Order No.
10, Series of 1997, makes a principal jointly and severally liable with the contractor
to contractual employees to the extent of the work performed when the contractor
fails to pay its employees' wages. The appeal to the SOLE, motion for
reconsideration to the SOLE, petition for certiorari to the CA and motion for
reconsideration to the CA were all denied, hence the present petition. The petitioner
objects to the finding that it is engaged in labor-only contracting and is
consequently an indirect employer, considering that it is beyond the visitorial and
enforcement power of the DOLE to make such conclusion. According to the
petitioner, such conclusion may be made only upon consideration of evidentiary
matters and cannot be determined solely through a labor inspection.
Issue:
1.) Whether or not DOLE has the jurisdiction to inspect in petitioners
workplace, pursuant to its visitorial and enforcement power;
2.) Whether or not Superior Package Corp. may be held solidarily liable with
Lancer Staffing for respondents‘ unpaid money claims;
Ruling:
Petition is denied. DOLE may inspect the petitioner‘s workplace pursuant to
its visitorial and enforcement power; Petitioner may be held solidarily liable;
First Issue:
The DOLE clearly acted within its authority when it determined the
existence of an employer-employee relationship between the petitioner and
respondents as it falls within the purview of its visitorial and enforcement power
under Article 128 (b) of the Labor Code. In People's Broadcasting (Bombo Radyo

Phils., Inc.) v. Secretary of the Department of Labor and Employment, the Court
stated that it can be assumed that the DOLE in the exercise of its visitorial and
enforcement power somehow has to make a determination of the existence of an
employer-employee relationship. Such determination, however, is merely
preliminary, incidental and collateral to the DOLE's primary function of enforcing
labor standards provisions. Also, the existence of an employer-employee
relationship is ultimately a question of fact. The determination made in this case by
the DOLE, albeit provisional, and as affirmed by the Secretary of DOLE and the CA
is beyond the ambit of a petition for review on certiorari.
Second Issue:
At the time of the respondents' employment in 1998, the applicable
regulation was DOLE Department Order No. 10, Series of 1997. (―Labor-only
contracting is prohibited and the person acting as contractor [Lancer] shall be
considered merely as an agent or intermediary of the employer [Superior Package]
who shall be responsible to the workers in the same manner and extent as if the
latter [Superior Package] were directly employed by him‖)
The marked disparity between the petitioner's actual capitalization

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

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

Topic 6 - WAGE PROTECTION PROVISIONS & PROHIBITIONS
REGARDING WAGES
1) SHS Perforated Materials, Inc. et al., vs. Diaz

G.R. No. 185814. October 13, 2010.
Facts:
Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation
organized and existing under the laws of the Republic of the Philippines and
registered with the Philippine Economic Zone Authority. Petitioner Winfried
Hartmannshenn (Hartmannshenn), a German national, is its president. Thus, the
wages of SHS employees are paid out by ECCP, through its Accounting Services
Department headed by Juliet Taguiang (Taguiang). Manuel F. Diaz (respondent)
was hired by petitioner SHS as Manager for Business Development on probationary
status.
During respondent‘s employment, Hartmannshenn was often abroad and,

because of business exigencies, his instructions to respondent were either sent by
electronic mail or relayed through telephone or mobile phone. During meetings with
the respondent, Hartmannshenn expressed his dissatisfaction over respondent‘s
poor performance. Respondent acknowledged his poor performance and offered to
resign from the company.
On November 18, 2005, Hartmannshenn arrived in the Philippines from

Germany, and on November 22 and 24, 2005, notified respondent of his arrival
through electronic mail messages and advised him to get in touch with him.
Respondent claimed that he never received the messages. Hartmannshenn
instructed Taguiang not to release respondent‘s salary.
Respondent served on SHS a demand letter and a resignation letter. It is precisely
because of illegal and unfair labor practices such as these that I offer my
resignation with neither regret nor remorse.
Appealing for the release of his salary respondent filed a Complaint against
the petitioners for illegal dismissal; non-payment of salaries/wages and 13th month
pay with prayer for reinstatement and full backwages; exemplary damages, and
attorney‘s fees, costs of suit, and legal interest.
Issues:
Whether or not the temporary withholding of respondent‘s salary/wages by
petitioners was a valid exercise of management prerogative.
Ruling:
Withholding respondent‘s salary was not a valid exercise of management
prerogative.

Although management prerogative refers to ―the right to regulate all aspects
of employment,‖ it cannot be understood to include the right to temporarily
withhold salary/wages without the consent of the employee.
Any withholding of an employee‘s wages by an employer may only be allowed

in the form of wage deductions under the circumstances provided in Article 113 of
the Labor Code, as set forth below:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by him
as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to
check-off has been recognized by the employer or authorized in writing by the
individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued
by the Secretary of Labor.
There is constructive dismissal if an act of clear discrimination, insensibility,
or disdain by an employer becomes so unbearable on the part of the employee
that it would foreclose any choice by him except to forego his continued
employment. It exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank and a diminution in pay.
In this case, the withholding of respondent‘s salary does not fall under any of
the circumstances provided under Article 113. Neither was it established with
certainty that respondent did not work from November 16 to November 30, 2005.
Hence, the Court agrees with the LA and the CA that the unlawful withholding of
respondent‘s salary amounts to constructive dismissal.

2) NIÑA JEWELRY MANUFACTURING OF METAL ARTS, INC.
(otherwise known as NIÑA MANUFACTURING AND METAL ARTS,
INC.) and ELISEA B. ABELLA, Petitioners, vs. MADELINE C.
MONTECILLO and LIZA M. TRINIDAD, Respondents.
G.R. No. 188169, November 28, 2011
Facts:
Respondents were employed as goldsmiths by the petitioner Niña Jewelry
Manufacturing of Metal Arts, Inc. There were incidents of theft involving
goldsmiths in Niña Jewelry's employ.
The petitioner imposed a policy for goldsmiths, which were intended to

answer for any loss or damage which Niña Jewelry may sustain by reason of the
goldsmiths' fault or negligence in handling the gold entrusted to them, requiring
them to post cash bonds or deposits in varying amounts but in no case exceeding
15% of the latter's salaries per week.
The petitioner alleged that the goldsmiths were given the option not to post
deposits, but to sign authorizations allowing the former to deduct from the latter's
salaries amounts not exceeding 15% of their take home pay should it be found that
they lost the gold entrusted to them. The deposits shall be returned upon
completion of the goldsmiths' work and after an accounting of the gold received.
The respondents claimed otherwise insisting that petitioner left the

goldsmiths with no option but to post the deposits. The next day after the policy was
imposed, the respondents no longer reported for work and signified their defiance
against the new policy which at that point had not even been implemented yet. The
respondents alleged that they were constructively dismissed by the petitioner as
their continued employments were made dependent on their readiness to post the
required deposits. The respondents then filed a complaint for illegal dismissal and
for the award of separation pay against the petitioner, and later filed their amended
complaint which excluded their earlier prayer for separation pay but sought
reinstatement and payment of back wages, attorney's fees and 13th month pay.
Issues:
1.) Whether or not Niña Jewelry Manufacturing of Metal Arts, Inc. may
impose the policy for their goldsmiths requiring them to post cash bonds or
deposits; 2.) Whether or not there is constructive dismissal.
Ruling:
NO, the Niña Jewelry may not impose the policy. Articles 113 and 114 of the
Labor Code are clear as to what are the exceptions to the general prohibition
against requiring deposits and effecting deductions from the employees' salaries.

ART. 113. Wage Deduction — No employer, in his own behalf or in behalf of
any person, shall make any deduction from the wages of his employees, except:
(a)In cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by him
as premium on the insurance;
(b)For union dues, in cases where the right of the worker or his union to
(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 failed to prove that their imposition of the new policy upon
the goldsmiths under Niña Jewelry's employ falls under the exceptions specified in
Articles 113 and 114 of the Labor Code.
2) There is NO constructive dismissal. Constructive dismissal occurs when

there is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or diminution in pay or
both; or when a clear discrimination, insensibility, or disdain by an employer
becomes unbearable to the employee. The petitioners did not whimsically or
arbitrarily impose the policy to post cash bonds or make deductions from the
workers' salaries.

3) LOCSIN II, petitioner, vs. MEKENI FOOD CORP, respondent.
GR No. 192105 December 9, 2013
Facts:
Petitioner Antonio Locsin II was the Regional Sales Manager of respondent
Mekeni Food Corporation. He was hired on February 2004 to oversee the NCR and
Luzon operation. In addition to his compensation and benefit package, a car was
offered to him under which one-half of the cost of the vehicle is to be paid by the
company and the other half to be deducted from petitioner's salary. The car valued
at 280,000 which Locsin paid through salary deductions of 5,000 per month.
On February 2006, Locsin resigned. A total of 112,500.00 had already been

deducted from his monthly salary and applied as part of his share in the car plan.
Upon resignation, petitioner made personal and written follow-ups regarding his
unpaid salaries, commissions, benefits, and offer to purchase his service vehicle.
Mekeni replied that the company car plan benefit applied only to employees who
have been with the company for five years; for this reason, the balance that
petitioner should pay on his service vehicle stood at P116,380.00 if he opts to
purchase the same.
On May 3, 2007, petitioner filed against Mekeni and/or its President,

Prudencio S. Garcia, a Complaint for the recovery of monetary claims consisting of
unpaid salaries, commissions, sick/vacation leave benefits, and recovery of monthly
salary deductions which were earmarked for his cost- sharing in the car plan.
Issue:
Whether or not petitioner is entitled to a refund of all the amounts applied to
the cost of the service vehicle under the car plan.
Ruling:
Any benefit or privilege enjoyed by petitioner from using the service vehicle
was merely incidental and insignificant, because for the most part the vehicle was
under Mekeni's control and supervision. Free and complete disposal is given to the
petitioner only after the vehicle's cost is covered or paid in full. Until then, the
vehicle remains at the beck and call of Mekeni. Given the vast territory petitioner
had to cover to be able to perform his work effectively and generate business for his
employer, the service vehicle was an absolute necessity, or else Mekeni's business
would suffer adversely. Thus, it is clear that while petitioner was paying for half of
the vehicle's value, Mekeni was reaping the full benefits from the use thereof.
Under Article 22 of the Civil Code, ―every person who through an act of
performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the
same to him." Article 2142 of the same Code likewise clarifies that there are certain

lawful, voluntary and unilateral acts which give rise to the juridical relation of
quasi-contract, to the end that no one shall be unjustly enriched or benefited at the
expense of another. In the absence of specific terms and conditions governing the
car plan arrangement between the petitioner and Mekeni, a quasi-contractual
relation was created between them. Consequently, Mekeni may not enrich itself by
charging petitioner for the use of its vehicle which is otherwise absolutely necessary
to the full and effective promotion of its business. It may not, under the claim that
petitioner's payments constitute rents for the use of the company vehicle, refuse to
refund what petitioner had paid, for the reasons that the car plan did not carry
such a condition; the subject vehicle is an old car that is substantially, if not
fully, depreciated; the car plan arrangement benefited Mekeni for the most part;
and any personal benefit obtained by petitioner from using the vehicle was merely
incidental.
Conversely, petitioner cannot recover the monetary value of Mekeni's

counterpart contribution to the cost of the vehicle; that is not property or money
that belongs to him, nor was it intended to be given to him in lieu of the car plan.
Mekeni's share of the vehicle's cost was not part of petitioner's compensation
package. The vehicle is an asset that belonged to Mekeni. Just as Mekeni is
unjustly enriched by failing to refund petitioner's payments, so should petitioner not
be awarded the value of Mekeni's counterpart contribution to the car plan, as this
would unjustly enrich him at Mekeni's expense.
Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's
payments under the car plan agreement amounting only to the extent of the
contribution Locsin made, totalling to the amount of P112, 500.00.

4) T & H SHOPFITTERS CORPORATION/GIN QUEEN CORPORATION,
STINNES HUANG, BEN HUANG and ROGELIO MADRIAGA,
Petitioners, vs. T & H SHOPFITTERS CORPORATION/GIN QUEEN
WORKERS UNION, ELPIDIO ZALDIVAR, et. al. Respondents.
G.R. No. 191714 February 26, 2014
Facts:
On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen
Corporation workers union (THS-GQ Union) filed their Complaint for Unfair Labor
Practice (ULP) by way of union busting, and Illegal Lockout, with moral and
exemplary damages and attorney‘s fees, against T&H Shopfitters Corporation (T&H
Shopfitters) and Gin Queen Corporation before the Labor Arbiter (LA).
First Cause:
In their desire to improve their working conditions, respondents and other
employees of held their first formal meeting on November 23, 2003 to discuss the
formation of a union. The following day, seventeen (17) employees were barred from
entering petitioners‘ factory premises located in Castillejos, Zambales, and ordered
to transfer to T&H Shopfitters‘ warehouse at Subic Bay Freeport Zone (SBFZ)
purportedly because of its expansion. Afterwards, the said seventeen (17) employees
were repeatedly ordered to go on forced leave due to the unavailability of work.
Respondents contended that the affected employees were not given regular
work assignments, while subcontractors were continuously hired to perform their
functions. Respondents sought the assistance of the National Conciliation and
Mediation Board. Subsequently, an agreement between petitioners and THS-GQ
Union was reached. Petitioners agreed to give priority to regular employees in the
distribution of work assignments. Respondents averred, however, that petitioners
never complied with its commitment but instead hired contractual workers.
Instead, Respondents claimed that the work weeks of those employees in the SBFZ
plant were drastically reduced to only three (3) days in a month.
Second Cause:
On March 24, 2004, THS-GQ Union filed a petition for certification election
and an order was issued to hold the certification election in both T&H Shopfitters
and Gin Queen.
On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for
its employees. The officers and members of the THS-GQ Union were purportedly
excluded from the field trip. On the evening of the field trip, a certain Angel
Madriaga, a sales officer of petitioners, campaigned against the union in the
forthcoming certification election.
When the certification election was scheduled on October 11, 2004, the employees
were escorted from the field trip to the polling center in Zambales to cast their

votes. The remaining employees situated at the SBFZ plant cast their votes as well.
Due to the heavy pressure exerted by petitioners, the votes for "no union" prevailed.
Third 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.
In its defense, Petitioners also stress that they cannot be held liable for ULP
for the reason that there is no employer-employee relationship between the former
and respondents. Further, Gin Queen avers that its decision to implement an
enforced rotation of work assignments for respondents was a management
prerogative permitted by law, justified due to the decrease in orders from its
customers; they had to resort to cost cutting measures to avoid anticipated financial
losses. Thus, it assigned work on a rotational basis. It explains that its failure to
present concrete proof of its decreasing orders was due to the impossibility of
proving a negative assertion. It also asserts that the transfer from Castillejos to
Cabangan was made in good faith and solely because of the expiration of its lease
contract in Castillejos. It was of the impression that the employees, who opposed its
economic measures, were merely motivated by spite in filing the complaint for ULP
against it.
Issue:
Whether ULP acts were committed by petitioners against respondents.
Ruling:
ULP were committed by petitioners against respondents.
Petitioners are being accused of violations of paragraphs (a), (c), and (e) of
Article 257 (formerly Article 248) of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers.––It shall be unlawful for an

employer to commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their
right to self-organization;

xxxx
(c) To contract out services or functions being performed by union members
when such will interfere with, restrain, or coerce employees in the exercise of
their right to self-organization;
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership in
any labor organization. x x x
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.

5) WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner, vs. WESLEYAN
UNIVERSITY-PHILIPPINES FACULTY and STAFF ASSOCIATION,
Respondent.
G.R. No. 181806 March 12, 2014
Facts:
Petitioner Wesleyan University Philippines is a non-stock, non-profit
educational institution duly organized and existing under the laws of the
Philippines. On the other hand, Respondent Wesleyan University - Philippines
Faculty and Staff Association is a duly registered labor organization acting as the
sole and exclusive bargaining agent of all rank-and-file faculty and staff employees
of petitioner.
In December 2003, the parties signed a 5-year CBA effective June 1, 2003
until May 31, 2008.
On August 16, 2005, petitioner, through its President, Atty. Maglaya, issued
a Memorandum providing guidelines on the implementation of vacation and sick
leave credits as well as vacation leave commutation which stipulated that (1)
vacation and sick leave credits are not automatic as leave credits and that they
would have to be earned monthly and (2) only the 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 SL and 15 days VL with pay every year and that after the second year of
service, all unused vacation leave shall be converted to cash and paid to the
employee at the end of each school year, not later than August 30 of each year.
Respondent filed a grievance complaint on the implementation of the vacation and
sick leave policy.
Petitioner also announced its plan of implementing a one-retirement policy

which was unacceptable to respondent. Respondent submitted affidavits to prove
that there is an established practice of giving two retirement benefits, one from the
Private Education Retirement Annuity Association (PERAA) Plan and another from
the CBA Retirement Plan.
The Voluntary Arbitrator rendered a decision declaring the one-retirement

policy and the Memorandum dated August 16, 2005 contrary to law. The Court of
Appeals also affirmed the ruling of the Voluntary Arbitrator.
Petitioner argues that there is only one retirement plan as the CBA
Retirement Plan and the PERAA Plan are one and the same. It maintains that

there is no established company practice or policy of giving two retirement benefits
to its employees. Respondent belies the claims of petitioner and asserts that there
are two retirement plans as the PERAA Retirement Plan, which has been
implemented for more than 30 years, is different from the CBA Retirement Plan.
Respondent further avers that it has always been a practice of petitioner to give two
retirement benefits and that this practice was established by substantial evidence
as found by both the Voluntary Arbitrator and the CA.
Issue:
Whether or not the respondents are entitled to two retirement plans.
Ruling:
Under Article 100 of the Labor Code, the Principle of Non-Diminution of
Benefits 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 company practice. To be
considered as a company practice, it must be consistently and deliberately made by
the employer over a long period of time.
In the instant case, respondent was able to present substantial evidence in

the form of affidavits to support its claim that there are two retirement plans
already established in the establishment. 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 rebut the veracity of the presented affidavits.
Petitioner's assertion that there is only one retirement plan as the CBA Retirement
Plan and the PERAA Plan are one and the same is not supported by any evidence.
The Memorandum dated August 16, 2005 is contrary to the existing CBA
because it limits the available leave credits of an employee at the start of the school
year. The Memorandum imposes a limitation not agreed upon by the parties nor
stated in the CBA, so it must be annulled.
Therefore, the petition is denied.

6) BLUER THAN BLUE JOINT VENTURES COMPANY/MARY ANN
DELA VEGA, Petitioners, vs. GLYZA ESTEBAN, Respondent.
G.R. No. 192582 April 7, 2014 citing 2011 Nina Jewelry Manufacturing of
Metal Arts Inc. vs. Montecillo
Facts:
The respondent was employed as a sales clerk and assigned at the
petitioner‘s boutique. Her primary tasks were attending to all customer needs,
ensuring efficient inventory, coordinating orders from clients, cashiering and
reporting to the accounting department. The petitioner learned that some of their
employees had access to their POS system with the use of a universal password
given to them by a certain Elmer Flores, who in turn learned of the password from
the respondent. The petitioner then conducted an investigation and asked the
petitioner to explain why she should not be disciplinarily dealt with.
During the investigation the respondent was placed under preventive

suspension. After investigation the petitioner terminated the respondent on the
grounds of loss of trust or confidence. This respondent was given her final wage and
benefits less the inventory variance incurred by the store. This urged the
respondent to file a complaint for illegal dismissal, illegal suspension, holiday pay,
rest day and separation pay.
The labor arbiter ruled in her favor awarding her backwages. The petitioner
appealed the decision in the NLRC and the decision was reversed. However, upon
the respondent‘s petition for certiorari in the court of appeals the decision was
reinstated. Hence, this petition.
Issue:
Whether the negative sales variance could be validly deducted from the
respondent‘s wage.
Ruling:
No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that no employer, in his own behalf or
in behalf of any person, shall make any deduction from the wages of his employees,
except in cases where the employer is authorized by law or regulations issued by the
Secretary of Labor and Employment, among others. The Omnibus Rules
Implementing the Labor Code, meanwhile, provides:
SECTION 14. Deduction for loss or damage. — Where the employer is

engaged in a trade, occupation or business where the practice of making deductions
or requiring deposits is recognized to answer for the reimbursement of loss or
damage to tools, materials, or equipment supplied by the employer to the employee,

the employer may make wage deductions or require the employees to make deposits
from which deductions shall be made, subject to the following conditions:
1. That the employee concerned is clearly shown to be responsible for the loss
or damage;
2. That the employee is given reasonable opportunity to show cause why
deduction should not be made;
3. That the amount of such deduction is fair and reasonable and shall not
exceed the actual loss or damage; and
4. That the deduction from the wages of the employee does not exceed 20
percent of the employee's wages in a week.
In this case, the petitioner failed to sufficiently establish that Esteban was
responsible for the negative variance it had in its sales for the year 2005 to 2006
and that Esteban was given the opportunity to show cause the deduction from her
last salary should not be made.
Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc.
v. Montecillo, that:
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.
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.

7) NETLINK COMPUTER INCORPORATED, Petitioner, vs. ERIC
DELMO, Respondent
G.R. No. 160827 June 18, 2014
Facts:
Since November 3, 1991, Mr. Eric Delmo was hired as an account manager
for Netlink Computer, Inc. Products and Services. His job requires him to canvass
and source clients. His performance is compensated by commissions of both
Philippine Peso and U.S Dollars. Mr. Delmo was able to generate sales which
entitled him to those commissions. Mr. Delmo‘s work required him in the field most
of the time and with his colleagues they are not required to accomplish time cards.
His request for his commissions was denied by Netlink. Instead, they gave him
partial cash advances chargeable to the commissions. Then, Netlink forced to Mr.
Delmo to resign by issuing several memoranda detailing his infractions of the
company‘s attendance policy.
On November 28, 1996, Mr. Delmo was refused entry into the company
premises. He filed, then, a complaint for illegal dismissal. As a response, the
company countered that Mr. Delmo is required to have his attendance recorded per
company policies. The company, furthermore, stated that his performance is dismal
and he is outperformed by other account managers.
Issue:
Whether or not the payment of commission by U.S Dollar as a company
practice/policy is protected by the non-diminution rule.
Ruling:
As a general rule, all obligations shall be paid in Philippine currency.
However, the contracting parties may stipulate that foreign currencies may be used
for settling obligations. This is pursuant to Republic Act No. 8183,which provides as
follows:
1. All monetary obligations shall be settled in the Philippine currency which is

legal tender in the Philippines. However, the parties may agree that the obligation or
transaction shall be settled in any other currency at the time of payment.
As established in Asia World Recruitment, Inc. v. NLRC, the real value of the
foreign exchange-incurred obligation up to the date of its payment should be
preserved. Though there was no written contract for the U.S Dollars commission,
the payment of which is still mandated because it is an established practice as a
company policy which is protected by the non-diminution rule. The principle of non-
diminution of benefits, which has been incorporated in Article 100of the Labor
Code, forbade Netlink from unilaterally reducing, diminishing, discontinuing or
eliminating the practice. Verily, the phrase "supplements, or other employee

benefits" in Article 100 is construed to mean the compensation and privileges
received by an employee aside from regular salaries or wages.
With regard to the length of time the company practice should have been
observed to constitute a voluntary employer practice that cannot be unilaterally
reduced, diminished, discontinued or eliminated by the employer, we find that
jurisprudence has not laid down any rule requiring a specific minimum number of
years. Several jurisprudence varies on the number of required years for a practice to
ripen.
With the payment of US dollar commissions having ripened into a company

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

8) PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND/OR
Ernani Tumimbang, Petitioners, v. Henry Estranero
GR No. 192518, October 15, 2014
Facts:
On July 1, 1995, PLDT employed the respondent as an Auto-
Mechanic/Electrician Helper with a monthly salary of P15, 000 at the time of his
separation from the service in 2003.
In the year 1995, PLDT adopted a company-wide Manpower Reduction

Program (MRP), aimed at reducing its work force. To commence with its program,
PLDT offered the affected employees an attractive redundancy pay consisting of
100% of their basic monthly salary for every year of service, in addition to their
retirement benefits, if entitled. For those who were not qualified to the retirement
benefits, they were offered separation or redundancy package of 200% of their basic
monthly salary for every year of service. Among those gravely affected by the MRP
was the Fleet Management Division where the respondent was assigned. Attracted
by the separation pay offered by the company, the respondent expressed his
conformity to his inclusion in the MRP in April 25, 2003. He was then made to sign
a deed denominated as a Receipt, Release and Quitclaim for his severance from
employment, thus availed of the offered personnel reduction program. Thereafter,
PLDT proceeded to compute the respondent's redundancy/separation benefits.
Since his length of service was seven (7) years, eleven (11) months and fifteen
(15) days, which was rounded to 8 years, the respondent was entitled to 200% of his
basic monthly salary for every year of service by way of redundancy pay equivalent
to P240, 000.00 plus other benefits and bonuses equivalent to P27, 028.37 for a total
of P267,028.37.
However, the respondent had outstanding liabilities arising from various

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

well as moral and exemplary damages plus attorney's fees against PLDT and

Ernani Tumimbang (petitioners), the Division Head of the Fleet Management
Division where the respondent was assigned.
The Labor Arbiter (LA) rendered a decision in favor of Estrañero ordering

PLDT to pay him P267,038.37 as separation pay. The LA sustained the validity of
PLDT's redundancy program as an authorized cause to terminate the employment
of the respondent, and his entitlement to the redundancy/separation pay pursuant
to the MRP, being more advantageous than the benefits allowed under the law. The
LA, however, ruled that the office lacks jurisdiction to pass upon the issue of
PLDT's act in deducting the total outstanding loans which the respondent obtained
from different entities since the same does not involve an employer-employee
relationship, and may only be enforced by PLDT through a separate civil action in
the regular courts. On appeal to the NLRC and eventually to the CA, the decision of
the LA was also affirmed.
Issue:
Whether or not PLDT can validly deduct the respondent's outstanding loan
obligation from his redundancy pay.
Ruling:
It is clear in Article 113 of the Labor Code that no employer, in his own
behalf or in behalf of any person, shall make any deduction from the wages of his
employees, except in cases where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment, among others. The Omnibus
Rules Implementing the Labor Code, meanwhile, provides that deductions from the
wages of the employees may be made by the employer when such deductions are
authorized by law, or when the deductions are with the written authorization of the
employees for payment to a third person. Thus, any withholding of an employee's
wages by an employer may only be allowed in the form of wage deductions under
the circumstances provided in Article 113 of the Labor Code, as well as the
Omnibus Rules implementing it. Further, Article 116 of the Labor Code clearly
provides that it is unlawful for any person, directly or indirectly, to withhold any
amount from the wages of a worker without the worker's consent.
In this case, the deductions made to the respondent's redundancy pay do not
fall under any of the circumstances provided under Article 113, nor was it
established with certainty that the respondent has consented to the said deductions
or that the petitioners had authority to make such deductions. Furthermore, the
petitioners may not offset the outstanding loans of the respondent against the
latter's monetary benefits. The records expressly revealed that the respondent has
obtained various loans from different entities and not with PLDT. Accordingly, set-
off or legal compensation cannot take place between PLDT and the respondent
because they are not mutually creditor and debtor of each other. Thus, there can be
no valid set-off because the respondent's creditor is not PLDT.

The Court further agrees with the labor tribunals that the petitioners cannot
offset the outstanding balance of the respondent's loan obligation with his
redundancy pay because the balance on the loan does not come within the scope of
jurisdiction of the LA. The demand for payment of the said loans is not a labor, but
a civil dispute. It involves debtor-creditor relations, rather than employee-employer
relations. Evidently, the respondent's unpaid balance on his loans cannot be offset
against the redundancy pay due to him.
The Court rules that PLDT has no legal right to withhold the respondent's
redundancy pay and other benefits to recompense for his outstanding loan
obligations to different entities. The respondent's entitlement to his redundancy pay
is mandated by law which the petitioners cannot unjustly deny.

9) EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER,
RONALDO DAVID, BONIFACIO MATUNDAN, NORA MENDOZA, et
al., Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
·SOLID MILLS, INC., and/or PHILIP ANG, Respondents.
G.R. No. 202961 February 4, 2015
Facts:
Petitioners are respondent Solid Mills, Inc.'s (Solid Mills) employees. They
are represented by the National Federation of Labor Unions (NAFLU), their
collective bargaining agent. As Solid Mills' employees, petitioners and their
families were allowed to occupy SMI Village, a property owned by Solid Mills.
According to Solid Mills, this was "out of liberality and for the convenience of its
employees and on the condition that the employees would vacate the premises
anytime the Company deems fit."
In September 2003, petitioners were informed that effective October 10, 2003,
Solid Mills would cease its operations due to serious business losses. 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. By October 10, 2003, petitioners were no longer
allowed to report for work. 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. Petitioners refused to sign the
documents and demanded to be paid their benefits and separation pay.
Hence, petitioners 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. On the other hand,
Solid Mills argued that petitioners' complaint was premature because they had not
vacated its property. The Labor Arbiter ruled in favor of petitioners. According to
the Labor Arbiter, Solid Mills illegally withheld petitioners' benefits and separation
pay.
Solid Mills appealed to the National Labor Relations Commission. The

National Labor Relations Commission ruled that because of petitioners' failure to
vacate Solid Mills' property, Solid Mills was justified in withholding their benefits
and separation pay. Solid Mills granted the petitioners the privilege to occupy its
property on account of petitioners' employment. It had the prerogative to terminate
such privilege. The Court of Appeals likewise agreed with the National Labor
Relations Commission's deletion of interest since it found that Solid Mills' act of
withholding payment of benefits and separation pay was proper. Petitioners'
terminal benefits and pay were withheld because of petitioners' failure to vacate
Solid Mills' property.

Issue:
Whether or not employer Solid Mill‘s withholding of terminal pay and
benefits of respondent-employees valid pending return of the employee‘s properties
Ruling:
Yes. The Court held that requiring clearance before the release of last
payments to the employee is a standard procedure among employers, whether
public or private. Clearance procedures are instituted to ensure that the properties,
real or personal, belonging to the employer but are in the possession of the
separated employee, are returned to the employer before the employee's departure.
As a general rule, employers are prohibited from withholding wages from
employees. The Labor Code provides:
Art. 116. Withholding of wages and kickbacks prohibited. The Labor Code
also prohibits the elimination or diminution of benefits.
The Labor Code also prohibits the elimination or diminution of benefits.

Thus:
Art. 100. Prohibition against elimination or diminution of benefits. —

Nothing in this Book shall be construed to eliminate or in any way diminish
supplements, or other employee benfits being enjoyed at the time of promulgation of
this Code.
However, our law supports the employers' institution of clearance procedures

before the release of wages. As an exception to the general rule that wages may not
be withheld and benefits may not be diminished, the Labor Code provides:
Article 1706. Withholding of the wages, except for a debt due, shall not be
made by the employer.
"Debt" in this case refers to any obligation due from the employee to the
employer. It includes any accountability that the employee may have to the
employer. There is no reason to limit its scope to uniforms and equipment, as
petitioners would argue. More importantly, respondent Solid Mills and NAFLU, the
union representing petitioners, agreed that the release of petitioners' benefits shall
be "less accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The

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

What can be gathered from the findings of the Labor Arbiter, National Labor
Relations Commission, and the Court of Appeals is that respondent Solid Mills
allowed the use of its property for the benefit of petitioners as its employees. The
return of the property's possession became an obligation or liability on the part of
the employees when the employer-employee relationship ceased. Withholding of
payment by the employer does not mean that the employer may renege on its
obligation to pay employees their wages, termination payments, and due benefits.
The employees' benefits are also not being reduced. It is only subjected to the
condition that the employees return properties properly belonging to the employer.
This is only consistent with the equitable principle that "no one shall be unjustly
enriched or benefited at the expense of another."
For these reasons, we cannot hold that petitioners are entitled to interest of
their withheld separation benefits. These benefits were properly withheld by
respondent Solid Mills because of their refusal to return its property. Clearly, in
this case, it is for the workers to return their housing in exchange for the release of
their benefits. This is what they agreed upon. It is what is fair in the premises.

10) ERNESTO GALANG and MA. OLGA JASMIN CHAN v. BOIE
TAKEDA CHEMICALS
GR No. 183934, July 20, 2016
Facts:
Respondent pharmaceutical company Boie Takeda Chemicals, Inc. (BTCI)
hired petitioners Ernesto Galang and Ma. Olga Jasmin Chan. Through the years,
petitioners rose from the ranks and were promoted to Regional Sales Managers in
2000. Petitioners held these positions until their separation from BTCI on May 1,
2004.
As Regional Sales Managers, they belong to the sales department of BTCI.

They primarily managed regional sales budget and target, and were responsible for
market share and company growth within their respective regions. Within the
organizational hierarchy, they reported to the National Sales Director.In 2002,
when the National Sales Director position became vacant (alter the retirement of
MelchorBarretto), petitioners assumed and shared (with the general manager) the
functions and responsibilities of this higher position, and reported directly to the
General Manager.
Petitioners were informed that BTCI promoted Villanueva as National Sales

Director. BTCI explained that the appointment was pursuant to its management
prerogative, and that it arrived at such decision only "after careful assessment of
the situation, the needs of the position and the qualifications of the respective
candidates." The promotion of Villanueva as the National Sales Director caused ill-
feelings on petitioners' part.
After Villanueva's promotion, petitioners claimed that Nomura threatened to

dismiss them from office if they failed to perform well under the newly appointed
National Sales Director. This prompted petitioners to inquire if they could avail of
early retirement package due to health reasons. Specifically, they requested
Nomura if they could avail of the early retirement package of 150% plus 120% of
monthly salary for every year of service tax free, and lull ownership of service
vehicle tax free. They claimed that this is the same retirement package given to
previous retirees namely, former Regional Sales Director Jose Sarmiento, Jr.
(Sarmiento), and former National Sales Director Melchor Barretto. Nomura,
however, insisted that such retirement package does not exist and Sarmiento's case
was exceptional since he was just a few years shy from the normal retirement age.
Issue:
Whether petitioners are entitled to a higher retirement package.

Ruling:
Petitioners were not discriminated against in terms of their retirement
package.
The entitlement of employees to retirement benefits must specifically be

granted under existing laws, a collective bargaining agreement or employment
contract, or an established employer policy. Based on both parties' evidence,
petitioners are not covered by any agreement. There is also no dispute that
petitioners received more than what is mandated by Article 287 of the Labor Code.
Petitioners, however, claim that they should have received a larger pay because
BTCI has given more than what they received to previous retirees. In essence, they
claim that they were discriminated against because BTCI did not give them the
package of 150% of monthly salary for every year of service on top of the normal
retirement package.
To prove that their claim on the additional grant of 150% of salary,

petitioners presented evidence showing that former employees received significantly
larger retirement benefits. However, the cases of Ducay, Arada, and Rafael cannot
be used as precedents to prove this specific company practice because these
employees were not shown to be similarly situated in terms of rank, nor are the
applicable retirement packages corresponding to their ranks alike. Also, these
employees, including Sarmiento, all retired in the same year of 2001, or only within
a one-year period. Definitely, a year cannot be considered long enough to constitute
the grant of retirement benefits to these employees as company practice. It cannot
therefore be disputed that petitioners already received the benefits as specified in
the CBA between BTC1 and BTCI Supervisory Union.
Petitioner Chan, for her 21 years of service, received a total of P1,764,000.00

as retirement benefits following the formula of P70,000.00 x 120% x 21 years.
Petitioner Galang, for his 29 years of service, received a total of P3,248,000.00 as
retirement benefits following the formula of P70,000.00 x 160% x 29 years.

Topic 7 - PAYMENT OF WAGES
1) DOMINICO C. CONGSON, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, NOE BARGO, ROGER HIMENO,
RAYMUNDO BADAGOS, PATRICIO SALVADOR, SR., NEHIL
BARGO, JOEL MENDOZA, and EMMANUEL CALIXIHAN,
respondents.
G.R. No. 114250 April 5, 1995
Facts:
Dominico C. Congson is the registered owner of Southern Fishing Industry.
Respondents were hired as piece-rate employees uniformly paid at a rate of P1.00
per tuna weighing thirty (30) to eighty (80) kilos per movement. They work for 7
days a week. Due to alleged scarcity of tuna, Congson notified his proposal to reduce
the rate-per-tuna movement. When they reported the following day, they found out
that they were already replaced with new set of workers. They wanted to have a
dialogue with the management, but they waited in vain.
Thus, they filed a case before NLRC for underpayment of wages (violation of
the minimum wage law) and non-payment of overtime pay, 13th month pay, holiday
pay, rest day pay, and five (5)-day service incentive leave pay; and for constructive
dismissal.
Petitioner conceded that his payment of wages falls below the minimum wage
law. He averred that NLRC should have considered as forming a substantial part of
private respondents' total wages the cash value of the tuna liver and intestines
private respondents were entitled to retrieve. He argued that the combined value of
the cash wage and monetary value of the tuna liver and intestines clearly exceeded
the minimum wage fixed by law.
Both the Labor Arbiter and the NLRC ruled in favor of the respondents.
Issue:
Whether or not the form of payment by Congson is valid pursuant to Article
102 of the Labor Code.
Ruling:
Petitioner's practice of paying the private respondents the minimum wage by
means of legal tender combined with tuna liver and intestines runs counter to the
above cited provision of the Labor Code. The fact that said method of paying the
minimum wage was not only agreed upon by both parties in the employment
agreement but even expressly requested by private respondents, does not shield
petitioner.

Article 102 of the Labor Code is clear.
ARTICLE 102. Forms of Payment. — No employer shall pay the wages of an

employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or
any object other than legal tender, even when expressly requested by the employee.
Payment of wages by check or money order shall be allowed when such manner of
payment is customary on the date of effectivity of this Code, or is necessary because
as specified in appropriate regulations to be issued by the Secretary of Labor or as
stipulated in a collective bargaining agreement.
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.

2) NORTH DAVAO MINING CORPORATION and ASSET
PRIVATIZATION TRUST, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, LABOR ARBITER ANTONIO M.
VILLANUEVA and WILFREDO GUILLEMA, respondents.
G.R. No. 112546 March 13, 1996
Facts:
Due to financial losses, North Davao Mining Corporation laid off workers.
Respondent Wilfredo Guillema is one among several employees of North Davao who
were separated by reason of the company‘s closure on May 31, 1992. It appears that,
during the life of the petitioner corporation, from the beginning of its operations in
1981 until its closure in 1992, it had been giving separation pay equivalent to thirty
(30) days‘ pay for every year of service.
Moreover, inasmuch as the region where North Davao operated was plagued
by insurgency and other peace and order problems, the employees had to collect
their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their
workplace and about 2 ½hours‘ travel time by public transportation; this
arrangement lasted from 1981 up to 1990.
Issue:
Whether or not time spent in collecting wages in a place other than the place
of employment is compensable notwithstanding that the same is done during official
time.
Ruling:
The Supreme Court, affirming the decision of the Labor Arbiter, finds that
the hours spent by complainants in collecting salaries at a bank in Tagum, Davao
del Norte shall be considered compensable hours worked.
Considering further the distance between Amacan, Maco to Tagum which is

2½ hours by travel and the risks in commuting all the time in collecting
complainants‘ salaries, would justify the granting of backwages equivalent to two
(2) days in a month as prayed for. Corollary, we likewise hold respondents liable for
the transportation expenses incurred by complainants at P40.00 round trip fare
during pay days.

3) HOUSE OF SARA LEE, Petitioner, vs. CYNTHIA F. REY, Respondent.
G.R. No. 149013 August 31, 2006
Facts:
The House 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.
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
respondent‘s sister-in-law, from the 52-day limit to an ―unauthorized‖ term of 60

days. The respondent made the instruction just before the computer data for the
computation of the Service Fee accruing to Ms. Rey-Petilla was about to be
generated. Ms. Mendoza then reported this allegedly unauthorized act of
respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the
report, as the petitioner alleges, BOM Villagracia discreetly verified the records and
discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had
been extended by the respondent, but there were several other IBMs whose credit
terms had been similarly extended beyond the periods allowed by company policy.
BOM Villagracia then summoned the respondent and required her to explain the
unauthorized credit extensions.
Issue:
Whether or not the respondent is entitled to 13th month pay.
Ruling:
The award of 13th month pay must be deleted. Respondent is not a rank-
and-file employee and is, therefore, not entitled to thirteenth-month pay. However,
the NLRC and the CA are correct in refusing to award 14th and 15th month pay as
well as the ―monthly salary increase of 10 percent per year for two years based on
her latest salary rate.‖ The respondent must show that these benefits are due to
her as a matter of right. Mere allegations by the respondent do not suffice in the
absence of proof supporting the same. With respect to salary increases in
particular, the respondent must likewise show that she has a vested right to the
same, such that her salary increases can be made a component in the computation
of back wages. What is evident is that salary increases are a mere expectancy.
They are by nature volatile and dependent on numerous variables, including the
company‘s fiscal situation, the employee‘s future performance on the job, or the
employee‘s continued stay in a position. In short, absent any proof, there is no
vested right to salary increases.

Topic 8 - CONDITIONS OF EMPLOYMENT
1) SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-

AFW/MA. CONSUELO MACQUILING LEONARDO MARTINEZ,
DOMINGO ELA, JR., RODOLFO CALUCIN, JR., PERLA MENDOZA,
REX RAPHAEL REYES, ROGELIO BELMONTE, and 375 other
EMPLOYEE-UNION MEMBERS, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, and SAN JUAN DE DIOS HOSPITAL,
respondents.
G.R. No. 126383 November 28, 1997
Facts:
Petitioners, the rank-and-file employee-union officers and members of San
Juan De Dios Hospital Employees Association sent a letter requesting and pleading
for the expeditious implementation and payment by respondent Juan De Dios
Hospital of the ‘40 HOURS/5-DAY WORKWEEK‘ with compensable weekly two (2)
days off provided for by Republic Act 5901 as clarified for enforcement by the
Secretary of Labor‘s Policy Instructions No. 54. RA 5901 seeks to reduce the number
of hospital personnel, considering the nature of their work, and at the same time
guarantee the payment to them of a full weekly wage for seven (7) days.
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. Both Labor Arbiter and NLRC dismissed the complaint.
Issue:
Whether or not the Policy Instructions No. 54 issued by then Labor Secretary
(now Senator) Franklin M. Drilon is valid.
Ruling:
The interpretation of Labor Secretary Drilon is not valid.
A cursory reading of Article 83 of the Labor Code betrays petitioners‘ position

that ―hospital employees‖ are entitled to ―a full weekly salary with paid two (2)
days‘ off if they have completed the 40-hour/5-day workweek‖.
What Article 83 merely provides are:

(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‘s assertion
that ―personnel in subject hospitals and clinics are entitled to a full weekly wage for
seven (7) days if they have completed the 40-hour/5-day workweek in any given
workweek‖.
Needless to say, the Secretary of Labor exceeded his authority by including a

two days off with pay in contravention of the clear mandate of the statute. Such act
the Court shall not countenance. Administrative interpretation of the law, we
reiterate, 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.

2) SIME DARBY PILIPINAS INC, petitioner, vs. NLRC (2nd Division)
and SIME DARBY SALARIED EMPLOYEES ASSOCIATION
(ALCU0TUCP), respondents.
G.R. No. 119205 April 15, 1998
Facts:
Prior to the present controversy, the factory employees of Sime Darby
Pilipinas, Inc. enjoyed a 30-minute paid ―on call‖ lunch break in their daily work
schedule of 7:45 am to 3:45 pm. The petitioner company passed a memorandum
dated Aug 12 1992 advising all factory-based workers, except those in the
Warehouse and Quality Assurance Department, of a change in work schedule that
discontinued the 30-minute paid ―on call‖ lunch break and set an uninterrupted 1
hour lunch break in lieu thereof.
Private respondents then filed a complaint for unfair labor practice,

discrimination, and evasion of liability with the Labor Arbiter who dismissed the
complaint, ruling that the elimination of the 30-minute lunch break was a valid
exercise of management prerogative. Appeal was made to respondent NLRC who
reversed the decision of the Labor Arbiter, declaring that the new work schedule
deprived the employees of the benefits of a time-honored company practice and that
such change also resulted in an unjust diminution of employee benefits.
The OSG recommended the present petition to be granted, alleging that the
new memorandum containing the work schedule was not discriminatory not did it
constitute unfair labor practice.
Issue:
Whether or not the memorandum dated Aug 14, 1992 discontinuing the 30-
minute paid ―on call‖ lunch break constituted unfair labor practice and diminution
of benefits
Ruling:
The Supreme Court sustained petitioner, holding that it is clearly a
management prerogative to fix the work schedules of company employees. Under
the old schedule, the employees are compensated during their 30-minute lunch
break, but in essence it is still working time since the workers could be called upon
to work. Whereas in the new schedule, the employees are given a longer break of 1
hour, though uncompensated, it is uninterrupted as workers on their break are no
longer ―on call‖. The change in schedule would improve company productivity as
well as enhance the comfort of workers who could enjoy an uninterrupted break.

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

3) PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, LABOR ARBITER ROMULUS
PROTACIO and DR. HERMINIO A. FABROS, respondents.
G.R. No. 132805 February 2, 1999
Facts:
Dr. Fabros (private respondent) was employed as flight surgeon at petitioner
company (PAL). He was assigned at (PAL Medical Clinic at Nichols) and was on
duty from 4:00 in the afternoon until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent left
the clinic to have his dinner at his residence, which was about five-minute drive
away. A few minutes later, the clinic received an emergency call from the PAL
Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart
attack. Upon receiving the call the nurse on duty, Mr. Merlino Eusebio, called
private respondent at home to inform him of the emergency. The patient arrived at
the clinic at 7:50 in the evening and was rushed by Mr. Eusebio to the hospital.
When private respondent reached the clinic at around 7:51 in the evening, Mr.
Eusebio had already left with the patient. Mr. Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B.
Banzon ordered the Chief Flight Surgeon to conduct an investigation. The Chief
Flight Surgeon, in turn, required private respondent to explain why no disciplinary
sanction should be taken against him.
In his explanation, private respondent asserted that he was entitled to a

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

charged private respondent with abandonment of post while on duty.
Petitioner argues that being a full-time employee, private respondent is

obliged to stay in the company premises for not less than eight (8) hours. Hence, he
may not leave the company premises during such time, even to take his meals.
Issue:
Whether or not 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.
Art. 85. Meal periods.—Subject to such regulations as the Secretary of Labor

may prescribe, it shall be the duty of every employer to give his employees not less
than sixty (60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor
Code further states:
Sec. 7. Meal and Rest Periods.—Every employer shall give his employees,
regardless of sex, not less than one (1) hour time-off for regular meals, except in the
following cases when a meal period of not less than twenty (20) minutes may be
given by the employer provided that such shorter meal period is credited as
compensable hours worked of the employee:
1. Where the work is non-manual work in nature or does not involve

strenuous physical exertion;
2. Where the establishment regularly operates not less than sixteen hours a
day;
3. 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
4. Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes
shall be considered as compensable working time.
Thus, the eight-hour work period does not include the meal break. Nowhere
in the law may it be inferred that employees must take their meals within the
company premises. Employees are not prohibited from going out of the premises as
long as they return to their posts on time.
Private respondent‘s act, therefore, of going home to take his dinner does not
constitute abandonment.

4) LINTON COMMERCIAL CO., INC. and DESIREE ONG, Petitioners,
vs. ALEX A. HELLERA, et. al. Respondents.
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:
Whether or not 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.

5) BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as
Union President, JOSELITO LARIÑO, VIVENCIO B. BARTE,
SATURNINO EGERA and SIMPLICIO AYA-AY, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA
CORPORATION, and/or WILFREDO C. RIVERA, respondents.
G.R. No. 151309 October 15, 2008
Facts:
Petitioners Larino, Barte, Egera and Aya-ay are Tryco Pharma Corporation‘s
regular employees. The petitioners are members of Bisig Manggagawa sa
Tryco(BMT), the exclusive bargaining representative of the rank-and-file employes.
Tryco and petitioners then signed a Memorandum of Agreement providing for

a compressed workweek schedule to be implemented in the company pursuant to
Department of Labor and Employment Department Order (D.O.) No. 21, Series of
1990, Guidelines on the Implementation of Compressed Workweek.
As provided in the MOA, 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 specially
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
require to work beyond 6:12 pm, such employee shall be entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of

Labor and Employment of the implementation of a compressed workweek in the
company.
Tryco then received a letter from the Bureau of Animal Industry of the
Department of Agriculture that its production should be conducted in Bulacan and
not in Caloocan.
Tryco then ISSUEd a Memorandum ordering petitioners to report to the

company‘s plant site in Bulacan. However, petitioners refused.
BMT opposed the transfer contending that it constitutes unfair labor practice
declared a strike.
Petitioners then filed separate complaints for illegal dismissal,

underpayment of wages, nonpayment of OT pay and service incentive leave and
refusal to bargain against Tryco alleging that it acted in bad faith in ordering the
transfer of petitioners to paralyze the union.

Respondent in its defense aver that petitioners were not dismissed but they
refused to comply with the management directive for them to report to Bulacan due
to the letter reminder from the Bureau of Animal Industry.
Issue:
Whether or not the Memorandum of Agreement providing for compressed
workweek is unenforceable as it is contrary to law.
Ruling:
No, the MOA is enforceable and binding against the petitioners.
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, thus:
―The compressed workweek scheme was originally conceived for

establishments wishing to save on energy costs, promote greater work efficiency and
lower the rate of employee absenteeism, among others. Workers favor the scheme
considering that it would mean savings on the increasing cost of transportation
fares for at least one (1) day a week; savings on meal and snack expenses; longer
weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure,
family responsibilities, studies and other personal matters, and that it will spare
them for at least another day in a week from certain inconveniences that are the
normal incidents of employment, such as commuting to and from the workplace,
travel time spent, exposure to dust and motor vehicle fumes, dressing up for work,
etc. Thus, under this scheme, the generally observed workweek of six (6) days is
shortened to ve (5) days but prolonging the working hours from Monday to Friday
without the employer being obliged for pay overtime premium compensation for
work performed in excess of eight (8) hours on weekdays, in exchange for the
benefits above cited that will accrue to the employees.‖
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:
1.The employees voluntarily agree to work more than eight (8) hours a day
the total in a week of which shall not exceed their normal weekly hours of
work prior to adoption of the compressed workweek arrangement;

2. There will not be any diminution whatsoever in the weekly or monthly
takehome pay and fringe benefits of the employees;
3. If an employee is permitted or required to work in excess of his normal

weekly hours of work prior to the adoption of the compressed workweek
scheme, all such excess hours shall be considered overtime work and shall be
compensated in accordance with the provisions of the Labor Code or
applicable Collective Bargaining Agreement (CBA);
4. Appropriate waivers with respect to overtime premium pay for work

performed in excess of eight (8) hours a day may be devised by the parties to
the agreement.
5. The effectivity and implementation of the new working time arrangement

shall be by agreement of the parties.
Thus, the MOA is enforceable and a valid undertaking.

6) HILARIO DASCO, REYMIR PARAFINA, RICHARD PARAFINA,
EDILBERTO ANIA, MICHAEL ADANO, JAIME BOLO, RUBEN E.
GULA, ANTONIO CUADERNO and JOVITO CATANGUI, Petitioners,
vs. PHILTRANCO SERVICE ENTERPRISES INC./CENTURION
SOLANO, Manager, Respondents.
G.R. No. 211141 June 29, 2016
Facts:
The petitioners were employed by the respondents (on various dates from
2006 to 2010) as bus drivers and/or conductors with travel routes of Manila (Pasay)
to Bicol, Visayas and Mindanao, and vice versa.
On July 4, 2011, the petitioners filed a case against the respondents alleging
that: (1) they were already qualified for regular employment status since they have
been working with the respondents for several years; (2) they were paid only
P404.00 per round trip, which lasts from two to five days, without overtime pay and
below the minimum wage rate; (3) they cannot be considered as field personnel
because their working hours are controlled by the respondents from dispatching to
end point and their travel time is monitored and measured by the distance because
they are in the business of servicing passengers where time is of the essence; and (4)
they had not been given their yearly five-day SIL since the time they were hired by
the respondents.
In response, the respondents asserted that: (1) the petitioners were paid on a
fixed salary rate of P0.49 centavos per kilometer run, or minimum wage, whichever
is higher; (2) the petitioners are seasonal employees since their contracts are for a
fixed period and their employment was dependent on the exigency of the
extraordinary public demand for more buses during peak months of the year; and
(3) the petitioners are not entitled to overtime pay and SIL pay because they are
field personnel whose time outside the company premises cannot be determined
with reasonable certainty since they ply provincial routes and are left alone in the
field unsupervised.
The Labor Arbiter ruled in favor of the respondents who were able to prove
that petitioners were paid with a fixed salary or minimum wage, whichever is
higher. It also held that employees were not entitled to holiday pay and SIL as field
personnel.
The NLRC held that the petitioners are not field personnel considering that
they ply specific routes with fixed time schedules determined by the respondents;
thus, they are entitled to minimum wage, SIL pay, and overtime benefits.
The CA reversed the NLRC and reinstated the Labor Arbiter.

Issue:
Whether the petitioners as bus drivers and/or conductors are field personnel,
and thus entitled to overtime pay and SIL pay.
Ruling:
The bus drivers and/or conductors are regular employees.
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.
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
The NLRC properly concluded that they are not field personnel but regular
employees who perform tasks usually necessary and desirable to the respondents'
business. Evidently, the petitioners are not field personnel as defined above and the
NLRC's finding in this regard is supported by the established facts of this case: (1)
the petitioners, as bus drivers and/or conductors, are directed to transport their
passengers at a specified time and place; (2) they are not given the discretion to
select and contract with prospective passengers; (3) their actual work hours could be
determined with reasonable certainty, as well as their average trips per month; and
(4) the respondents supervised their time and performance of duties.
Thus, they are consequently entitled to the benefits accorded to regular

employees of the respondents, including overtime pay and SIL pay.

7) HSY MARKETING LTD. CO., petitioner, v. VIRGILIO 0.
VILLASTIQUE, respondent.
G.R. No. 219569 August 17, 2016
Facts:
On January 3, 2003, petitioner hired respondent as a field driver for
Fabulous Jeans & Shirt & General Merchandise (Fabulous Jeans), tasked to deliver
ready-to-wear items and/or general merchandise for a daily compensation of
P370.00.
On January 10, 2011, respondent figured in an accident when the service

vehicle (a 2010-model Mitsubishi Strada pick up) he was driving in Iligan City
bumped a pedestrian, Ryan Dorataryo (Dorataryo). Fabulous Jeans shouldered the
hospitalization and medical expenses of Dorataryo in the amount of P64,157.15,
which respondent was asked to reimburse, but to no avail.
On February 24, 2011, respondent was allegedly required to sign a

resignation letter, which he refused to do. A couple of days later, he tried to collect
his salary for that week but was told that it was withheld because of his refusal to
resign. Convinced that he was already terminated on February 26, 2011, he lost no
time in filing a complaint for illegal dismissal with money claims against petitioner,
Fabulous Jeans, and its owner, Alexander G. Arqueza.
The Labor Arbiter dismissed the complaint for illegal dismissal as there was
no substantial evidence presented that respondent was dismissed. The Labor
Arbiter ruled however that because there was strained relationship between
petitioner and respondent, reinstatement was no longer feasible and petitioner was
asked to deliver separation pay and service incentive leave pay to respondent.
NLRC and CA affirmed the Labor Arbiter‘s RULING.
Issue:
Whether or not Villatisque, as a company driver, falls under the definition of
a regular employee and is thus entitled to service incentive leave pay.
Ruling:
Yes, respondent Villatisque is a regular employee and should be awarded his
SIL.
A regular employee‘s task is necessary and desirable to the usual trade and
business of the company, and is thus entitled to the benefits including SIL.
Villatisque is not a field employee but rather a regular since he is expected to
deliver goods at a specified time and place and is under the control and supervision
of HSY Marketing. Company drivers who are under the control and direct

supervision of management officers – like respondent herein – are regular
employees entitled to benefits including SIL.
The Court likewise upholds the unanimous conclusion of the lower tribunals
that respondent had not been dismissed at all. Other than the latter's
unsubstantiated allegation of having been verbally terminated from his work, no
substantial evidence was presented to show that he was indeed dismissed or was
prevented from returning to his work. In the absence of any showing of an overt or
positive act proving that petitioner had dismissed respondent, the latter's claim of
illegal dismissal cannot be sustained, as such supposition would be self-serving,
conjectural, and of no probative value.
Hence, since there is no dismissal or abandonment to speak of, the

appropriate course of action is to reinstate the employee (in this case, herein
respondent) without, however, the payment of backwages. If respondent voluntarily
chooses not to return to work, he must then be considered as having resigned from
employment. This is without prejudice, however, to the willingness of both parties
to continue with their former contract of employment or enter into a new one
whenever they so desire.
While petitioner should not be adjudged liable for separation pay, the Court
nonetheless sustains the award of service incentive leave pay in favor of respondent;
in accordance with the finding of the CA that respondent was a regular employee of
petitioner and is, therefore, entitled to such benefit.

8) NATE CASKET MAKER AND/OR ARMANDO AND ANELY NATE,
Petitioners, v. ELIAS V. ARANGO, EDWIN M. MAPUSAO, JORGE C.
CARIÑO, JERMIE MAPUSAO, WILSON A. NATE, EDGAR A. NATE,
MICHAEL A. MONTALES, CELSO A. NATE, BENJES A. LLONA AND
ALLAN A. MONTALES, Respondent.
G.R. No. 192282 October 05, 2016
Facts:
Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate
Casket Maker. They employed respondents on various dates as
carpenters,mascilladors and painters in their casket-making business from 1998
until their alleged termination in March 2007. Petitioners alleged that respondents
are pakyaw workers who are paid per job order. On February 3, 2007, they met with
respondents in order to present a proposed employment agreement which would
change the existing pakyaw system to "contractual basis" and would provide for
vacation leave and sick leave pay and other benefits given to regular employees.
On the other hand, respondents then alleged that when they were adamant
and eventually refused to sign the contract, petitioners told them to go home
because their employment has been terminated.
Respondents filed a Complaint for illegal dismissal and non-payment of separation
pay against petitioners including claims for underpayment of wages, non-payment
of overtime pay, holiday pay, 5-day service incentive leave pay and 13th month pay.
The Labor Arbiter dismissed the complaint for lack of merit. While the Labor
Arbiter acknowledged that respondents being pakyaw workers are considered
regular employees, he ruled that petitioners did not terminate the services of
respondents. On the issue of underpayment, the Labor Arbiter held that
respondents were earning more than the minimum wage per day; and as pakyaw
workers, though they are deemed regular workers, they are not entitled to overtime
pay, holiday pay, service incentive leave pay and 13th month pay citing the case of
field personnel and those paid on purely commission basis. The decision of the
Labor Arbiter was affirmed by the NLRC.
The CA reversed and set aside the decision of the NLRC.
Issue:
Whether or not respondents, being pakyaw workers, are considered regular
employees which would not warrant their dismissal without payment of back wages
and other benefits.

Ruling:
Yes. Respondents being pakyaw workers are considered regular employees
and their dismissal is illegal and they must be paid with their back wages and
corresponding benefits.
There is no dispute that the tasks performed by respondents as carpenters,

painters, and mascilladors were necessary and desirable in the usual business of
petitioners who are engaged in the manufacture and selling of caskets. We have to
also consider the length of time that respondents worked for petitioners,
commencing on various dates from 1998 to 2007. In addition, the power of control of
petitioners over respondents is clearly present in this case. Respondents follow the
steps in making a casket, as instructed by the petitioners, like carpentry, mascilla,
rubbing and painting. They had their own notebooks where they listed the work
completed with their signature and the date finished. The same would be checked
by petitioners as basis for the compensation for the day. Thus, petitioners wielded
control over the respondents in the discharge of their work.
Hence, pakyaw workers are considered regular employees for as long as their
employers exercise control over them. Thus, while respondents' mode of
compensation was on a per-piece basis, the status and nature of their employment
was that of regular employees.
As regular employees, respondents were entitled to security of tenure and

could be dismissed only for just or authorized causes and after the observance of due
process.
Petitioners violated respondents' rights to security of tenure and

constitutional right to due process in not even serving them with a written notice of
termination which would recite any valid or just cause for their dismissal.
Respondents were merely told that their services are terminated.
Thus, the Court of Appeals correctly ruled that private respondents were
illegally dismissed.
Under Article 279 of the Labor Code, an employee unjustly dismissed from
work is entitled to reinstatement and backwages, among others. Reinstatement
restores the employee who was unjustly dismissed to the position from which he
was removed, that is, to his status quo ante dismissal, while the grant of backwages
allows the same employee to recover from the employer that which he had lost by
way of wages as a result of his dismissal.
These twin remedies — reinstatement and payment of backwages — make

the dismissed employee whole who can then look forward to continued employment.
Thus, do these two remedies give meaning and substance to the constitutional right

of labor to security of tenure. Respondents are, therefore, entitled to reinstatement
with full backwages pursuant to Article 279 of the Labor Code, as amended by R.A.
No. 6715.

Topic 9 - MINIMUM LABOR STANDARD BENEFITS
1) SAN MIGUEL CORPORATION, petitioner, vs. THE HONORABLE

COURT OF APPEALS-FORMER THIRTEENTH DIVISION, HON.
UNDERSECRETARY JOSE M. ESPAÑOL, JR., Hon. CRESENCIANO
B. TRAJANO, and HON. REGIONAL DIRECTOR ALLAN M.
MACARAYA, respondents.
G.R. No. 146775 January 30, 2002
Facts:
On 17 October 1992, the Department of Labor and Employment (DOLE),
Iligan District Office, conducted a routine inspection in the premises of San Miguel
Corporation (SMC) in Sta. Filomena, Iligan City. It was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent
a copy of the inspection result to SMC and it was received by and explained to its
personnel officer Elena dela Puerta.
SMC contested the findings and DOLE conducted summary hearings on 19

November 1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit
proof that it was paying regular Muslim holiday pay to its employees. Hence, Alan
M. Macaraya, Director IV of DOLE Iligan District Office issued a compliance order,
dated 17 December 1993, directing SMC to consider Muslim holidays as regular
holidays and to pay both its Muslim and non-Muslim employees holiday pay within
thirty (30) days from the receipt of the order.
SMC appealed to the DOLE main office in Manila. However, the appeal was
dismissed for lack of merit and the order of Director Macaraya was affirmed. SMC
went to SC for relief via a petition for certiorari, which the Court referred to the
Court of Appeals. The appellate court modified the order with regards the payment
of Muslim holiday pay from 200% to 150% of the employee's basic salary. Its motion
for reconsideration having been denied for lack of merit, SMC filed a petition for
certiorari before the SC
Issues:
1.) Whether or not public respondents seriously erred and committed grave
abuse of discretion when they granted Muslim Holiday Pay to non-Muslim
employees of SMC.
2.) Whether or not SMC was not accorded with due process of law in the
issuance of the compliance order.
3.) Whether or not regional director Macaraya, undersecretary Trajano and
undersecretary Espanol have jurisdiction in issuing the assailed compliance orders.

Ruling:
The court ruled the issues in negative. Muslim holidays are provided under
Articles 169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise
known as the Code of Muslim Personal Laws, which states:
Art. 169. Official Muslim holidays. - The following are hereby recognized as
legal Muslim holidays:
a) ‗Amun Jadīd (New Year), which falls on the first day of the first lunar
month of Muharram;
b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the
twelfth day of the third lunar month of Rabi-ul-Awwal;
c) Lailatul Isrā Wal Mi‘rāj (Nocturnal Journey and Ascension of the Prophet
Muhammad), which falls on the twenty-seventh day of the seventh lunar
month of Rajab;
d) ‗Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth
lunar month of Shawwal, commemorating the end of the fasting season; and
e) ‗Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth
lunar month of Dhū‘l-Hijja.
Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays
shall be officially observed in the Provinces of Basilan, Lanao del Norte,
Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and
Zamboanga and in such other Muslim provinces and cities as may hereafter
be created; (2) Upon proclamation by the President of the Philippines,
Muslim holidays may also be officially observed in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the

Labor Code, which provides:
Art. 94. Right to holiday pay. –

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 worker‘s faith or religion. In addition, the
1999 Handbook on Workers‘ Statutory Benefits, categorically stated: Considering
that all private corporations, offices, agencies, and entities or establishments

operating within the designated Muslim provinces and cities are required to observe
Muslim holidays, both Muslim and Christians working within the Muslim areas
may not report for work on the days designated by law as Muslim holidays.
On the question regarding the jurisdiction of the Regional Director Allan M.

Macaraya, Article 128, Section B of the Labor Code, as amended by Republic Act
No. 7730, provides: Article 128. Visitorial and enforcement power. -
(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall
have the power to issue compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the
course of the inspection. The Secretary or his duly authorized representative shall
issue writs of execution to the appropriate authority for the enforcement of their
orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary
proofs which were not considered in the course of inspection.
In the case before us, Regional Director Macaraya acted as the duly
authorized representative of the Secretary of Labor and Employment and it was
within his power to issue the compliance order to SMC. In addition, the Court
agrees with the Solicitor General that the petitioner did not deny that it was not
paying Muslim holiday pay to its non-Muslim employees. Indeed, petitioner merely
contends that its non-Muslim employees are not entitled to Muslim holiday pay.
Hence, the issue could be resolved even without documentary proofs. In any case,
there was no indication that Regional Director Macaraya failed to consider any
documentary proof presented by SMC in the course of the inspection.
Anent the allegation that petitioner was not accorded due process, the court
finds that SMC was furnished a copy of the inspection order and it was received by
and explained to its Personnel Officer. Further, a series of summary hearings were
conducted by DOLE on 19 November 1992, 28 May 1993 and 4 and 5 October 1993.
Thus, SMC could not claim that it was not given an opportunity to defend itself.

2) ROLANDO Y. TAN, petitioner, vs. LEOVIGILDO LAGRAMA and THE
HONORABLE COURT OF APPEALS, respondents.
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 backwages 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 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, he is paid a fixed amount for work done, regardless of the
time he spent in accomplishing such work.

3) AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs.
LABOR RELATIONS COMMISSION and J.C. TAILOR SHOP and/or
JOHNNY CO, respondents.
G.R. No. 111042 October 26, 1999
Facts:
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by
private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and
March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. As in the case of the other 100 employees of
private respondents, petitioners were paid on a piece-work basis, according to the
style of suits they made. Regardless of the number of pieces they finished in a day,
they were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private

respondents for illegal dismissal and sought recovery of overtime pay, holiday pay,
premium pay on holiday and rest day, service incentive leave pay, separation pay,
13th month pay, and attorney‘s fees. After hearing, Labor Arbiter found private
respondents guilty of illegal dismissal and accordingly ordered them to pay
petitioners‘ claims. On appeal, the NLRC reversed the decision of the Labor Arbiter.
The NLRC held petitioners guilty of abandonment of work and accordingly
dismissed their claims except that for 13th month pay.
Petitioners allege that they were dismissed by private respondents as they

were about to file a petition with the Department of Labor and Employment
(DOLE) for the payment of benefits such as Social Security System (SSS) coverage,
sick leave and vacation leave. They deny that they abandoned their work.
Issue:
Whether or not the petitioners are entitled to the minimum benefits provided
by law?
Ruling:
Yes. 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.

(2) Those whose time and performance are unsupervised. Here, the
employer‘s control is over the result of the work. Workers on pakyao and takay
basis belong to this group. Both classes of workers are paid per unit accomplished.
Piece-rate payment is generally practiced in garment factories where work is

done in the company premises, while payment on pakyao and takay basis is
commonly observed in the agricultural industry, such as in sugar plantations where
the work is performed in bulk or in volumes difficult to quantify. The petitioners
belong to the first category, i.e., supervised employees.
In this case, private respondents exercised control over the work of

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

with back wages. The Arbiter applied the rule in the Mercury Drug case, according
to which the recovery of back wages should be limited to three years without
qualifications or deductions. Any award in excess of three years is null and void as
to the excess. The Labor Arbiter correctly ordered private respondents to give
separation pay. Considerable time has elapsed since petitioners‘ dismissal, so that
reinstatement would now be impractical and hardly in the best interest of the
parties. In lieu of reinstatement, separation pay should be awarded to petitioners at
the rate of one month salary for every year of service, with a fraction of at least six
(6) months of service being considered as one (1) year. The awards for overtime pay,
holiday pay and 13th month pay are in accordance with our finding that petitioners
are regular employees, although paid on a piece-rate basis. Hence, decision of the
NLRC is set aside.

4) R & E TRANSPORT, INC., and HONORIO ENRIQUEZ, petitioners, vs.
AVELINA P. LATAG, representing her deceased husband, PEDRO M.
LATAG, respondents.
G.R. No. 155214 February 13, 2004
Facts:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961.
However, he was transferred to the petitioner R & E Transport, Inc. upon cessation
of La Mallorca‘s business operations. In January 1995, he got sick and was forced to
apply for partial disability with the SSS, which was then granted. Upon recovery,
he reported back to work in September 1998 but was no longer allowed on account
of his old age. Latag asked the petitioner, through its administrative officer for his
retirement pay pursuant to Republic Act 7641 but he was ignored. Latag filed a case
for payment of his retirement pay before the NLRC.
Upon Pedro Latag‘s death on April 30, 1999, he was substituted by his wife,
the respondent Avelina Latag. Labor Arbiter rendered a decision in favour of Latag.
Petitioner filed the quitclaim and motion to dismiss where the Labor Arbiter issued
an order for Writ of Execution. Petitioners interposed an appeal before NLRC.
Appeal was dismissed for failure to post a cash or surety bond, as mandated by law.
Issue:
Whether or not Latag is entitled to retirement benefits considering she
signed a waiver of quitclaim.
Ruling:
The Supreme Court ruled that the respondent is entitled to retirement
benefits despite of the waiver of quitclaims. This is not to say that all quitclaims are
invalid per se. Courts, however, are wary of schemes that frustrate workers' rights
and benefits, and look with disfavor upon quitclaims and waivers that bargain these
away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R &
E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No.
7641, 30 provides: Retirement. — In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the establishment, an employee
upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age, who has served at
least five (5) years in said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half-month salary
shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5) days of service incentive leaves.

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

5) ASIAN TRANSMISSION CORPORATION, petitioner, vs. The Hon.
COURT OF APPEALS, Thirteenth Division, HON. FROILAN M.
BACUNGAN as Voluntary Arbitrator, KISHIN A. LALWANI, Union,
Union representative to the Panel Arbitrators; BISIG NG ASIAN
TRANSMISSION LABOR UNION (BATLU); HON. BIENVENIDO T.
LAGUESMA in his capacity as Secretary of Labor and Employment;
and DIRECTOR CHITA G. CILINDRO in her capacity as Director of
Bureau of Working Conditions, respondents.
G.R. No. 144664 March 15, 2004
Facts:
The Department of Labor and Employment (DOLE), through Undersecretary
Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993
wherein it clarified, inter alia, that employees are entitled to 200% of their basic
wage on April 9, 1993, whether unworked, which[,] apart from being Good Friday
[and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal
holiday].
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was
both Maundy Thursday and Araw ng Kagitingan.
Despite the explanatory bulletin, petitioner, Asian Transmission Corporation,

opted to pay its daily paid employees only 100% of their basic pay on April 9, 1998.
Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.
The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor

Union (BATLU), and held that Article 94 of the Labor Code provides for holiday pay
for every regular holiday, the computation of which is determined by a legal formula
which is not changed by the fact that there are two holidays falling on one day, like
on April 9, 1998 when it was Araw ng Kagitingan and at the same time was
Maundy Thursday.
In the assailed decision, the Court of Appeals upheld the findings of the
Voluntary Arbitrator.
Issue:
Whether or not daily-paid employees are entitled to be paid for two regular
holidays which fall on the same day.
Ruling:
The Court dismissed the petition and ruled that petitioners should pay its
employees ―200% and not just 100% of their regular daily wages for the unworked
April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and
Maundy Thursday.‖

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

monthly or daily basis. Unlike a bonus, which is a management prerogative, holiday
pay is a statutory benefit demandable under the law.

6) AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO
BAUTISTA, respondent.
G.R. No. 156367 May 16, 2005
Facts:
Respondent Antonio Bautista has been employed by petitioner Auto Bus
Transport Systems, Inc., since May 1995, as driver-conductor with travel routes
Manila-Tuguegarao via Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk
via Baguio. Respondent was paid on commission basis, seven percent (7%) of the
total gross income per travel, on a twice a month basis.
On January 2000, while respondent was driving Autobus No. 114 along Sta.
Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of
Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without
giving any warning. Respondent averred that the accident happened because he
was compelled by the management to go back to Roxas, Isabela, although he had
not slept for almost twenty-four (24) hours, as he had just arrived in Manila from
Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully
paid the amount of P75,551.50, representing thirty percent (30%) of the cost of
repair of the damaged buses and that despite respondent's pleas for reconsideration,
the same was ignored by management. After a month, management sent him a
letter of termination. Thus, on 02 February 2000, respondent instituted a
Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month
pay and service incentive leave pay against Autobus.
On 29 September 2000, based on the pleadings and supporting evidence

presented by the parties, Labor Arbiter decided that the complaint be dismissed
where the respondent must pay to the complainant
Issue:
Whether or not respondent is entitled to service incentive leave.
Ruling:
The respondent is entitled to service incentive leave.
The disposition of the issue revolves around the proper interpretation of

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

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

that the grant of service incentive leave has been delimited by the Implementing
Rules and Regulations of the Labor Code to apply only to those employees not
explicitly excluded by Section 1 of Rule V. According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as "field personnel."
The phrase "other employees whose performance is unsupervised by the

employer" must not be understood as a separate classification of employees to which
service incentive leave shall not be granted. Rather, it serves as an amplification of
the interpretation of the definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot be determined with reasonable
certainty."
The same is true with respect to the phrase "those who are engaged on task
or contract basis, purely commission basis." Said phrase should be related with
"field personnel," applying the rule on ejusdem generis that the general and
unlimited terms are restrained and limited by the particular terms that they follow.
Hence, employees engaged on task or contract basis or paid on purely commission
basis are not automatically exempted from the grant of service incentive leave,
unless, they fall under the classification of field personnel.
What must be ascertained in order to resolve the issue of propriety of the

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

job/service is not supervised by the employer or his representative, the workplace
being away from the principal office and whose hours and days of work cannot be
determined with reasonable certainty; hence, they are paid specific amount for
rendering specific service or performing specific work. If required to be at specific

places at specific times, employees including drivers cannot be said to be field
personnel despite the fact that they are performing work away from the principal
office of the employee.
At this point, it is necessary to stress that the definition of a "field personnel"

is not merely concerned with the location where the employee regularly performs
his duties but also with the fact that the employee's performance is unsupervised by
the employer. As discussed above, field personnel are those who regularly perform
their duties away from the principal place of business of the employer and whose
actual hours of work in the field cannot be determined with reasonable certainty.
Thus, in order to conclude whether an employee is a field employee, it is also
necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to
whether or not the employee's time and performance are constantly supervised by
the employer. Respondent is not a field personnel but a regular employee who
performs tasks usually necessary and desirable to the usual trade of petitioner's
business. Accordingly, respondent is entitled to the grant of service incentive leave.
The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book
III of the Implementing Rules and Regulations provides that "every employee who
has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay."
Service incentive leave is a right which accrues to every employee who has
served "within 12 months, whether continuous or broken reckoned from the date the
employee started working, including authorized absences and paid regular holidays
unless the working days in the establishment as a matter of practice or policy, or
that provided in the employment contracts, is less than 12 months, in which case
said period shall be considered as one year." It is also "commutable to its money
equivalent if not used or exhausted at the end of the year." In other words, an
employee who has served for one year is entitled to it. He may use it as leave days
or he may collect its monetary value. To limit the award to three years, as the
solicitor general recommends, is to unduly restrict such right.

7) SAN MIGUEL CORPORATION, Petitioner, vs. CAROLINE C. DEL
ROSARIO, Respondent.
G.R. Nos. 168194 & 168603 December 13, 2005
Facts:
On April 17, 2000, respondent was employed by petitioner as key account
specialist. On March 9, 2001, petitioner informed respondent that her probationary
employment will be severed at the close of the business hours of March 12, 2001. On
March 13, 2001, respondent was refused entry to petitioner‘s premises. On June 24,
2002, respondent filed a complaint against petitioner for illegal dismissal and
underpayment/non-payment of monetary benefits.
Issue:
Whether or not respondent is a regular employee of petitioner.
Ruling:
Yes. In termination cases, like the present controversy, the burden of proving
the circumstances that would justify the employee‘s dismissal rests with the
employer. The best proof that petitioner should have presented to prove the
probationary status of respondent is her employment contract. None, having been
presented, the continuous employment of respondent as an account specialist for
almost 11 months, from April 17, 2000 to March 12, 2001, means that she was a
regular employee and not a temporary reliever or a probationary employee.
And while it is true that by way of exception, the period of probationary

employment may exceed six months when the parties so agree, such as when the
same is established by company policy, or when it is required by the nature of the
work, none of these exceptional circumstance were proven in the present case.
Hence, respondent whose employment exceeded six months is undoubtedly a
regular employee of petitioner.
Moreover, even assuming that the employment of respondent from April 7,

2000 to September 3, 2000, is only temporary, and that the reckoning period of her
probationary employment is September 4, 2000, she should still be declared a
regular employee because by the time she was dismissed on March 12, 2001, her
alleged probationary employment already exceeded six months, i.e., six months and
eight days to be precise. A worker was found to be a regular employee
notwithstanding the presentation by the employer of a Payroll Authority indicating
that said employee was hired on probation, since it was shown that he was
terminated four days after the 6th month of his purported probationary
employment.
Neither will petitioner‘s belated claim that respondent became a

probationary employee starting October 1, 2000 work against respondent. As

earlier stated, the payroll authorities indicating that respondent‘s probationary
status became effective as of such date are of scant evidentiary value since it does
not show the conformity of respondent. At any rate, in the interpretation of
employment contracts, whether oral or written, all doubts must be resolved in favor
of labor.
Hence, the contract of employment in the instant case, which appears to be

an oral agreement since no written form was presented by petitioner, should be
construed as one vesting respondent with a regular status and security of tenure.
Regarding the argument of redundancy, Redundancy, for purposes of the

Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. Succinctly put,
a position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line or service
activity previously manufactured or undertaken by the enterprise.
The determination that the employee‘s services are no longer necessary or

sustainable and, therefore, properly terminable is an exercise of business judgment
of the employer. The wisdom or soundness of this judgment is not subject to
discretionary review of the Labor Arbiter and the NLRC, provided there is no
violation of law and no showing that it was prompted by an arbitrary or malicious
act. In other words, it is not enough for a company to merely declare that it has
become overmanned. It must produce adequate proof of such redundancy to justify
the dismissal of the affected employees.
The following evidence may be proffered to substantiate redundancy: the

new staffing pattern, feasibility studies/proposal, on the viability of the newly
created positions, job description and the approval by the management of the
restructuring.
In the case at bar, petitioner presented an affidavit of its Sales Manager and
a memorandum of the company both to the effect that there is a need to redeploy its
regular employees and terminate the employment of temporary employees, in view
of an excess in manpower. These documents, however, do not satisfy the
requirement of substantial evidence that a reasonable mind might accept as
adequate to support a conclusion.
Moreover, the lingering doubt as to the existence of redundancy or of

petitioner‘s so called ―restructuring, realignment or reorganization‖ which resulted
in the dismissal of not only probationary employees but also of regular employees, is
highlighted by the non-presentation by petitioner of the required notice to the
DOLE and to the separated employees. If there was indeed a valid redundancy

effected by petitioner, these notices and the proof of payment of separation pay to
the dismissed regular employees should have been offered to establish that there
was excess manpower in petitioner‘s GMA-KAG caused by a decline in the sales
volume.
In balancing the interest between labor and capital, the prudent recourse in
termination cases is to safeguard the prized security of tenure of employees and to
require employers to present the best evidence obtainable, especially so because in
most cases, the documents or proof needed to resolve the validity of the termination,
are in the possession of employers. A contrary ruling would encourage employers to
prevent the regularization of an employee by simply invoking a feigned or
unsubstantiated redundancy program.
Granting that petitioner was able to substantiate the validity of its

reorganization or restructuring, it nevertheless, failed to effect a fair and reasonable
criterion in dismissing respondent. The criteria in implementing a redundancy are:
(a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority.
It is evident from the foregoing that the criterion allegedly used by petitioner
in reorganizing its sales unit was the employment status of the employee. However,
in the implementation thereof, petitioner erroneously classified respondent as a
probationary employee, resulting in the dismissal of the latter. Verily, the absence
of criteria and the erroneous implementation of the criterion selected, both render
invalid the redundancy because both have the ultimate effect of illegally dismissing
an employee.
Considering that respondent was illegally dismissed, she is entitled not only
to reinstatement but also to payment of full back wages, computed from the time
her compensation was actually withheld from her on March 13, 2001, up to her
actual reinstatement. As a regular employee of petitioner from the date of her
employment on April 17, 2000, she is likewise entitled to other benefits, i.e., service
incentive leave pay and 13th month pay computed from such date also up to her
actual reinstatement.
Respondent is not, however, entitled to holiday pay because the records

reveal that she is a monthly paid regular employee. Under Section 2, Rule IV, Book
III of the Omnibus Rules Implementing the Labor Code, employees who are
uniformly paid by the month, irrespective of the number of working days therein,
shall be presumed to be paid for all the days in the month whether worked or not.
Anent attorney‘s fees, in actions for recovery of wages or where an employee was
forced to litigate and thus incurred expenses to protect his rights and interests, a
maximum of 10% of the total monetary award by way of attorney‘s fees is justifiable
under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its

Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. The award of
attorney‘s fees is proper and there need not be any showing that the employer acted
maliciously or in bad faith when it withheld the wages. There need only be a
showing that the lawful wages were not paid accordingly, as in the instant
controversy.

8) CHARLITO PEÑARANDA, Petitioner, vs. BAGANGA PLYWOOD
CORPORATION and HUDSON CHUA, Respondents.
G.R. No. 159577 May 3, 2006
Facts:
Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an
employee of Baganga Plywood Corporation (BPC) to take charge of the operations
and maintenance of its steam plant boiler. In May 2001, Peñaranda filed a
Complaint for illegal dismissal with money claims against BPC and its general
manager, Hudson Chua, before the NLRC.
After the parties failed to settle amicably, the labor arbiter directed the
parties to file their position papers and submit supporting documents.
Peñaranda alleges that he was employed by respondent Banganga on March

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

Philippine laws and is represented herein by its General Manager HUDSON
CHUA, the individual respondent. Respondents allege that complainant's
separation from service was done pursuant to Art. 283 of the Labor Code. The
respondent BPC was on temporary closure due to repair and general maintenance
and it applied for clearance with the Department of Labor and Employment,
Regional Office No. XI, to shut down and to dismiss employees. And due to the
insistence of herein complainant he was paid his separation benefits.
Consequently, when respondent BPC partially reopened in January 2001,

Peñaranda failed to reapply.
The labor arbiter ruled that there was no illegal dismissal and that
petitioner's Complaint was premature because he was still employed by BPC.
Petitioner‘s money claims for illegal dismissal was also weakened by his quitclaim
and admission during the clarificatory conference that he accepted separation
benefits, sick and vacation leave conversions and thirteenth month pay.

Issue:
Whether or not Peñaranda is a regular, common employee entitled to
monetary benefits under Art. 82 of the Labor Code and is entitled to the payment of
overtime pay and other monetary benefits.
Ruling:
The petitioner is not entitled to overtime pay and other monetary benefits.
The Court disagrees with the NLRC's finding that petitioner was a
managerial employee. However, petitioner was a member of the managerial staff,
which also takes him out of the coverage of labor standards. Like managerial
employees, officers and member of the managerial staff are not entitled to the
provisions of law on labor standards.
The Implementing Rules of the Labor Code define members of a managerial

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

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

The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that
petitioner was a member of the managerial staff. His duties and responsibilities
conform to the definition of a member of a managerial staff under the Implementing
Rules.
Petitioner supervised the engineering section of the steam plant boiler. His
work involved overseeing the operation of the machines and the performance of the
workers in the engineering section. This work necessarily required the use of
discretion and independent judgment to ensure the proper functioning of the steam
plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.
Noteworthy, even petitioner admitted that he was a supervisor. In his

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

9) 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.
Ruling:
Leyte IV Electric Cooperative is not liable for underpayment of holiday pay.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal
interpretation of the CBA provisions that the holiday pay be reflected in the payroll
slips. Such literal interpretation ignores the admission of respondent in its Position
Paper that the employees were paid all the days of the month even if not worked.
This ruling was applied in Wellington Investment and Manufacturing

Corporation v. Trajano, Producers Bank of the Philippines v. National Labor
Relations Commission. In this case, the monthly salary was fixed by Wellington to
provide for compensation for every working day of the year including the holidays
specified by law — and excluding only Sundays. In fixing the salary, Wellington
used what it called the "314 factor"; that is, it simply deducted 51 Sundays from the
365 days normally comprising a year and used the difference, 314, as basis for
determining the monthly salary. The monthly salary thus fixed actually covered
payment for 314 days of the year, including regular and special holidays, as well as
days when no work was done by reason of fortuitous cause, such as transportation
strike, riot, or typhoon or other natural calamity, or cause not attributable to the
employees.

It was also applied in Odango v. National Labor Relations Commission,
where Court ruled that the use of a divisor that was less than 365 days cannot
make the employer automatically liable for underpayment of holiday pay. Thus, the
minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays
and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant
that the employees were deprived of their holiday pay for some or all of the ten legal
holidays. The 304-day divisor used by the employer was clearly above the minimum
of 287 days.
In this case, the employees are required to work only from Monday to Friday.
Thus, the minimum allowable divisor is 263, which is arrived at by deducting 51 un-
worked Sundays and 51 un-worked Saturdays from 365 days. Considering that
petitioner used the 360-day divisor, which is clearly above the minimum,
indubitably, petitioner's employees are being given their holiday pay. Thus, the
Voluntary Arbitrator should not have simply brushed aside petitioner's divisor
formula. In granting respondent's claim of non-payment of holiday pay, a "double
burden" was imposed upon petitioner because it was being made to pay twice for its
employees' holiday pay when payment thereof had already been included in the
computation of their monthly salaries.

10) BAHIA SHIPPING SERVICES, INC., petitioner, vs. REYNALDO
CHUA, respondent
G.R. No. 162195 April 8, 2008 citing Cagampan vs. NLRC, 195 SCRA 533
[1998]
Facts:
Reynaldo Chua, herein respondent, was under the employ of Bahia Shipping
Services, Inc., herein petitioner, as a restaurant waiter on board the M/S Black
Watch , a luxury cruise ship liner. His employment is pursuant to a Philippine
Overseas Employment Administration (POEA) approved employment contract
dated October 9, 1996 for a period of nine (9) months from October 18, 1996 to July
17, 1997.
On October 18, 1996, respondent, on board the cruise ship, left Manila for
Heathrow, England. About four months into his employment, or on February 15,
1997, responded reported to work an hour and a half (1 ½) late. Due to the incident,
respondent was issued a warning-termination form by the master of the cruise ship,
Thor Fleten on February 17, 1997, who likewise conducted an inquisitorial hearing
to investigate the incident on March 8, 1997.
Thereafter, on March 9, 1997, respondent was dismissed from service on the

strength of an unsigned and undated notice of dismissal. Attached to the dismissal
notice is the alleged minutes or records of the investigation and hearing.
On March 24, 1997, respondent filed a complaint for illegal dismissal and
other monetary claims. He claims that he was underpaid in the amount of
US$110.00 per month for a period of five (5) months, since he was only paid
US$300.00 per month, instead of US$410.00 per month, which was stipulated in
his contract. Aside from underpayment, he alleged that US$20.00 per month was
also deducted from his salary by petitioner for union dues.
Issue:
In the computation of the award, should the ―guaranteed overtime‖ pay per
month be included as part of his salary?
Ruling:
There is no factual or legal basis in the inclusion of his "guaranteed overtime"
pay into his monthly salary computation for the entire unexpired period of his
contract.
The Court ruled in Cagampan v. National Labor Relations Commission, that

although an overseas employment contract may guarantee the right to overtime
pay, entitlement to such benefit must first be established, otherwise the same
cannot be allowed.

Petitioner‘s contention that there is no factual or legal basis for the inclusion
of said amount since respondent‗s repatriation is well-taken.

11) PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY
DIVISION WORKERS ORGANIZATION (PSTMSDWO), represented
by its President, RENE SORIANO, Petitioner, vs. PNCC SKYWAY
CORPORATION, Respondent.
G.R. No. 171231 February 17, 2010
Facts:
Petitioner PNCC Skyway Corporation Traffic Management and Security
Division Workers' Organization (PSTMSDWO) is a labor union duly registered with
the Department of Labor and Employment (DOLE). Respondent PNCC Skyway
Corporation is a corporation duly organized and operating under and by virtue of
the laws of the Philippines. On November 15, 2002, petitioner and respondent
entered into a Collective Bargaining Agreement (CBA) incorporating the terms and
conditions of their agreement which included vacation leave and expenses for
security license provisions.
A memorandum was passed by the respondents scheduling the leaves of the

laborers. Petitioner objected to the implementation of this memorandum and
contended that their union members have the preference in scheduling their
vacation leave. On the other hand, respondent argued that Article VIII, Section 1
(b) gives the management the final say regarding the vacation leave schedule of its
employees. Respondent may take into consideration the employees' preferred
schedule, but the same is not controlling.
Issue:
Whether or not it is the prerogative of PNCC to schedule leaves of its
employees.
Ruling:
Yes. The rule is that where the language of a contract is plain and
unambiguous, its meaning should be determined without reference to extrinsic facts
or aids. The intention of the parties must be gathered from that language, and from
that language alone. Stated differently, where the language of a written contract is
clear and unambiguous, the contract must be taken to mean that which, on its face,
it purports to mean, unless some good reason can be assigned to show that the
words used should be understood in a different sense.
In the case at bar, the contested provision of the CBA is clear and
unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that the
scheduling of vacation leave shall be under the option of the employer. The
preference requested by the employees is not controlling because respondent retains
its power and prerogative to consider or to ignore said request. Thus, if the terms of
a CBA are clear and leave no doubt upon the intention of the contracting parties,

the literal meaning of its stipulation shall prevail. In fine, the CBA must be strictly
adhered to and respected if its ends have to be achieved, being the law between the
parties.

12) RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY,
Petitioners, vs. DOMINGO Z. YBAROLA, JR. and ALFONSO E.
RIVERA, JR., Respondents.
G.R. No. 198662 September 12, 2012
Facts:
Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired
on June 15, 1977 and June 1, 1983, respectively, by RMN. They eventually became
account managers, soliciting advertisements and servicing various clients of RMN.
The respondents‘ services were terminated as a result of RMN‘s

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

complaints (which were later consolidated) against RMN and its President, Eric S.
Canoy, for illegal dismissal with several money claims, including attorney‘s fees.
They indicated that their monthly salary rates were P 60,000.00 for Ybarola and P
40,000.00 for Rivera.
The respondents argued that the release/quitclaim they executed should not
be a bar to the recovery of the full benefits due them; while they admitted that they
signed release documents, they did so due to dire necessity.
The petitioners denied liability, contending that the amounts the respondents
received represented a fair and reasonable settlement of their claims, as attested to
by the release/quitclaim affidavits which they executed freely and voluntarily. They
belied the respondents‘ claimed salary rates, alleging that they each received a
monthly salary of P 9,177.00, as shown by the payrolls.
The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint,
but ordered the payment of additional separation pay to the respondents – P
490,066.00 for Ybarola and P 429,517.55 for Rivera.
On appeal by the petitioners to the National Labor Relations Commission

(NLRC), the NLRC set aside the labor arbiter‘s decision and dismissed the
complaint for lack of merit. It ruled that the withholding tax certificate cannot be
the basis of the computation of the respondents‘ separation pay as the tax document
included the respondents‘ cost-of-living allowance and commissions; as a general
rule, commissions cannot be included in the base figure for the computation of the
separation pay.

The CA granted the petition and set aside the assailed NLRC dispositions. It
reinstated the labor arbiter‘s separation pay award, rejecting the NLRC‘s ruling
that the respondents‘ commissions are not included in the computation of their
separation pay. It pointed out that in the present case, the respondents earned their
commissions through actual market transactions attributable to them; these
commissions, therefore, were part of their salary.
The appellate court declared the release/quitclaim affidavits executed by the

respondents invalid for being against public policy, citing two reasons: (1) the terms
of the settlement are unconscionable; the separation pay the respondents received
was deficient by at least P 400,000.00 for each of them; and (2) the absence of
voluntariness when the respondents signed the document, it was their dire
circumstances and inability to support their families that finally drove them to
accept the amount the petitioners offered. Significantly, they dallied and it took
them three months to sign the release/quitclaim affidavits.
Issue:
Whether or not the release/quitclaim affidavits are invalid for being against
public policy.
Ruling:
Release/Quitclaim; Separation pay. The release/quitclaim affidavits are
invalid for being against public policy for two reasons: (1) the terms of the
settlement are unconscionable; the separation pay for termination due to
reorganization/restructuring was deficient by Php400,000.00 for each employee;
they were given only half of the amount they were legally entitled to; and (2) the
absence of voluntariness when the employees signed the document, it was their dire
circumstances and inability to support their families that finally drove them to
accept the amount offered. Without jobs and with families to support, they dallied
in executing the quitclaim instrument, but were eventually forced to sign given
their circumstances. To be sure, a settlement under these terms is not and cannot
be a reasonable one, given especially the respondent‘s length of service – 25 years
for Ybarola and 19 years for Rivera.

13) ROBINA FARMS CEBU/UNIVERSAL ROBINA CORPORATION,
Petitioner, vs. ELIZABETH VILLA, Respondent.
G.R. No. 175869 April 18, 2016
Facts:
Employer Robina Farms is appealing the decision of the NLRC making it
liable for illegal dismissal of Elizabeth Villa.
Respondent Villa brought an action against petitioner Robina Farms for

illegal suspension, illegal dismissal, nonpayment of overtime benefits and
nonpayment of service incentive leave.
Respondent was a sales clerk with the company since August 1981. In the
later part of 2001, petitioner enticed her to avail of the company‘s special retirement
program. On March 2, 2002 she received a memorandum from Lily Ngochua
requiring her to explain her failure to issue invoices for unhatched eggs for the
months of January and February of that year. She explained that the delivery
receipts were delayed and overlooked; despite her explanation she was suspended
for 10 days of March 8, 2002 to March 19, 2002.
When she returned, she was advised to cease working because her
application for retirement had been approved; and then subsequently disapproved;
and she was then advised to tender her resignation with a request for financial
assistance. She manifested her intention to return to work, but petitioner had
replaced her with another employee, confiscated her gate pass and prevented her
from entering the premises ever again.
The petitioner asserts that she violated the company rule on ―timely issuance
of the invoices‖. She was suspended because the delay resulted in a delay of
payment by the buyers, which depended on the receipt of the invoices. Her
application for retirement was denied because ―management did not approve the
benefits equivalent to 86% of her salary rate she applied for, but only 1/2 month for
every year of service.
Issue:
Whether Villa was 1.) illegally dismissed, 2.) entitled to overtime, and 3.)
entitled to service incentive leave.
Ruling:
1. Yes, she was illegally dismissed. The advice of Ngochua and De Guzman
for Villa to resign and instead to request for financial assistance was a strong and
unequivocal indication of the petitioners desire to sever the employer-employee
relationship.

The desire of Villa to retire does not evidence of her intention to sever the
relationship as it was enticed to her as a promo. In that she believed she receive a
greater benefit from petitioner company‘s offer. Hence, her consent cannot be
deemed to have been knowingly and freely given.
2. No, she is not entitled to overtime pay.
Entitlement to overtime pay must be ―established by proof‖ that overtime

work was actually performed. The burden of proof rests on the employee. Daily
Time Records (DTR) does not substantially prove actual performance beyond eight
(8) hours. There must be ―prior authorization―, without which invalidates the claim
to the benefit
Section 4 (c) Omnibus Rules Implementing the Labor Code states that: ―If the
work performed was necessary, or if benefitted the employer, or the employee could
not abandon his work at the end of normal working hours because he had no
replacement, all the time spent for such work shall be considered as hours worked,
if work was with the knowledge of the employer or his immediate supervisor.‖
(3) Yes, she is entitled to Service Incentive Leave.
Grant of vacation or sick leave with pay of at least five days could be credited
as compliance with the duty to pay service incentive leave. However, the employer
must still prove it fully paid the accrued service incentive leave pay.
Evidence of the pay should have been presented at before the decision of the Labor
Arbiter, not after it of during appeal. Such practice is not tolerated.

25) HILARIO DASCO, REYMIR PARAFINA, RICHARD PARAFINA,
EDILBERTO ANIA, MICHAEL ADANO, JAIME BOLO, RUBEN E. GULA,
ANTONIO CUADERNO and JOVITO CATANGUI, petitioners, vs.
PHILTRANCO SERVICE ENTERPRISES, INC./CENTURION SOLANO,
Manager, respondents.
G.R. No. 211141, June 29, 2016
Facts: T
he petitioners, Dasco et al, are drivers of the public utility transportation

company – Philtranco Service Enterprise (respondents). For four years, 2006 to
2010, the petitioners were bus drivers and/or conductors of this company; route is
from Manila to Bicol, Visayas, and Mindanao (vice versa).
The petitioners then filed a complaint against the respondents alleging the
following: (1) that they are supposed to be considered as regular employees already
since they have been working for the company for several years, (2) they work for 2
to 5 days without overtime pay, (3) they can‘t be considered as field personnel
because their trips are monitored from the start to finish, (4) they have never been
given their service incentive leave since the time they were hired by the
respondents.
The respondents on the other hand alleged the following: (1) the drivers were
paid PHP 0.49 per kilometer run, or the minimum wage, whichever is higher, (2)
the drivers are considered seasonal employees since their employment is for a fixed
period, and they were only hired if the need arises, (3) the drivers aren‘t entitled to
service incentive leave since they are considered as field personnel.
The Labor Arbiter ruled in favor of the respondents, but ruled that the
petitioners are considered regular employees. The National Labor Relations
Commission ruled in favor of the petitioners. The Court of Appeals ruled in favor of
the respondents.
Issue:
1. Whether or not the bus drivers are considered field personnel.
2. Whether or not the bus drivers are entitled to service incentive leave.

Ruling:
1. No, the bus drivers are not considered field personnel.
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.
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.
In this case, the bus drivers can‘t be considered as field personnel because they
are under control and supervision of the bus company while in the performance of
their work based on the facts: (1) the petitioners, as bus drivers and/or conductors,
are directed to transport their passengers at a specified time and place; (2) they are
not given the discretion to select and contract with prospective passengers; (3) their
actual work hours could be determined with reasonable certainty, as well as their
average trips per month; and (4) the respondents supervised their time and
performance of duties.
2. Yes, the drivers are entitled to service incentive leave because they are
considered as regular employees since they perform tasks which are directly
and necessarily connected with the respondents' business.

26) HSY MARKETING LTD., CO., petitioner, vs. VIRGILIO O.
VILLASTIQUE, respondent
G.R. No. 219569, August 17, 2016
Facts:
The petitioner, HSY Marketing Ltd. owns Fabulous Jeans & Shirt & General
Merchandise (Fabulous Jeans). The petitioner hired the respondent, Virgilio
Villastique as field driver.
One day, when the driver was tasked to deliver some merchandise, he met an
accident on the way; he bumped a pedestrian named Ryan Dorataryo. Fabulous
Jeans shouldered the hospitalization and medical fees of the pedestrian, and told
the driver to reimburse the company for the expenses paid. The driver, however,
didn‘t reimburse the hospitalization fees spent by Fabulous Jeans.
The driver was allegedly required to resign by Fabulous Jeans. A few days
after this, when the driver wanted to collect his salary, he was told that his salary
was withheld because of his refusal to resign. Convinced that he was already
terminated, the driver filed a complaint against Fabulous Jeans and its owner for
illegal dismissal with money claims.
Fabulous Jeans on the other hand contended that the driver has committed
various violations while still in the company, was found to be a reckless and
negligent driver by his superior and his fellow employees, and that after Fabulous
Jeans paid the hospitalization and medical fees, the driver refused to work probably
to avoid paying the hospitalization and medical fees. Fabulous Jeans contends that
the money claims shouldn‘t prosper since it was the driver himself who refused to
report for work.
The Labor Arbiter, National Labor Relations Commission, and the Court of
Appeals ruled in favor of Fabulous Jeans.
Issue:
Whether or not the respondent, Virgilio Villastique is entitled to service

incentive leave.

Ruling:
Yes, Villastique is entitled to service incentive leave.
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 [(1)] 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 (1) year is entitled to it. He may use it as leave
days or he may collect its monetary value.
Company drivers who are under the control and supervision of management
officers are considered regular employees, and are entitled to service incentive
leave. Respondent is not a field personnel because of the nature of his job as a
company driver. Expectedly, respondent is directed to deliver the goods at a
specified time and place and he is not given the discretion to solicit, select, and
contact prospective clients. Respondent in his Position Paper claimed that he was
required to report for work from 8:00 a.m. to 8:00 p.m. at the company's store.

27) DE LA SALLE ARANETA UNIVERSITY, PETITIONER, vs. JUANITO C.
BERNARDO, RESPONDENT.
G.R. No. 190809, February 13, 2017
Facts:
On February 26, 2004, Bernardo filed a complaint against DLS-AU and its
owner/manager, Dr. Oscar Bautista (Dr. Bautista), for the payment of retirement
benefits.
Bernardo alleged that he started working as a part-time professional lecturer

at DLS-AU (formerly known as the Araneta University Foundation) on June 1, 1974
for an hourly rate of P20.00. Bernardo taught for two semesters and the summer for
the school year 1974-1975. Bernardo then took a leave of absence from June 1, 1975
to October 31, 1977 when he was assigned by the Philippine Government to work in
Papua New Guinea.
When Bernardo came back in 1977, he resumed teaching at DLS-AU until

October 12, 2003, the end of the first semester for school year 2003-2004. Bernardo's
teaching contract was renewed at the start of every semester and summer.
However, on November 8, 2003, DLS-AU informed Bernardo through a

telephone call that he could not teach at the school anymore as the school was
implementing the retirement age limit for its faculty members. As he was already
75 years old, Bernardo had no choice but to retire. At the time of his retirement,
Bernardo was being paid P246.50 per hour.
Bernardo immediately sought advice from the DOLE regarding his

entitlement to retirement benefits after 27 years of employment. In letters dated
January 20, 2004 and February 3, 200, the DOLE, through its Public Assistance
Center and Legal Service Office, opined that Bernardo was entitled to receive
benefits under Republic Act No. 7641, otherwise known as the "New Retirement
Law," and its Implementing Rules and Regulations.
Yet, Dr. Bautista, in a letter dated February 12, 2004, stated that Bernardo
was not entitled to any kind of separation pay or benefits. Dr. Bautista explained to
Bernardo that as mandated by the DLS-AU's policy and Collective Bargaining
Agreement (CBA), only full-time permanent faculty of DLS-AU for at least five
years immediately preceding the termination of their employment could avail
themselves of the post--employment benefits. As part-time faculty member,
Bernardo did not acquire permanent employment under the Manual of Regulations
for Private Schools, in relation to the Labor Code, regardless of his length of service.

Issues:
1.) Are part-time employees excluded from the coverage of those entitled to
retirement benefits under RA 7641?
2.) Has a claim for retirement benefits filed beyond the period provided for
under Art. 291 of the Labor Code prescribed?
Ruling:
1) Yes. Bernardo‘s employment with DLS-AU had always been for a fixed-
term and his contracts of employment with the school were valid, legal, and
binding. Based on RA 7641, its Implementing Rules and Secretary Quisumbing‘s
Labor Advisory, Bernardo, as a part-time employee of DLS-AU, is entitled to
retirement benefits. The general coverage of RA 7641 is broad enough to encompass
all private sector employees, and part-time employees are not among those
specifically exempted from the law.
2) Bernardo‘s right to retirement benefits and the obligation of DLS-AU to

pay such benefits are already established under Article 302 [287] of the Labor Code,
as amended by RA 7641. However, there was a violation of Bernardo‘s right only
after DLS-AU informed him that the university no longer intended to offer him
another contract of employment, and already accepting his separation from service,
Bernardo sought his retirement benefits, but was denied by the school. Therefore,
the cause of action for Bernardo‘s retirement benefits only accrued after the refusal
of DLS-AU to pay him the same, clearly expressed in Dr. Bautista‘s letter dated
February 12, 2004. Hence, Bernardo‘s complaint, filed with the NLRC on February
26, 2004, was filed within the three-year prescriptive period provided under Article

Topic 10 - OTHER SPECIAL BENEFITS
1) ROGELIO REYES, Petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, Fifth Division, and UNIVERSAL ROBINA
CORPORATION GROCERY DIVISION, Respondents.
G.R. No. 160233 August 8, 2007 citing Boie Takeda Chemicals vs. Dela
Serna, 228 SCRA 329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380
[1995]
Facts:
Petitioner was employed as a salesman at private respondent's Grocery
Division in Davao City on August 12, 1977. He was eventually appointed as unit
manager of Sales Department-South Mindanao District, a position he held until his
retirement on November 30, 1997. Thereafter, he received a letter regarding the
computation of his separation pay. Insisting that his retirement benefits and 13th
month pay must be based on the average monthly salary of P42,766.19, which
consists of P10,919.22 basic salary and P31,846.97 average monthly commission,
petitioner refused to accept the check issued by private respondent in the amount of
P200,322.21. Instead, he filed a complaint before the arbitration branch of the
NLRC for retirement benefits, 13th month pay, tax refund, earned sick and
vacation leaves, financial assistance, service incentive leave pay, damages and
attorney's fees.
Petitioner contends that the commissions form part of the basic salary, citing
the case of Philippine Duplicators, Inc. v. National Labor Relations Commission,
wherein the Court held that commissions earned by salesmen form part of their
basic salary. Private respondent counters that petitioner knew that the overriding
commission is not included in the basic salary because it had not been considered as
such for a long time in the computation of the 13th month pay, leave commissions,
absences and tardiness.
Issue:
Whether or not the overriding commission is included in the computation of
the retirement benefits and 13th month pay?
Ruling:
The Court in the Resolution dated February 15, 1995 in the Philippine
Duplicators case had clarified any seeming inconsistencies between Philippine
Duplicators and Boie-Takeda.
The Court thus clarified that in Philippine Duplicators, the salesmen‘s

commissions, comprising a predetermined percentage of the selling price of the

goods sold by each salesman, were properly included in the term basic salary for
purposes of computing the 13th month pay. The salesmen‘s commissions 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 this case, SC ruled that commissions should be excluded. The commissions

which Reyes 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.

2) ARCO METAL PRODUCTS, CO., INC., and MRS. SALVADOR UY,
petitioners, vs. SAMAHAN NG MGA MANGGAGAWA SA ARCO
METAL-NAFLU (SAMARM-NAFLU), respondent.
G.R. No. 170734 May 14, 2008
Facts:
Petitioner is a company engaged in the manufacture of metal products,
whereas respondent is the labor union of petitioner‘s rank and file employees.
Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave
encashment of three union members in amounts proportional to the service they
actually rendered in a year, which is less than a full twelve (12) months.
Respondent protested the prorated scheme, claiming that on several occasions
petitioner did not prorate the payment of the same benefits to seven (7) employees
who had not served for the full 12 months. According to respondent, the prorated
payment violates the rule against diminution of benefits under Article 100 of the
Labor Code. Thus, they filed a complaint before the National Conciliation and
Mediation Board (NCMB).
Issue:
Whether or not the grant of 13th month pay, bonus, and leave encashment in
full regardless of actual service rendered constitutes voluntary employer practice
and, consequently, whether or not the prorated payment of the said benefits
constitute diminution of benefits under Article 100 of the Labor Code.
Ruling:
Any benefit and supplement being enjoyed by employees cannot be reduced,
diminished, discontinued or eliminated by the employer. The principle of non-
diminution of benefits is founded on the Constitutional mandate to "protect the
rights of workers and promote their welfare and to afford labor full protection. Said
mandate in turn is the basis of Article 4 of the Labor Code which states that all
doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations shall be rendered in favor of labor.
Jurisprudence is replete with cases which recognize the right of employees to

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

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

3) UNIVERSAL ROBINA SUGAR MILLING CORPORATION
(URSUMCO) and/or RENATO CABATI, as Manager, Petitioners, vs.
AGRIPINO CABALLEDA and ALEJANDRO CADALIN, Respondents.
G.R. No. 156644 July 28, 2008
Facts:
Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a
domestic corporation engaged in the sugar milling business and petitioner Renato
Cabati is URSUMCO's manager. Respondent Agripino Caballeda (Agripino) worked
as welder for URSUMCO from March 1989 until June 23, 1997 with a salary of
P124.00 per day, while respondent Alejandro Cadalin (Alejandro) worked for
URSUMCO as crane operator from 1976 up to June 15, 1997 with a salary of
P209.30 per day.
On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a

Memorandum establishing the company policy on ―Compulsory Retirement‖
(Memorandum) of its employees. The memorandum provides that all employees
corporate-wide who attain 60 years of age on or before April 30, 1991 shall be
considered retired on May 31, 1991.
On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a
legitimate labor organization and the recognized sole and exclusive bargaining
representative of all the monthly and daily paid employees of URSUMCO, of which
Alejandro was a member, entered into a Collective Bargaining Agreement (CBA).
Article XV of the said CBA particularly provided that the retirement benefits of the
members of the collective bargaining unit shall be in accordance with law.
Agripino and Alejandro (respondents), having reached the age of 60, were
allegedly forced to retire by URSUMCO. Agripino averred that URSUMCO illegally
dismissed him from employment on June 24, 1997 when he was forced to retire
upon reaching the age of sixty (60) years old. Upon the termination of his
employment, he accepted his separation pay and applied for retirement benefits
with the Social Security System (SSS). Earlier, on April 15, 1997, Alejandro turned
60 years old. On May 28, 1997, he filed his application for retirement with
URSUMCO, attaching his birth and baptismal certificates. On July 23, 1997, he
accepted his retirement benefits and executed a quitclaim in favor of URSUMCO.
Thereafter, on August 6, 1997, Agripino filed a Complaint for illegal

dismissal, damages and attorney‘s fees before the Labor Arbiter (LA) of Dumaguete
City. He alleged that his compulsory retirement was in violation of the provisions
of Republic Act (R.A.) 7641 and, was in effect, a form of illegal dismissal.
On August 26, 1997, Alejandro likewise filed a Complaint for illegal

dismissal, underpayment of retirement benefits, damages and attorney‘s fees before

the LA, alleging that he was given only 15 days per year of service by way of
retirement benefits and further assails that his compulsory retirement was
discriminatory considering that there were other workers over sixty (60) years of
age who were allowed to continuously report for work.
Issue:
Whether respondents were illegally terminated on account of compulsory
retirement or the same voluntarily retired.
Ruling:
SC ruled in favor of the respondents.
Retirement is the result of a bilateral act of the parties, a voluntary

agreement between the employer and the employee whereby the latter, after
reaching a certain age, agrees to sever his or her employment with the former. The
age of retirement is primarily determined by the existing agreement between the
employer and the employees. However, in the absence of such agreement, the
retirement age shall be fixed by law. Under Art. 287 of the Labor Code as amended,
the legally mandated age for compulsory retirement is 65 years, while the set
minimum age for optional retirement is 60 years.
In this case, it may be stressed that the CBA does not per se specifically
provide for the compulsory retirement age nor does it provide for an optional
retirement plan. It merely provides that the retirement benefits accorded to an
employee shall be in accordance with law. Thus, we must apply Art. 287 of the
Labor Code which provides for two types of retirement: (a) compulsory and (b)
optional. The first takes place at age 65, while the second is primarily determined
by the collective bargaining agreement or other employment contract or employer's
retirement plan. In the absence of any provision on optional retirement in a
collective bargaining agreement, other employment contract, or employer's
retirement plan, an employee may optionally retire upon reaching the age of 60
years or more, but not beyond 65 years, provided he has served at least five years in
the establishment concerned. That prerogative is exclusively lodged in the
employee.
Indubitably, the voluntariness of the respondents' retirement is the meat of

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

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

retirement benefit. Thus, it is clear from the decisions of the LA, NLRC and CA that
petitioners are still liable to pay Alejandro the differential on his retirement
benefits. On the other hand, Agripino was actually and totally deprived of his
retirement benefit.
Moreover, the petitioners, not the respondents, have the burden of proving
that the quitclaim was voluntarily entered into. In previous cases, we have
considered, among others, the educational attainment of the employees concerned
in upholding the validity of the quitclaims which they have executed in favor of
their employers.

4) LOURDES A. CERCADO, Petitioner, vs. UNIPROM, INC.,
Respondent.
G.R. No. 188154 October 13, 2010
Facts:
Petitioner Lourdes cerdaco was an employee of UNIPROM Inc. for 22 years
since December 15, 1978. When respondent came up with a retirement plan,
sometime in 1980 and then amended in 2001, which provides that any employee
with a minimum of 20 years of service, regardless of age, may be retired at the
option of the employer. In December 2000, UNIPROM implemented a company-
wide retirement program, including herein petitioner. She was offered an early
retirement package amounting to P171, 982.90 but Cercado rejected the offer.
UNIPROM exercised its option under the retirement plan and decided to
retire petitioner effective February 15, 2001 so she was no longer given any work
assignment after the said date. This prompted the petitioner to file a complaint for
illegal dismissal before the Labor Arbiter, alleging that UNIPROM did not have
abona fide retirement plan, and even if there was, she didn‗t consent thereto.
Respondent averred that Cercado was automatically covered by the retirement plan
when she agreed to the company‗s rules and regulations, and that her retirement
was an exercise of management prerogative.
Issues:
1.) Whether or not UNIPROM has a bona fide retirement plan;
2.) Whether or not petitioner was validly retired pursuant thereto
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 company‗s retirement
plan, which provides that employees who have rendered at least 20 years of service
can be retired at the option of the company. Respondent‗s 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 the ages provided by law must be assented to and accepted by the
latter, otherwise its adhesive imposition will amount to a deprivation of property
without due process. In decided cases, the retirement plans were either embodied in
the CBA, or established after consultations and negotiations with the employees‘
bargaining representative. The consent of the employees to be retired even before
the statutory retirement age of 65 years was thus clear and unequivocal.
Acceptance by the employees of an early retirement age must be explicit, voluntary,
free and uncompelled.

5) RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY,
Petitioners, vs. DOMINGO Z. YBAROLA, JR. and ALFONSO E.
RIVERA, JR., Respondents.
G.R. No. 198662 September 12, 2012
Facts:
Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired
on June 15, 1977 and June 1, 1983, respectively, by Radio Mindanao Network
(RMN). They eventually became account managers, soliciting advertisements and
servicing various clients of RMN.
On September 15, 2002, the respondents' services were terminated as a

result of RMN's reorganization/restructuring; they were given their separation pay
— P631,250.00 for Ybarola, and P481,250.00 for Rivera. Sometime in December
2002, they executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate

complaints (which were later consolidated) against RMN and its President, Eric S.
Canoy, for illegal dismissal with several money claims, including attorney's fees.
They indicated that their monthly salary rates were P60,000.00 for Ybarola and
P40,000.00 for Rivera.
Issue:
Whether the amounts the respondents received represented a fair and
reasonable settlement of their claims
Ruling:
The petitioners insist that the respondents' commissions were not part of
their salaries, because they failed to present proof that they earned the commission
due to actual market transactions attributable to them. They submit that the
commissions are profit-sharing payments which do not form part of their salaries.
We are not convinced. If these commissions had been really profit-sharing bonuses
to the respondents, they should have received the same amounts.
Yet, as the NLRC itself noted, Ybarola and Rivera received P372,173.11 and
P586,998.50 commissions, respectively, in 2002. The variance in amounts the
respondents received as commissions supports the CA's finding that the salary
structure of the respondents was such that they only received a minimal amount as
guaranteed wage; a greater part of their income was derived from the commissions
they get from soliciting advertisements; these advertisements are the "products"
they sell. As the CA aptly noted, this kind of salary structure does not detract from
the character of the commissions being part of the salary or wage paid to the
employees for services rendered to the company, as the Court held in Philippine
Duplicators, Inc. v. NLRC.

The petitioners' reliance on our ruling in Talam v. National Labor Relations
Commission, regarding the "proper appreciation of quitclaims," as they put it, is
misplaced. While Talam, in the cited case, and Ybarola and Rivera, in this case, are
not unlettered employees, their situations differ in all other respects.
In Talam, the employee received a valuable consideration for his less than
two years of service with the company; he was not shortchanged and no essential
unfairness took place. In this case, as the CA noted, the separation pay the
respondents each received was deficient by at least P400, 000.00; thus, they were
given only half of the amount they were legally entitled to. To be sure, a settlement
under these terms is not and cannot be a reasonable one, given especially the
respondents' length of service — 25 years for Ybarola and 19 years for Rivera. The
CA was correct when it opined that the respondents were in dire straits when they
executed the release/quitclaim affidavits. Without jobs and with families to support,
they dallied in executing the quitclaim instrument, but were eventually forced to
sign given their circumstances.

6) ELEAZAR S. PADILLO, Petitioner vs. RURAL BANK OF
NABUNTURAN, INC. and MARK S. OROPEZA, Respondents.
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.
Issue:
Whether or not Padillo is entitled to claim for separation and retirement
benefits under the Labor Code?
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.

7) GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal,
DR. JAMES TAN, Petitioner, vs. FILIPINAS A. LAVANDERA,
Respondent.
G.R. No. 177845 August 20, 2014
Facts:
Filipinas 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 attorney‘s fees against GCHS and/or its principal, Dr.
James Tan. She alleged that on May 11, 2001, she was informed that her services
were to be terminated effective May 31, 2001, pursuant to GCHS‘ retirement plan
which gives the school the option to retire a teacher who has rendered at least 20
years of service, regardless of age, with a retirement pay of one-half (½) month for
every year of service. At that time, Filipinas was only 58 years old and still
physically fit to work. She pleaded with GCHS to allow her to continue teaching but
her services were terminated, contrary to the provisions of Republic Act No. (RA)
7641, otherwise known as the ―Retirement Pay Law.‖
The Labor Arbiter dismissed the illegal dismissal case but found the
retirement benefits payable under GCHS plan to be deficient. NLRC reversed LA‘s
award and held that retirement pay should be computed based on her monthly
salary at the time of her retirement. CA modified NLRC‘s decision and ruled that
the computation of ―one-half month salary‖ by equating it to‖22.5 days‖.
Issue:
Whether or not the multiplier ―22.5 days‖ is to be used in computing the
retirement pay differentials of Filipinas.
Ruling:
Yes. RA 7641, which was enacted on December 9, 1992, amended Article 287
of the Labor Code, providing for the rules on retirement pay to qualified private
sector employees in the absence of any retirement plan in the establishment. The
said law states that ―an employee‘s retirement benefits under any collective
bargaining agreement (CBA) and other agreements shall not be less than those
provided‖ under the same – that is, at least one-half (1/2) month salary for every
year of service, a fraction of at least six (6) months being considered as one whole
year – and that ―unless the parties provide for broader inclusions, the term one-half
(1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th

month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.‖
Applicability of the 1/2 month salary provision

1. There is no CBA or other applicable agreement providing for retirement
benefits to employees, or
2. There is a CBA or other applicable agreement providing for retirement
benefits but it is below the requirement set by law.
Verily, the determining factor in choosing which retirement scheme to apply

is still superiority in terms of benefits provided.
In the present case, GCHS has a retirement plan for its faculty and non-
faculty members, which gives it the option to retire a teacher who has rendered at
least 20 years of service, regardless of age, with a retirement pay of one-half (1/2)
month for every year of service. Considering, however, that GCHS computed
Filipinas‘ retirement pay without including one-twelfth (1/12) of her 13th month
pay and the cash equivalent of her five (5) days SIL, both the NLRC and the CA
correctly ruled that Filipinas‘ retirement benefits should be computed in accordance
with Article 287 of the Labor Code, as amended by RA 7641, being the more
beneficent retirement scheme. They differ, however, in the resulting benefit
differentials due to divergent interpretations of the term ―one-half (1/2) month
salary‖ as used under the law.
Moreover, the Court held that the award of legal interest at the rate of 6%
per annum on the amount of P68,150.00 representing the retirement pay
differentials due Filipinas should be reckoned from the rendition of the LA‘s
Decision on March 26, 2002 and not from the filing of the illegal dismissal
complaint.

8) GOODYEAR PHILIPPINES, INC. and REMEGIO M. RAMOS,
Petitioners, vs. MARINA L. ANGUS, Respondent.
G.R. No. 185449 November 12, 2014
Facts:
Angus was employed by Goodyear on November 16, 1966 and occupied the
position of Secretary to the Manager of Quality and Technology. In order to
maintain the viability of its operations in the midst of economic reversals, Goodyear
implemented cost-saving measures which included the streamlining of its
workforce. Angus‘ position was declared as redundant or ―no longer necessary‖. In a
letter by the HR:
―As Company practice, termination due to redundancy or

retrenchment is paid at 45 days' pay per year of service.
Considering, that you have rendered 34.92 years of service to the
Company as of October 18, 2001, and have reached the required
minimum age of 55 to qualify for early retirement, Management has
decided to grant you early retirement benefit at 47 days' per year of
service.‖
―The Company will pay you the following termination benefits on

October 18, 2001: 47 days' pay per year of service (which will come
from the Pension Fund), fractions of 13th and 14th months pay,
longevity pay, emergency leave and any earned and unused vacation
and/or sick leave. The refund of your contributions to the Goodyear
Savings Plan, as well as the Company's share will be handled
separately by Security Bank Corporation, the Administrator of said
Plan.‖
Upon receipt, Angus responded through a letter of even date;

Dear Sirs:
With reference to the attached letter dated September 18, 2001, I
accept Management decision to avail early retirement benefit.
However, I do not agree on the terms stated therein. I suggest I be
given a premium of additional 3 days for every year of service which
is only 6.3% or a total of 50 days. I gathered it is Philippine
industry's practice to give premium to encourage employees to avail
of the early retirement benefit.
Acceptance of this proposal will make my separation from Goodyear
pleasant.
On November 20, 2001, Angus accepted the checks which covered payment of
her retirement benefits computed at 47 days' pay per year of service and other

company benefits. However, she put the following annotation in the
acknowledgement receipt thereof:
Received under protest — amount is not acceptable. Acceptance is on

condition that I will be given a premium of additional 3 days for
every year of service.
Since my service was terminated due to redundancy, I now claim my

separation pay as mandated by law. This is a separate claim from
my early retirement benefit.
Allegedly because of the above-quoted annotation, and also of Angus' refusal

to sign a Release and Quitclaim, petitioners took back the checks.
In response, Ramos wrote her a letter explaining that the company has
already offered her the most favorable separation benefits due to redundancy, that
is, 47 days' pay per year of service instead of the applicable rate of 45 days' pay per
year of service.
Angus reiterated her claim for both termination pay and early retirement
benefits.
On January 17, 2002, Angus finally accepted a check in the amount of

P1,958,927.89 purportedly inclusive of all termination benefits computed at 47 days'
pay per year of service. She likewise executed a Release and Quitclaim in favor of
Goodyear.
On February 5, 2002, Angus filed with the Labor Arbiter a complaint for
illegal dismissal with claims for separation pay, damages and attorney's fees
against petitioners.
In her Position Paper, Angus claimed that her termination by reason of

redundancy was effected in violation of the Labor Code for it was not timely
reported to the DOLE and no separation pay was given to her; that the separation
pay to which she is entitled by law is entirely different from the retirement benefits
that she received; that nothing in the company's Retirement Plan under the CBA,
the CBA itself or the Employment Contract prohibits the grant of more than one
kind of separation pay; and, that she was only forced to sign a quitclaim after
accepting her retirement benefits.
On the other hand, petitioners asseverated in their Position Paper that

Angus was validly dismissed for an authorized cause; that she voluntarily accepted
her termination benefits and freely executed the corresponding quitclaim; that her
receipt of early retirement benefits equivalent to 47 days' pay for every year of

service, which amount is higher than the regular separation pay, had effectively
barred her from recovering separation pay due to redundancy.
Issue:
Is the petitioner entitled to separation pay AND early retirement benefit?
Ruling:
Angus is entitled to both separation pay and early retirement benefit due to
the absence of a specific provision in the CBA prohibiting recovery of both.
An employee is entitled to recover both separation pay and retirement

benefits in the absence of a specific prohibition in the Retirement Plan or CBA. An
employee's right to receive separation pay in addition to retirement benefits
depends upon the provisions of the company's Retirement Plan and/or CBA.
Petitioners allege that there is a provision in the last CBA against the
recovery of both retirement benefits and separation pay. To support their claim,
petitioners submitted a copy of what appears to be a portion of the company CBA
entitled "Retirement Plan, Life Insurance, Physical Disability Pay and Resignation
Pay." Section 1, Article XI thereof provides that the availment of retirement
benefits precludes entitlement to any separation pay.
Angus presented the parties' 2001-2004 CBA, it did not contain any
restriction on the availment of benefits under the company's Retirement Plan AND
of separation pay.
The amount Angus received from petitioners represented only her retirement
pay and not separation.
Petitioners also argue that Angus is not entitled to retirement pay because
she does not meet the requirements enumerated in the Retirement Plan provision of
the CBA. The Court disagrees. While it is obvious that Angus is not entitled to
compulsory retirement as she has not yet reached the age of 60, there is no denying,
that she is qualified for early retirement. Under the provision of the Retirement
Plan of the CBA, a worker who is at least 50 years old and with at least 15 years of
service, and who has been recommended by the President of the Union for early
retirement and duly approved by the Human Resources Director, shall be entitled to
lump sum retirement benefits. Angus has met all these requirements.
Retirement benefits and separation pay are not mutually exclusive.

Retirement benefits are a form of reward for an employee's loyalty and service to an
employer and are earned under existing laws, CBAs, employment contracts and
company policies. Separation pay is that amount which an employee receives at the
time of his severance from employment, designed to provide the employee with the

wherewithal during the period that he is looking for another employment and is
recoverable only in instances enumerated under Articles 283 and 284 of the Labor
Code or in illegal dismissal cases when reinstatement is not feasible. In the case at
bar, Article 283 clearly entitles Angus to separation pay apart from the retirement
benefits she received from petitioner.

9) BANCO DE ORO UNIBANK, INC., Petitioner, v. GUILLERMO C.
SAGAYSAY, Respondent.
G.R. No. 214961, September 16, 2015
Facts:
On May 16, 2006, respondent Guillermo 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 28
years.
On 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. Sagaysay sent several requests to extend his employment but these
requests were denied. Sagaysay then signed Release, Waiver and Quitclaim, dated
October 22, 2010, for and in consideration of P98,376.14.
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.
The Labor Arbiter ruled that Sagaysay was illegally dismissed because he
was forced to avail of an optional retirement at the age of sixty (60) which was
contrary to the provisions of Article 287 of the Labor Code. The NLRC reversed and
set aside the ruling of the LA and concluded that when Sagaysay accepted his
employment with BDO, he assented to the provisions of the retirement plan. The
CA rendered the assailed decision which reversed the NLRC ruling. It opined that
Sagaysay was forced to participate in the retirement plan. Equally, the quitclaim he
executed was not given credence because his subsequent filing of a complaint for
illegal dismissal manifested that he had no intention to relinquish his employment
Issue:
Whether the retirement plan is valid and effective and the mandatory
retirement age of 60 is also binding.
Ruling:
The petition essentially centers on whether the June 1, 1994 retirement plan
is valid and effective against Sagaysay. To resolve this issue, a review of the

relevant laws and jurisprudence regarding the compulsory retirement age is
warranted.
Article 287 of the Labor Code is the primary provision which governs the age
of retirement. Doubtless, under this provision, the retirement age is primarily
determined by the existing agreement or employment contract. Only in the absence
of such an agreement shall the retirement age be fixed. Retirement plans allowing
employers to retire employees who have not yet reached the compulsory retirement
age of 65 years are not per se repugnant to the constitutional guaranty of security of
tenure. By its express language, the Labor Code permits employers and employees
to fix the applicable retirement age at 60 years or below, provided that the
employees' retirement benefits under any CBA and other agreements shall not be
less than those provided therein.
After a judicious study of records, the Court is convinced that Sagaysay was
undeniably informed and had consented to the retirement plan of BDO before his
compulsory retirement.
For four years, from the time he was employed until his retirement and
having actual knowledge of the BDO retirement plan, Sagaysay had every
opportunity to question the same, if indeed he knew it would not be beneficial to
him. Yet, he did not express his dissent. In fact, he recognized in one of his emails
that "the time has come that BDO Retirement Program will be implemented to
those reaching the age of sixty (60).
The NLRC ruling is reinstated.

10) MAUREEN P. PEREZ, Petitioner, v. COMPARTS INDUSTRIES,
INC., Respondent.
G.R. No. 197557, October 05, 2016
Facts:
Perez (petitioner) started her employment with CII (respondent) on 16 July
1988 and became a regular employee thereof on 01 September 1988. After years of
working and after several promotions, she was eventually appointed as Marketing
Manager. She held this position from 1998 up to 10 January 2009, the date when
she resigned from her work.
CII has a retirement program for its managerial employees or officers covered by
"Comparts Industries, Inc. Employees Retirement Plan" (Retirement Plan) that
took effect on 01 June 1999 and was amended on 25 January 2001. Included therein
are provisions relating to optional or early retirement and optional retirement
benefits.
Prior to her resignation, Perez manifested to CII sometime in November 2007

her intention to avail of the optional retirement program since she was already
qualified to retire under it. Her application was denied. In January 2008, while
vacationing in the United States of America (USA), she again filed an application
for optional retirement to take advantage of a job offered to her in the said country.
Still, her application was denied. CII justified its denial of Perez's application
saying that, under the Retirement Plan, it has the option to grant or deny her
application for optional retirement and considering that it is experiencing financial
crisis, it has no choice but to disallow her intention.
Perez maintains that she is entitled to separation pay: (1) primarily through
the optional retirement program under the Retirement Plan having rendered more
than twenty (20) years of service to CII, (2) through a similar optional retirement
program under the CBA which has been likewise extended to other
managerial/middle management employees in several instances, or (3) a
retrenchment program undertaken by CII because of the global financial crisis.
Issue:
Whether or not petitioner is entitled to optional retirement program.
Ruling:
First and foremost, the Court emphasized that termination of employment by
the employee, as in this instance, does not entitle the employee to separation pay.
Separation pay is that amount which an employee receives at the time of his
severance from employment, designed to provide the employee with the
wherewithal during the period that he is looking for another employment and is
recoverable only in instances enumerated under Articles 283 and 284 of the Labor
Code or in illegal dismissal cases when reinstatement is not feasible.

Second, in the matter of Perez's entitlement to optional retirement benefits,
the Court agrees with the NLRC and the appellate court that as a managerial
employee, she is covered by the Retirement Plan for CII Officers which took effect in
1999 and was amended in 2001.
A Retirement Plan in a company partakes the nature of a contract, with the

employer and the employee as the contracting parties. It creates a contractual
obligation in which the promise to pay retirement benefits is made in, consideration
of the continued faithful service of, the employee for the requisite period. Being a
contract, the employer and employee may establish such stipulations, clauses,
terms and conditions as they may deem convenient.
Observably, as stipulated in the Retirement Plan, it is not enough that an

employee of CII who wants to optionally retire meets the conditions for optional
retirement. CII has to give its consent for the optional retirement to operate. In this
case, Perez's application for optional retirement was denied several times as CII
still needs her services. Perez's unilateral act of retiring without the consent of CII
does not bind the latter with the provisions of the Retirement Plan. Therefore, CII
is not liable to give Perez the optional retirement benefits provided therein.
Clearly, the age of retirement is primarily determined by the existing

agreement or employment contract. In the absence of such agreement, the
retirement age shall be fixed by law. Under the law, the mandated compulsory
retirement age is set at 65 years, while the minimum age for optional retirement is
set at 60 years.

11) DE LA SALLE ARANETA UNIVERSITY, PETITIONER, vs.
JUANITO C. BERNARDO, RESPONDENT.
G.R. No. 190809, February 13, 2017
Facts:
On February 26, 2004, Bernardo filed a complaint against DLS-AU and its
owner/manager, Dr. Oscar Bautista (Dr. Bautista), for the payment of retirement
benefits.
Bernardo alleged that he started working as a part-time professional lecturer

at DLS-AU (formerly known as the Araneta University Foundation) on June 1, 1974
for an hourly rate of P20.00. Bernardo taught for two semesters and the summer for
the school year 1974-1975. Bernardo then took a leave of absence from June 1, 1975
to October 31, 1977 when he was assigned by the Philippine Government to work in
Papua New Guinea.
When Bernardo came back in 1977, he resumed teaching at DLS-AU until

October 12, 2003, the end of the first semester for school year 2003-2004. Bernardo's
teaching contract was renewed at the start of every semester and summer.
However, on November 8, 2003, DLS-AU informed Bernardo through a telephone
call that he could not teach at the school anymore as the school was implementing
the retirement age limit for its faculty members. As he was already 75 years old,
Bernardo had no choice but to retire. At the time of his retirement, Bernardo was
being paid P246.50 per hour.
Bernardo immediately sought advice from the DOLE regarding his

entitlement to retirement benefits after 27 years of employment. In letters dated
January 20, 2004 and February 3, 200, the DOLE, through its Public Assistance
Center and Legal Service Office, opined that Bernardo was entitled to receive
benefits under Republic Act No. 7641, otherwise known as the "New Retirement
Law," and its Implementing Rules and Regulations.
Yet, Dr. Bautista, in a letter dated February 12, 2004, stated that Bernardo
was not entitled to any kind of separation pay or benefits. Dr. Bautista explained to
Bernardo that as mandated by the DLS-AU's policy and Collective Bargaining
Agreement (CBA), only full-time permanent faculty of DLS-AU for at least five
years immediately preceding the termination of their employment could avail
themselves of the post-employment benefits. As part-time faculty member,
Bernardo did not acquire permanent employment under the Manual of Regulations
for Private Schools, in relation to the Labor Code, regardless of his length of service.

Issues:
1.) Are part-time employees excluded from the coverage of those entitled to
retirement benefits under RA 7641?
2.) Has a claim for retirement benefits filed beyond the period provided for
under Art. 291 of the Labor Code prescribed?
Ruling:
1) Yes. Bernardo‘s employment with DLS-AU had always been for a fixed-
term and his contracts of employment with the school were valid, legal, and
binding. Based on RA 7641, its Implementing Rules and Secretary Quisumbing‘s
Labor Advisory, Bernardo, as a part-time employee of DLS-AU, is entitled to
retirement benefits. The general coverage of RA 7641 is broad enough to encompass
all private sector employees, and part-time employees are not among those
specifically exempted from the law.
2) Bernardo‘s right to retirement benefits and the obligation of DLS-AU to

pay such benefits are already established under Article 302 [287] of the Labor Code,
as amended by RA 7641. However, there was a violation of Bernardo‘s right only
after DLS-AU informed him that the university no longer intended to offer him
another contract of employment, and already accepting his separation from service,
Bernardo sought his retirement benefits, but was denied by the school. Therefore,
the cause of action for Bernardo‘s retirement benefits only accrued after the refusal
of DLS-AU to pay him the same, clearly expressed in Dr. Bautista‘s letter dated
February 12, 2004. Hence, Bernardo‘s complaint, filed with the NLRC on February
26, 2004, was filed within the three-year prescriptive period provided under Article

12) Editha M. Catotocan, petitioner, vs. Lourdes School of Quezon
City, Inc./Lourdes School, Inc. and Rev. Fr. Cesar F. Acuin, OFM
CAP, Rector, respondents.
G.R. No. 213486 April 26, 2017
Facts:
Petitioner Catotocan started her employment in Lourdes School of Quezon
City (LSQC) in 1971 as a music teacher. By the school year 200-2006, she had
already served for 35 years.
LSQC has a retirement plan providing for retirement at 60 years old or

separation pay depending on the number of years of service. In relation to its
retirement policy, LSQC issued Administrative Order No. 2003-004. The said order
provides that ―An employee may apply for retirement or be retired by the school
when he/she reaches the age of sixty (60) years or when he/she completes thirty (30)
years of service, whichever comes first.‖
Petitioner and other co-employees assailed the said order. They argued that
they do not deserve to be retired and be rehired when they are, in fact, very much
capable of doing their duties and responsibilities.
LSQC retired Petitioner sometime in June 2006 after completing 35 years of

service. Full retirement benefits were given to her computed based on the latest
salary multiplied by the total years of service. Under the school's retirement policy,
60% of her retirement benefit was paid in lump sum by the trustee bank, and the
balance was to be paid in equal monthly pensions over the next three (3) years. 60%
of that amount, or Five Hundred Seventy-One Thousand Seven Hundred and One
Philippine Pesos (Php571,701.00) was credited to her savings account, which she
opened in accordance with the school's retirement policy.
Petitioner was told that if she desires, she may signify in writing her intent
to continue serving the school on a contractual basis. She responded by submitting a
"Letter of Intent" on February 14, 2006. Petitioner was rehired for two school years
as a guidance counselor. When she re-applied for the third time, LSQC no longer
considered her application. Petitioner filed a complaint for illegal dismissal. Both
LA and NLRC dismissed Catotocan‘s complaint. Likewise, the CA dismissed the
petition.
Issue:
Whether or not the receipt of Catotocan of her retirement benefits will not
stop her from pursuing an illegal dismissal complaint against LSQC.

Ruling:
SC denied the petition. LSQC‘s retirement plan is not per se repugnant to the
constitutional guaranty of security of tenure. By its express language, the Labor
Code permits employers and employees to fix the applicable retirement age at 60
years or below, provided that the employees' retirement benefits under any CBA
and other agreements shall not be less than those provided therein.
Catotocan's subsequent actions after her "retirement" are actually

tantamount to her consent to LSQC's retirement policy of retiring her from service
upon serving the school for at least thirty (30) continuous years.
(1) after being notified that she was being retired from service by LSQC, she
opened a savings account with BDO, the trustee bank;
(2) she accepted all the proceeds of her retirement package: the lump sum
and all the monthly payments credited to her account until June 2009; and
(3) upon acceptance of the retirement benefits, there was no notation that she
is accepting the retirement benefits under protest or without prejudice to the
filing of an illegal dismissal case.
Moreover, petitioner‘s correspondence with the respondent following her

"retirement‖ shows her voluntary assent to the latter‘s retirement policy. Said letter
stipulates that ―re-hiring was exclusive only for those employees who have availed
of the retirement benefits or who have been retired by the school but who has not
yet reached 65 years of age.
Thus, since petitioner has availed of this contractual employment which is

exclusively offered only to LSQC's qualified retirees for three (3) consecutive years
following her retirement, she can no longer dispute that she has indeed legitimately
retired from employment, and was not illegally dismissed.
Furthermore, petitioner‘s availment of the re-hiring program of LSQC for

qualified retirees for 3 consecutive years is a supervening event that would reveal
that she has already voluntarily and freely signified her consent to the retirement
policy despite her initial opposition to it.

13) PHILIPPINE AIRLINES, INC., PETITIONER, V. ARJAN T.
HASSARAM, RESPONDENT.
G. R. No. 217730, June 05, 2017
Facts:
Hassaram filed a case against PAL for illegal dismissal and the payment of
retirement benefits, damages, and attorney's fees. He claimed that he had applied
for retirement from PAL in August 2000 after rendering 24 years of service as a
pilot, but that his application was denied. Instead, PAL informed him that he had
lost his employment in the company as of 9 June 1998, in view of his failure to
comply with the Return to Work Order Issued by the Secretary of Labor against
members of the Airline Pilots Association of the Philippines (ALPAP) on 7 June
1998.
Hassaram argued that he was not covered by the Secretary's Return to Work
Order; hence, PAL had no valid ground for his dismissal. In the course of the trial it
was found that Hassaram's purported receipt of retirement benefits in the amount
of P4,456,817.75 pursuant to the PAL-ALPAP Plan.
PAL likewise alleged that, as a consequence of this newly discovered

payment, any claim made by Hassaram for retirement benefits should be deemed
extinguished.
Issues:
1.) Whether the amount received by Hassaram under the PAL-ALPAP
Retirement Plan should be deemed part of his retirement pay together with PAL
Pilots' Retirement Benefit Plan which is another retirement plan aside from PAL-
ALPAP;
2.)Whether Hassaram is entitled to receive retirement benefits under Article
Ruling:
The Supreme Court ruled that Hassaram is entitled to both retirement plans
but seeing Hassaram has received his benefits under the Plan, he is now entitled to
claim only his remaining benefits under the CBA, i.e., the amount of P120,000 (24
years x P5,000) for his 24 years of service to the company. Since the PAL-ALPAP
retirement fund raised from contributions exclusively from [PAL] of amounts
equivalent to 20% of each pilot's gross monthly pay, pilot gets an amount equivalent
to 240% of his gross monthly income for every year of service he rendered to
petitioner. This is in addition to the amount of not less than P100,000.00 that he
shall receive under the 1967 Retirement Plan.

As to the issue of whether or not Hassaram is entitled to receive retirement
benefits under Article 287 of the Labor Code, the petitioner would only be receiving
a retirement pay equivalent to at least one-half (1/2) of his monthly salary for every
year of service, a fraction of at least six (6) months being considered as one whole
year. Which means that, 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 service incentive leave.
Comparing the benefits under the two (2) retirement schemes, it can readily
be perceived that the 22.5 days‘ worth of salary for every year of service provided
under Article 287 of the Labor Code cannot match the 240% of salary or almost two
and a half worth of monthly salary per year of service provided under the PAL
Pilots' Retirement Benefit Plan, which will be further added to the P125,000.00 to
which the petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly
then, it is to the petitioner's advantage that PAL's retirement plans were applied in
the computation of his retirement benefits.

14) MARIA DE LEON TRANSPORTATION, INC., represented by
MA. VICTORIA D. RONQUILLO, petitioner, vs. DANIEL M.
MACURAY, respondent.
G.R. No. 214940, June 6, 2018
Facts:
The petitioner, Alfredo F. Laya, Jr., was hired by one of the respondents –
Philippine Veterans Bank (PVB), as Chief Legal Counsel with a rank of Vice
President. One of the terms and conditions on retirement in the company was that
the normal retirement age is 60 years old. If the employee would want to extend his
service, the employee may extend subject to the approval of the Board, but shall not
be allowed to extend beyond age 65.
On June 14, 2007, the petitioner was informed by PVB through letter that his
retirement would be effective on July 1, 2007. The petitioner asked for an extension
for 2 more years of service. Before the Board could decide on whether to accept his
extension or not, he was allowed to extend his service until final decision by the
Board. However, the Board decided that his request for extension was denied.
According to petitioner Laya, he was only made aware of the retirement plan
of PVB after he had long been employed and was shown a photocopy of the
Retirement Plan Rules and Regulations. But even then, PVB was persistent in its
decision denying the petitioner‘s request for extension of his service. The petitioner
then filed a complaint for illegal dismissal against PVB to protest his unexpected
retirement.
The Labor Arbiter dismissed the complaint for illegal dismissal. However,
PVB was still ordered to pay PHP200,000 to the petitioner by way of reasonable
indemnity. The National Labor Relations Commission affirmed the dismissal of the
case, but deleted the indemnity imposed by the Labor Arbiter. The Court of Appeals
ruled in favor of PVB.
Issue:
Whether or not petitioner Laya was validly retired by PVB at age 60.
Ruling:
Yes, Laya was invalidly retired by PVB.
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.
Although the employer could be free to impose a retirement age lower than
65 years for as long its employees consented, the retirement of the employee whose
intent to retire was not clearly established, or whose retirement was involuntary is
to be treated as a discharge.
Since the details of the retirement plan was only made 5 years after Laya
became the Chief Legal Counsel, and there was no explicit consent from Laya, he is
considered to have been invalidly dismissed by PVB.

Topic 12 –2011 NLRC RULES OF PROCEDURE, AMENDED
1) LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC.,

petitioner, vs. UNIVERSITY OF THE PHILIPPINES, respondent.
G.R. No. 185918, [April 18, 2012], 686 PHIL 191-203
Facts:
The petition is for review on certiorari under Rule 45. Petitioner Lockheed
entered into a contract of security with the University of the Philippines. On 1998,
several of the guards assigned to UP filed a complaint for unpaid wages, 25%
overtime pay, premium pay for rest days and special holidays, holiday pay, service
incentive leave pay, night shift differentials, 13th month pay, refund of cash bond,
refund of deductions for the Mutual Benefits Aids System (MBAS), unpaid wages
from December 16-31, 1998, and attorney's fees.
The Labor Arbiter declared UP solidarily liable. The decision was appealed
but sustained by the NLCR, albeit a few modifications. The parties motion to
reconsider were likewise denied. On July 25, 2005, a Notice of Garnishment 10 was
issued to Philippine National Bank (PNB) UP Diliman Branch for the satisfaction of
the award of P12,142,522.69 (inclusive of execution fee).
On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP

contended that the funds being subjected to garnishment at PNB are
government/public funds. However, the execution of the garnishment was carried
out. UP elevated their case to the court of appeals. On reconsideration, however, the
CA issued the assailed Amended Decision. It held that without departing from its
findings that the funds covered in the savings account sought to be garnished do not
fall within the classification of public funds, it reconsiders the dismissal of the
petition in light of the ruling in the case of National Electrification Administration
v. Morales which mandates that all money claims against the government must
first be filed with the Commission on Audit (COA).
Lockheed appealed this decision to the Supreme Court. Arguing mainly that
the NEA case should not apply and that UP could be both sued and held liable. And
that the quashal of garnishment sought was moot because it had already become
fait accompli.
Issues:
1. Whether or not the NEA Case applies and the funds be garnished
directly bypassing the COA.
2. Whether or not the previous garnishment and withdrawal of funds was
fait accompli.

Ruling:
1. YES.
This Court finds that the CA correctly applied the NEA case. Like NEA, UP
is a juridical personality separate and distinct from the government and has the
capacity to sue and be sued. Thus, also like NEA, it cannot evade execution, and its
funds may be subject to garnishment or levy. However, before execution may be
had, a claim for payment of the judgment award must first be filed with the COA.
(suability does not immediately mean liability).
2. NO.
As to the fait accompli argument of Lockheed, contrary to its claim that there
is nothing that can be done since the funds of UP had already been garnished, since
the garnishment was erroneously carried out and did not go through the proper
procedure (the filing of a claim with the COA), UP is entitled to reimbursement of
the garnished funds plus interest of 6% per annum, to be computed from the time of
judicial demand to be reckoned from the time UP filed a petition for certiorari
before the CA which occurred right after the withdrawal of the garnished funds
from PNB.

2) MARIETTA N. PORTILLO, petitioner, vs. RUDOLF LIETZ, INC.,
RUDOLF LIETZ and COURT OF APPEALS, respondents.
G.R. No. 196539, [October 10, 2012], 697 PHIL 232-250
Facts:
Potillo was hired by Rudolf in Lietz Co. under the condition that Potillo will
not engage in any other gainful employment by himself or with any other company
either directly or indirectly without written consent of Lietz Inc., otherwise Potillo
will be liable for liquidated damages.
Upon his promotion, Potillo signed another letter agreement containing a

―Goodwill Clause‖ stating that:
―…on the termination of his employment and for a period of three (3) years
thereafter, he shall not engage directly or indirectly as employee, manager,
proprietor, or solicitor for himself or others in a similar or competitive business or
the same character of work which he was employed by Lietz Inc. to do and perform.
Should he breach this good will clause of this Contract, he shall pay Lietz Inc. as
liquidated damages the amount of 100% of his gross compensation over the last 12
months.‖
Three (3) years thereafter, on 6 June 2005, Portillo resigned from Lietz Inc.
During her exit interview, Portillo declared that she intended to engage in
businessa rice dealership, selling rice in wholesale.
On 15 June 2005, Lietz Inc. accepted Portillos resignation and reminded her
of the "Goodwill Clause" in the last letter agreement she had signed.
Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller
Philippines, Limited to head its Pharma Raw Material Department. Ed Keller
Limited is purportedly a direct competitor of Lietz Inc.
Meanwhile, Portillos demands from Lietz Inc. for the payment of her
remaining salaries and commissions went unheeded. Lietz Inc. gave Portillo the run
around, on the pretext that her salaries and commissions were still being computed.
Subsequently, Portillo filed a complaint with the National Labor Relations

Commission (NLRC) for non-payment of 1 months salary, two (2) months
commission, 13th month pay, plus moral, exemplary and actual damages and
attorneys fees.
In its position paper, Lietz Inc. admitted liability for Portillos money claims
in the total amount of P110,662.16. However, Lietz Inc. raised the defense of legal
compensation: Portillos money claims should be offset against her liability to Lietz

Inc. for liquidated damages for Portillos alleged breach of the "Goodwill Clause" in
the employment contract when she became employed with Ed Keller Philippines,
Limited.
Issue:
1. Who has jurisdiction over the present controversy?
2. Whether Portillos money claims for unpaid salaries may be offset
against respondents claim for liquidated damages.
Ruling:
1. Jurisdiction belongs to the Civil Courts.
Petitioner seeks protection under the civil laws and claims no benefits under
the Labor Code. The primary relief sought is for liquidated damages for breach of a
contractual obligation. The other items demanded are not labor benefits demanded
by workers generally taken cognizance of in labor disputes, such as payment of
wages, overtime compensation or separation pay. The items claimed are the natural
consequences flowing from breach of an obligation, intrinsically a civil dispute.
Furthermore, non-compete clause, as in the "Goodwill Clause" refers to post-

employment relations of the parties. The "Goodwill Clause" or the "Non-Compete
Clause" is a contractual undertaking effective after the cessation of the employment
relationship between the parties. In accordance with jurisprudence, breach of the
undertaking is a civil law dispute, not a labor law case.
As it is, petitioner does not ask for any relief under the Labor Code. It merely
seeks to recover damages based on the parties contract of employment as redress for
respondents breach thereof. Such cause of action is within the realm of Civil Law,
and jurisdiction over the controversy belongs to the regular courts. More so must
this be in the present case, what with the reality that the stipulation refers to the
postemployment relations of the parties.
2. No, it may not be.
Indeed, the application of compensation in this case is effectively barred by

Article 113 of the Labor Code which prohibits wage deductions except in three
circumstances:
ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of

any person, shall make any deduction from wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to
(c) In cases where the employer is authorized by law or regulations issued

by the Secretary of Labor.

3) BUILDING CARE CORPORATION/LEOPARD SECURITY &
INVESTIGATION AGENCY and/or RUPERTO PROTACIO,
petitioners, vs. MYRNA MACARAEG, respondent.
G.R. No. 198357, [December 10, 2012], 700 PHIL 749-759
Facts:
Petitioners are in the business of providing security services to their clients.
They hired respondent as a security guard beginning August 25, 1996, assigning
her at Genato Building in Caloocan City. However, on March 9, 2008, respondent
was relieved of her post. She was re-assigned to Bayview Park Hotel from March 9-
13, 2008, but after said period, she was allegedly no longer given any assignment.
Thus, on September 9, 2008, respondent filed a complaint against petitioners for
illegal dismissal, underpayment of salaries, non-payment of separation pay and
refund of cash bond. Conciliation and mediation proceedings failed, so the parties
were ordered to submit their respective position papers.
Respondent claimed that petitioners failed to give her an assignment for

more than nine months, amounting to constructive dismissal, and this compelled
her to file the complaint for illegal dismissal. On the other hand, petitioners that
respondent was relieved from her post as requested by the client because of her
habitual tardiness, persistent borrowing of money from employees and tenants of
the client, and sleeping on the job.Respondent filed a complaint for illegal dismissal
with the Labor Arbiter. The Labor Arbiter (LA) in favor of petitioners, holding that
the dismissal of Macaraeg was valid, but ordered the former to pay a certain sum as
financial assistance.The Appeal which respondent filed with the NLRC was for
having been filed out of time. Hence, NLRC declared that the LA's Decision had
become final and executory on June 16, 2009.
Respondent elevated the case to the CA via a petition for certiorari. The CA
reversed and set aside the decision of NLRC and declared Macaraeg to have been
illegally dismissed. Petitioners were ordered to reinstate petitioner without loss of
seniority rights, benefits and privileges; and to pay her backwages and other
monetary benefits during the period of her illegal dismissal up to actual
reinstatement. Petitioners' motion for reconsideration was denied. Hence, the
present petition.
Issue:
Whether the CA erred in liberally applying the rules of procedure and ruling
that respondent's appeal should be allowed and resolved on the merits despite
having been filed out of time.
Ruling:
Yes.

It should be emphasized that the resort to a liberal application, or suspension
of the application of procedural rules, must remain as the exception to the well-
settled principle that rules must be complied with for the orderly administration of
justice. In Marohomsalic v. Cole the Court stated:
While procedural rules may be relaxed in the interest of justice, it is well-

settled that these are tools designed to facilitate the adjudication of cases. The
relaxation of procedural rules in the interest of justice was never intended to be a
license for erring litigants to violate the rules with impunity. Liberality in the
interpretation and application of the rules can be invoked only in proper cases and
under justifiable causes and circumstances.While litigation is not a game of
technicalities, every case must be prosecuted in accordance with the prescribed
procedure to ensure an orderly and speedy administration of justice.
The later case of Daikoku Electronics Phils., Inc. v. Raza, further explained
that:
To be sure, the relaxation of procedural rules cannot be made without any

valid reasons proffered for or underpinning it. To merit liberality, petitioner must
show reasonable cause justifying its non-compliance with the rules and must
convince the Court that the outright dismissal of the petition would defeat the
administration of substantial justice. x x x The desired leniency cannot be accorded
absent valid and compelling reasons for such a procedural lapse. x x
In this case, the justifications given by the CA for its liberality by choosing to
overlook the belated filing of the appeal are, the importance of the issue raised, i.e.,
whether respondent was illegally dismissed; and the belief that respondent should
be "afforded the amplest opportunity for the proper and just determination of his
cause, free from the constraints of technicalities," considering that the belated filing
of respondent's appeal before the NLRC was the fault of respondent's former
counsel. Note, however, that neither respondent nor her former counsel gave any
explanation or reason citingextraordinary circumstances for her lawyer's failure to
abide by the rules for filing an appeal. Respondent merely insisted that she had not
been remiss in following up her case with said lawyer.It is, however, an oft-repeated
ruling that the negligence and mistakes of counsel bind the client. A departure from
thisrule would bring about never- ending suits, so long as lawyers could allege their
own fault or negligence to support the client‘s case and obtain remedies and reliefs
already lost by the operation of law.
It should also be borne in mind that the right of the winning party to enjoy
the finality of the resolution of the case is also an essential part of public policy and
the orderly administration of justice. Hence, such right is just as weighty or equally

important as the right of the losing party to appeal or seek reconsideration within
the prescribed period.

4) ANDREW JAMES MCBURNIE, petitioner,vs.EULALIO GANZON,
EGI-MANAGERS, INC. and E. GANZON, INC., respondents
G.R. Nos. 178034, 178117 & 186984-85 (Resolution), [October 17, 2013],
719 PHIL 680-728
Facts:
On October 4, 2002, McBurnie (McBurnie), an Australian national, instituted
a complaint for illegal dismissal and other monetary claims against Eulalio Ganzon,
EGI-Managers, Inc., and E. Ganzon, Inc., (respondents). McBurnie claimed that on
May 11, 1999, he signed a 5-year employment agreement with the company EGI as
an Executive Vice-President who shall oversee the management of the company
hotels and resorts within the Philippines. He performed work for the company until
sometime in November 1999, when he figured in an accident that compelled him to
go back to Australia while recuperating from his injuries. While in Australia, he
was informed by respondent Ganzon that his services were no longer needed
because their intended project would no longer push through.
The respondents contend that their agreement with McBurnie was to jointly
invest in and establish a company for the management of the hotels. They did not
intend to create an employer-employee relationship, and the execution of the
employment contract that was being invoked by McBurnie was solely for the
purpose of allowing McBurnie to obtain an alien work permit in the Philippines,
and that McBurnie had not obtained a work permit.
On September 30, 2004, the Labor Arbiter (LA) declared McBurnie as having
been illegally dismissed from employment. The respondents filed their
Memorandum of Appeal and Motion to Reduce Bond, and posted an appeal bond in
the amount of P100,000.00. They claimed that an award of more than P60 Million
Pesos to a single foreigner who had no work permit and who left the country for
good one month after the purported commencement of his employment was a patent
nullity.
On March 31, 2005, the NLRC denied the motion to reduce bond explaining
that in cases involving monetary award, an employer seeking to appeal the LA
decision to the Commission is unconditionally required by Art. 223, Labor Code to
post bond equivalent to the monetary award.
The motion for reconsideration was denied, the respondents appealed to the
CA via a Petition for Certiorari and Prohibition (with extremely urgent prayer for
the issuance of a Preliminary Injunction and/or Temporary Restraining Order)
docketed as CA-G.R. SP No. 90845.

The NLRC dismissed their appeal due to respondent's failure to post the
required additional bond. The respondents motion for reconsideration was denied on
June 30, 2006. This prompted respondents to filed with the CA the Petition for
Certiorari docketed as CA-G.R SP No. 95916, which was later consolidated with CA-
G.R. SP No. 90845
The CA granted the respondent's application for a writ of preliminary

injunction on February 16, 2007. It directed the NLRC, McBurnie, and all persons
acting for and under their authority to refrain from causing the execution and
enforcement of the LA decision in favor of McBurnie, conditioned upon the
respondents posting of a bond in the amount of P10,000,000.00. The reconsideration
of issuance of the writ of preliminary injunction sought by McBurnie was denied by
the CA.
McBurnie filed with the Supreme Court a Petition for Review on Certiorari
(G.R. Nos. 178034 and 178117) assailing the CA resolutions that granted the
respondent's; application for the injunctive writ. On July 4, 2007, the Court denied
the petition. A motion for reconsideration was denied with a finality on October 7,
2007.
McBurnie filed a Motion for Leave (1) To File Supplemental Motion for
Reconsideration and (2) to Admit the Attached Supplemental Motion for
Reconsideration, a prohibited pleading under Section 2, Rule 56 of the Rules of
Court. Thus, the motion for leave was denied by the Court and the July 4, 2007
became final and executor on November 13, 2007.
On October 27, 2008, the CA ruled on the merits of CA-G.R. SP No. 90845
and CA-G.R. SP No. 95916 and rendered a decision allowing the respondent's
motion to reduce appeal bond and directing the NLRC to give due course to their
appeal. The CA also ruled that the NLRC committed grave abuse of discretion in
immediately denying the motion without fixing an appeal bond in an amount that
was reasonable, as it denied the respondents of their right to appeal from the
decision of the LA.
McBurnie filed a motion for reconsideration. The respondents moved that the
appeal be resolved on the merits by the CA. The CA denied both motions. McBurnie
then filed with the Supreme Court the Petition for Review on Certiorari (G.R. Nos.
186984-85)
The NLRC, acting on the CA order of remand, accepted the appeal from the
LA decision and reversed and set aside the decision of the LA, and entered a new on
dismissing McBurnie complaint.

On September 18, 2009, the third division of this court rendered its decision
granting respondents motion to reduce appeal bond. This Court also reinstated and
affirmed the NLRC decision dismissing respondent's appeal for failure to perfect an
appeal and denying their motion for reconsideration. The aforementioned decision
became final and executor on March 14, 2012.
The respondents filed a Motion for Leave to File Attached Third Motion for
Reconsideration, with an attached Motion for Reconsideration with Motion to Refer
These Cases to the Honorable Court En Banc. The Court En Banc accepted the case
from the third division and issued a temporary restraining order (TRO) enjoining
the implementation of the LA Decision. McBurnie filed a Motion for Reconsideration
where he invoked that the Court September 18, 2009 decision had become final and
executor.
Issue:
Whether or not the second motion for reconsideration was valid.
Ruling:
At the outset, the Court emphasizes that second and subsequent motions for
reconsideration are, as a general rule, prohibited. Section 2, Rule 52 of the Rules of
Court provides that no second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained. The rule rests on the basic tenet
of immutability of judgments. At some point, a decision becomes final and executory
and, consequently, all litigations must come to an end.
The general rule, however, against second and subsequent motions for
reconsideration admits of settled exceptions. In a line of cases, the Court has then
entertained and granted second motions for reconsideration n the higher interest of
substantial justice,as allowed under the Internal Rules when the assailed decision
is legally erroneous,patently unjust and potentially capable of causing unwarranted
and irremediable injury or damage to the parties. In Tirazona v. Philippine EDS
Techno-Service, Inc. (PET, Inc.), we also explained that a second motion for
reconsideration may be allowed in instances of xtraordinarily persuasive reasons
and only after an express leave shall have been obtained.In Apo Fruits Corporation
v. Land Bank of the Philippines, we allowed a second motion for reconsideration as
the issue involved therein was a matter of public interest, as it pertained to the
proper application of a basic constitutionally-guaranteed right in the government
implementation of its agrarian reform program.In San Miguel Corporation v.
NLRC, the Court set aside the decisions of the LA and the NLRC that favored
claimants-security guards upon the Court review of San Miguel Corporation second
motion for reconsideration.In Vir-Jen Shipping and Marine Services, Inc. v. NLRC,
et al., the Court en banc reversed on a third motion for reconsideration the ruling of
the Court Division on therein private respondentsclaim for wages and monetary
benefits.

The instant case qualifies as an exception to, first, the proscription against
second and subsequent motions for reconsideration, and second, the rule on
immutability of judgments; a reconsideration of the Decision dated September 18,
2009, along with the Resolutions dated December 14, 2009 and January 25, 2012, is
justified by the higher interest of substantial justice.
In League of Cities of the Philippines (LCP) v. Commission on Elections, we

reiterated a ruling that when a motion for leave to file and admit a second motion
for reconsideration is granted by the Court, the Court therefore allows the filing of
the second motion for reconsideration.In such a case, the second motion for
reconsideration is no longer a prohibited pleading. Similarly in this case, there was
then no reason for the Court to still consider the respondent's second motion for
reconsideration as a prohibited pleading, and deny it plainly on such ground.The
Court intends to remedy such error through this resolution.
Upon review, the Court is constrained to rule differently on the petitions.We

have determined the grave error in affirming the NLRC rulings, promoting results
that are patently unjust for the respondents, as we consider the facts of the case,
pertinent law, jurisprudence, and the degree of the injury and damage to the
respondents that will inevitably result from the implementation of the Court
Decision dated September 18, 2009.

5) INDOPHIL TEXTILE MILLS, INC., petitioner, vs. ENGR. SALVADOR
ADVIENTO, respondent
G.R. No. 171212, [August 4, 2014])
Facts:
The present dispute stemmed from a complaint filed by the respondent in the
RTC for damage and injury due to gross negligence. It was alleged in the complaint
that respondent used to work as a facility maintenance officer for the petitioner‘s
factory which was engaged in the deleterious industry of dying and chemical
manufacture. Daily confrontations with these hazards prompted him to forwards
suggestions to the management in his and all the other workers‘ behalf.
Unfortunately, these matters fell on deaf ears fell on deaf ears. It was finally
alleged that the petitioner‘s negligence in heeding to the call and acting to the
complaints eventually resulted in the deterioration of respondent‘s health which
caused his eventual dismissal.
For the petitioner‘s part, they argued that the matter falls outside the
jurisdiction of the RTC considering that these are matters within the sole
jurisdiction of the Labor Arbiter considering that the controversy arose from an
employer-employee relationship. Further, they argued that that there is a pending
case involving the same parties and cause in the NLRC.
The RTC then resolved the complaint by affirming its jurisdiction over the
matter. The court noted that matters involving negligence, notwithstanding the fact
that it arose during employment, is a case of quasi-delict within its jurisdiction. The
petitioner then appealed to the RTC which dismissed the complaint and affirmed
the RTC‘s decision.
ISSUE:
Whether or not the fact that the complaint was founded on gross negligence
arising from employment is within the jurisdiction of the Regional Trial Court?
RULING:
Yes.
It is obvious from the complaint that the plaintiffs have not alleged any
unfair labor practice. Theirs is a simple action for damages for tortious acts
allegedly committed by the defendants. Such being the case, the governing statute
is the Civil Code and not the Labor Code.
Upon the facts and issues involved, jurisdiction over the present controversy
must be held to belong to the civil Courts. While seemingly petitioner's claim for
damages arises from employer-employee relations, and the latest amendment to
Article 217 of the Labor Code under PD No. 1691 and BP Blg. 130 provides that all
other claims arising from employer-employee relationship are cognizable by Labor
Arbiters [citation omitted], in essence, petitioner's claim for damages is grounded on

the "wanton failure and refusal without just cause of private respondent Cruz to
report for duty despite repeated notices served upon him of the disapproval of his
application for leave of absence without pay. This, coupled with the further
averment that Cruz "maliciously and with bad faith" violated the terms and
conditions of the conversion training course agreement to the damage of petitioner
removes the present controversy from the coverage of the Labor Code and brings it
within the purview of Civil Law.
Clearly, the complaint was anchored not on the abandonment per se by

private respondent Cruz of his job—as the latter was not required in the Complaint
to report back to work—but on the manner and consequent effects of such
abandonment of work translated in terms of the damages which petitioner had to
suffer.
However, it should be stressed that respondent‘s claim for damages is
specifically grounded on petitioner‘s gross negligence to provide a safe, healthy and
workable environment for its employees −a case of quasi-delict.
Thus, the matter rightfully belongs to the jurisdiction of the trial courts.

6) MANILA MINING CORPORATION, petitioner, vs. LOWITO AMOR,
ET AL., respondents
G.R. No. 182800, [April 20, 2015]
Facts:
Petitioners were regular employees of Manila Mining Corp. In December
2000, the petitioner temporarily shut down its mining operations pending approval
of its application to increase said facility's capacity. Although the DENR-EMB
issued a temporary authority for it to be able to continue operating for another six
(6) months and to increase its capacity, petitioner failed to secure an extension
permit when said temporary authority eventually lapsed. Thus, petitioner served
notice to its employees and DOLE of its temporary suspension for six months and
the temporary lay-off off of two thirds of its employees. However, the shutdown was
extended for another six months. Adversely affected by the petitioner‘s continued
failure to resume its operations, respondents filed a complaint of constructive
dismissal and monetary claims.
The labor arbiter ruled in favor of respondents holding petitioner liable for
constructive dismissal in view of the suspension of its operations beyond the six-
month period allowed in the Labor Code.
Petitioners filed a memorandum of appeal with the NLRC and moved for the
reduction of the appeal bond on the ground of the financial losses of the preceding
years has rendered it unable to put up the surety equivalent to the monetary
award.
Respondents moved for the dismissal of the appeal on two grounds:

1. Despite receipt of the decision on Nov 24, 2004, the memorandum of
appeal was only mailed on Feb 7, 2005.
2. Appeal bond tendered by petitioner was so grossly disproportionate to
the monetary award for the same to be considered as substantial compliance.
NLRC granted the appeal. The case was raised to the CA, which nullified the
NLRC decision on the grounds that the NLRC did not have jurisdiction over the
case since the appeal was not perfected.
ISSUE:
Whether or not the appeal was perfected?
HELD:
No, the appeal was not perfected. The CA ruling is upheld.

That the right to appeal is not a natural right or a part of due process; it is
merely a statutory privilege, and may be exercised only in the manner and in
accordance with the provisions of law.
On timeliness of appeal
Having received the Labor Arbiter's Decision on 24 November 2004,

petitioner had ten (10) calendar days or until 4 December 2004 within whichto
perfect an appeal. Considering that the latter date fell on a Saturday, petitioner had
until the next working day, 6 December 2004, within which to comply with the
requirements for the perfection of its appeal. Our perusal of the record shows that,
despite bearing the date 3 December 2004, petitioner's memorandum of appeal was
subscribed before Notary Public only on 6 December 2004. Without proof as to the
actual date of filing of said pleading being presented by both parties, the CA
discounted the timeliness of its filing in light of the established fact that the copy
thereof intended for respondents was only served by registered mail on 7
February2005.Since proof of service of the memorandum on appeal is required for
the perfection of an appeal from the decision of the Labor Arbiter, the CA ruled that
"respondents filed its appeal not earlier than 07 February 200[5], which is way
beyond the ten-day reglementary period to appeal."
However, the rule is settled that the burden of evidence lies with the party
who asserts the affirmative of an issue. By and of itself, the fact that the copy of
memorandum of appeal intended for respondents was served upon them by
registered mail only on 7 February 2005 does not necessarily mean that petitioner's
appeal from the Labor Arbiter's decision was filed out of time. On the principle that
justice should not be sacrificed for technicality, it has been ruled that the failure of
a party to serve a copy of the memorandum to the opposing party is not a
jurisdictional defect and does not bar the NLRC from entertaining the appeal.
On the validity of the cash bond
On Dec 6, petitioner filed a motion to reduce the appeal bond. The ruling in
McBurnie v. Ganzon, et al., ruled that a reduction to reduce appeal bond is granted
only when (1) the motion to reduce the bond shall be based on meritorious grounds;
and (2) a reasonable amount in relation to the monetary award is posted by the
appellant, otherwise the filing of the motion to reduce bond shall not stop the
running of the period to perfect an appeal.
We find that both conditions are not met in the case at bar. On the first
requisite, the petitioners did not provide any proof to substantiate its claim on the
preferred basis of serious losses and reverses it supposedly sustained.

On the second requisite, petitioner posted an amount of 100,000php as
provisional bond sufficient to suspend the running of the 10 day reglementary
period. However, the check was dishonored, thereby rendering the tender thereof as
ineffectual. Since it is the posting of a cash or surety bond which confers jurisdiction
upon the NLRC, the rule is settled that non-compliance is fatal and has the effect
of rendering the award final and executory.
Thus, the perfection of an appeal in the manner and within the period
prescribed by law is not only mandatory but also jurisdictional and failure of a party
to conform to the rules regarding appeal will render the judgment final and
executory.

7) TOYOTA ALABANG, INC., petitioner, vs. EDWIN GAMES, respondent
G.R. No. 206612 (Resolution), [August 17, 2015])
Facts:
Respondent Games, worked as a foreman for petitioner, allegedly stole its
vehicle lubricants. Subsequently, it charged him with qualified theft before the trial
court. Two years thereafter, or on 24 August 2007, Games filed a Complainant for
illegal dismissal, nonpayment of benefits, and damages against petitioner. The
latter, through counsel, failed to file its Position Paper on the date set on 15
November 2007.
On 5 February 2008, the LA ruled against petitioner and ordered the latter to
pay Games P535,553.07 for his separation pay, back wages, service incentive leave
pay and attorney's fees resulting from his illegal dismissal. Petitioner no longer
filed a motion for reconsideration. As a result, the LA's ruling became final and
executory.
The LA issued a Writ of Execution, which petitioner sought to quash. It

prayed that the proceedings be reopened, explaining that it had failed to present
evidence because of its counsel's negligence in filing the appropriate pleadings. The
LA denied the claims of petitioner. Aggrieved, the latter appealed before the NLRC.
The appeal of petitioner was denied due course because it had failed to show
proof of its security deposit for the appeal. According to the NLRC, the bonding
company's mere declaration in the Certification of Security Deposit that the bond
was fully secured was not tantamount to a faithful compliance with the rule,
because there must first be an accompanying assignment of the employer's bank
deposit.
On the merits, the NLRC dismissed the case on the basis of the rule that no
appeal may be taken from an order of execution of a final judgment. For the NLRC,
petitioner's failure to appeal the LA Decision already made the ruling final and
executory.
Petitioner elevated the case to the CA via a Petition for Certiorari, but the
action was dismissed. Firstly, the CA ruled that the NLRC did not gravely abuse its
discretion in denying the appeal, given that petitioner had failed to comply
faithfully with the bond requirement. Secondly, it echoed the ruling of the NLRC
that a final judgment is no longer appealable. Thirdly, the CA found that
petitioner's own negligence had caused it to lose its right to appeal.
Aggrieved, petitioner filed a Petition for Review on Certiorari with Urgent

Prayer for Injunctive Relief before this Court. It disputed the finding that it did not

show proof of its security deposit for the appeal bond. It also insisted that its
counsel's gross negligence justified the reopening of the proceedings below.
Issue:
1. Whether or not CA erred in dismissing the petitioners complaint

2. Whether or not the NLRC gravely abused its discretion in requiring
petitioner to post an appeal bond
3. Whether or not an appeal bond must be accompanied by a "proof of
security deposit or collateral securing the bond."
Ruling:
1. This Court maintains that the CA correctly refused to reopen the

proceedings below. The reopening of a case is an extraordinary remedy, which, if
abused, can make a complete farce of a duly promulgated decision that has long
become final and executory. Hence, there must be good cause on the movant's part
before it can be granted.
a) In this case, petitioner itself was negligent in advancing its case. As

found by the appellate court, petitioner was present during the mandatory
conference hearing in which the latter was informed by the LA of the need to file a
Position Paper on 15 November 2007. However, petitioner not only reneged on the
submission of its Position Paper, but even failed to move for the filing of the
pleading at any point before the LA resolved the case on 5 February 2008.
b) Moreover, petitioner had failed to exhibit diligence when it did not

attend the hearing on 11 January 2008, or any of the proceedings thereafter,
despite its manifestation that it no longer had any legal representative. Given the
instances of negligence by petitioner itself, the Court finds that the CA justly
refused to reopen the case in the former's favor. Definitely, petitioner cannot now be
allowed to claim denial of due process when it was petitioner who was less than
vigilant of its rights.
2. The NLRC did not commit any mistake in requiring petitioner to post
an appeal bond. The paraphrased proposition that "an appeal bond is not required
in appeals from decisions of the LA denying a motion to quash a writ of execution"
lacks any citation sourced from a statute or case law. Article 223 of the Labor Code
and Section 6, Rule VI of the 2011 NLRC Rules of Procedure, uniformly state thus:
In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the posting
of a bond, which shall either be in the form of cash deposit or surety bond

equivalent in amount to the monetary award, exclusive of damages and attorney's
fees. (Emphasis supplied)
Evidently, the above rules do not limit the appeal bond requirement only to
certain kinds of rulings of the LA. Rather, these rules generally state that in case
the ruling of the LA involves a monetary award, an employer's appeal may be
perfected only upon the posting of a bond. Therefore, absent any qualifying terms,so
long as the decision of the LA involves a monetary award, as in this case, that
ruling can only be appealed after the employer posts a bond.
Clearly, this construction is but proper considering the avowed purpose of

appeal bonds demanded by the law from employers in labor cases. If we are to
construe otherwise, then an aggrieved party may simply seek the quashal of a writ
of execution, instead of going through the normal modes of appeal, to altogether
avoid paying for an appeal bond. This ruse will then circumvent the requirement of
both labor rules and jurisprudence16to post an appeal bond before contesting the
LA's grant of monetary award. Hence, the first point is not only incorrect, but also
dangerous.
3. According to the NLRC and the CA, the bonding company's mere declaration
in the Certification of Security Deposit that the bond is fully secured is not
tantamount to a faithful compliance with the rule, because there must first be an
accompanying assignment of the employer's bank deposit. On the other hand, the
dissent sees this declaration as an act that satisfies Section 6, Rule VI of the 2011
NLRC Rules of Procedure. For this reason, he opines that the NLRC should have
entertained the appeal of petitioner.
Notwithstanding this issue, the NLRC has given a well-founded reason for
refusing to entertain petitioner's appeal, namely, no appeal may be taken from an
order of execution of a final and executory judgment.
An appeal is not a matter of right, but is a mere statutory privilege. It may be

availed of only in the manner provided by law and the rules. Thus, a party who
seeks to elevate an action must comply with the requirements of the 2011 NLRC
Rules of Procedure as regards the period, grounds, venue, fees, bonds, and other
requisites for a proper appeal before the NLRC; and in Section 6, Rule VI, the
aforesaid rules prohibit appeals from final and executory decisions of the Labor
Arbiter.
In this case, petitioner elevated to the NLRC an already final and executory
decision of the LA. To recall, after petitioner learned of its former counsel's
negligence in filing a Position Paper before the LA, it nonetheless failed to file a
motion reconsideration to question the ruling of the LA that it illegally dismissed
Games. At that point, the Decision was already final and executory, so the LA

dutifully issued a Writ of Execution. Petitioner sought the quashal of the writ of
execution and the reopening of its case only at that stage; and only after it was
rebuffed by the LA did petitioner appeal before the NLRC. Based on the timeline,
therefore, the LA's adverse Decision had become final and executory even prior to
petitioner's appeal before the NLRC contesting the denial of the Motion to Quash
the Writ of Execution. Consequently, the NLRC dismissed the appeal based on its
clear prohibition under Section 5, Rule V of the 2011 NLRC Rules of Procedure.
The NLRC's reasoning that no appeal may be taken from an order of

execution of a final and executory judgment is also rooted in case law.
Jurisprudence dictates that a final and executory decision of the LA can no longer
be reversed or modified.After all, just as a losing party has the right to file an
appeal within the prescribed period, so does the winning party have the correlative
right to enjoy the finality of the resolution of the case.On this basis, the CA did not
grievously err when it concluded that the ruling of the NLRC denying petitioner's
appeal was not baseless, arbitrary, whimsical, or despotic.

8) SOCIAL SECURITY SYSTEM, petitioner, vs. DEBBIE UBAÑA,
respondent.
G.R. No. 200114 , [August 24, 2015])
Facts:
In her complaint for damages against the Social Security System (SSS), the
DBP Service Corporation, and the SSS Retirees Association, respondent Ubana
alleged that in July 1995 she applied for employment with the SSS. Despite
passing all the examinations and submitting the requirements, she was referred to
the DBP Service Corporation, passed the pre-employment examination and was
referred to SSS Naga for training and immediate deployment to SSS Daet.
She was made to sign a six-month Service Contract in May, 1996; and when
she reported to the SSS Daet Branch, she was assigned to various sections and
divisions as Processor and Data Encoder. Her salary was only P229.00 daily
compared to a regular SSS Processor who receives P846.45 daily. While her service
contract with the DBP Service Corporation was never renewed, she continued to be
employed by the SSS; she was continually assured of being absorbed into the SSS;
in fact she was qualified for the position as she passed the required training.
Because of the oppressive and prejudicial treatment of the SSS, she was
forced to resign in August, 2002 as she could not stand anymore the exploitation,
the agony of dissatisfaction, anxiety, demoralization, and injustice. Respondent
Ubana therefore alleges that the defendants conspired to exploit her and violate
civil service rules and regulations and Civil Code provisions on Human relations,
specifically Articles 19, 20 and 21. Thus, she prayed for actual damages by way of
unrealized income, moral and exemplary damages, and attorneys fees.
The defendants filed a motion to dismiss for lack of jurisdiction, averring that
the complaint was predicated on the claims that arose out of employer-employee
relations, thus cognizable by the NLRC. At first, the RTC granted the motion to
dismiss, but on motion for reconsideration by the respondent, the RTC reversed
itself and denied the motion to dismiss. It held that a perusal of the complaint filed
by Debbie substantially alleges that the case is for Damages. Having denied the
existence of employer-employee relationship between it and Debbie, and the case is
for damages, the regular trial courts, not the CSC has jurisdiction over the case.
SSS moved to reconsider, but the RTC denied, hence it filed a petition for certiorari
with the CA which likewise dismissed the case.
Thus, this present petition before the Court.
Issue:
Whether or not the RTC has jurisdiction over the complaint filed by Debbie.

Ruling:
The Court denies the Petition.
In Home Development Mutual Fund v. Commission on Audit, it was held that

while they performed the work of regular government employees, DBP Service
Corporation personnel are not government personnel, but employees of DBP Service
Corporation acting as an independent contractor. Applying the foregoing
pronouncement to the present case, it can be said that during respondent‘s stint
with petitioner, she never became an SSS employee, as she remained an employee
of DBP Service Corporation and SSS Retirees Association – the two being
independent contractors with legitimate service contracts with SSS.
Indeed, ―[i]n legitimate job contracting, no employer-employee relation exists

between the principal and the job contractor‘s employees. The principal is
responsible to the job contractor‘s employees only for the proper payment of wages.‖
In her Complaint, respondent acknowledges that she is not petitioner‘s

employee, but that precisely she was promised that she would be absorbed into the
SSS plantilla after all her years of service with SSS; and that as SSS Processor, she
was paid only P229.00 daily or P5,038.00 monthly, while a regular SSS Processor
receives a monthly salary of P18,622.00, or P846.45 daily wage. In its pleadings,
petitioner denied the existence of an employer-employee relationship between it and
respondent; in fact, it insists on the validity of its service agreements with DBP
Service Corporation and SSS Retirees Association – meaning that the latter, and
not SSS, are respondent‘s true employers. Since both parties admit that there is no
employment relation between them, then there is no dispute cognizable by the
NLRC. Thus, respondent‘s case is premised on the claim that in paying her only
P229.00 daily – or P5,038.00 monthly – as against a monthly salary of P18,622.00,
or P846.45 daily wage, paid to a regular SSS Processor at the time, petitioner
exploited her, treated her unfairly, and unjustly enriched itself at her expense.
For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter
to acquire jurisdiction over a dispute, there must be an employer-employee relation
between the parties thereto.
x x x It is well settled in law and jurisprudence that where no employer-employee
relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective
bargaining agreement, it is the Regional Trial Court that has jurisdiction, x x x The
action is within the realm of civil law hence jurisdiction over the case belongs to the
regular courts. While the resolution of the issue involves the application of labor
laws, reference to the labor code was only for the determination of the solidary
liability of the petitioner to the respondent where no employer-employee relation

exists. Article 217 of the Labor Code as amended vests upon the labor arbiters
exclusive original jurisdiction only over the following:
1. Unfair labor practices;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may
file involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including
questions involving legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity benefits, all other claims, arising from employer- employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement.
In all these cases, an employer-employee relationship is an indispensable

jurisdictional requisite.
Since there is no employer-employee relationship between the parties herein,

then there is no labor dispute cognizable by the Labor Arbiters or the NLRC.
There being no employer-employee relation or any other definite or direct

contract between respondent and petitioner, the latter being responsible to the
former only for the proper payment of wages, respondent is thus justified in filing a
case against petitioner, based on Articles 19 and 20 of the Civil Code, to recover the
proper salary due her as SSS Processor. At first glance, it is indeed unfair and
unjust that as, Processor who has worked with petitioner for six long years, she was
paid only P5,038.00 monthly, or P229.00 daily, while a regular SSS employee with
the same designation and who performs identical functions is paid a monthly salary
of P18,622.00, or P846.45 daily wage. Petitioner may not hide under its service
contracts to deprive respondent of what is justly due her. As a vital government
entity charged with ensuring social security, it should lead in setting the example
by treating everyone with justice and fairness. If it cannot guarantee the security of
those who work for it, it is doubtful that it can even discharge its directive to
promote the social security of its members in line with the fundamental mandate to
promote social justice and to insure the well-being and economic security of the
Filipino people.
In this jurisdiction, the ―long honored legal truism of ‗equal pay for equal
work'‖ has been ―impregnably institutionalized;‖ ―[p]ersons who work with
substantially equal qualifications, skill, effort and responsibility, under similar
conditions, should be paid similar salaries.‖ ―That public policy abhors inequality

and discrimination is beyond contention. Our Constitution and laws reflect the
policy against these evils. The Constitution in the Article on Social Justice and
Human Rights exhorts Congress to ‗give highest priority to the enactment of
measures that protect and enhance the right of all people to human dignity, reduce
social, economic, and political inequalities.‘ The very broad Article 19 of the Civil
Code requires every person, ‗in the exercise of his rights and in the performance of
his duties, [to] act with justice, give everyone his due, and observe honesty and good
faith‘.‖

9) ILAW BUKLOD NG MANGGAGAWA (IBM) NESTLE PHILIPPINES,
INC. CHAPTER (ICE CREAM AND CHILLED PRODUCTS DIVISION),
ITS OFFICERS, MEMBERS BONIFACIO T. FLORENDO, EMILIANO
B. PALANAS and GENEROSO P. LAXAMANA, petitioners, vs.
NESTLE PHILIPPINES, INC., respondent
G.R. No. 198675, [September 23, 2015]
Facts:
The petitioner union staged a strike against Nestle Philippines Inc.
company's Ice Cream and Chilled Products Division on the following grounds:
alleged violation of the collective bargaining agreement (CBA), dismissal of union
officers and members, discrimination and other unfair labor practice (ULP) acts.
However, after a series of conciliation meetings and discussions between the
parties, they agreed to resolve their differences and came up with a compromise
which was embodied in a Memorandum of Agreement (MOA). After a lapse of more
than eleven (11) years from the time of execution of the subject MOA, petitioners
filed with the NLRC a Motion for Writ of Execution contending that they have not
been paid the amounts they are entitled to in accordance with the MOA.
Respondent filed its Opposition to the Motion for Writ of Execution contending that
petitioners' remedy is already barred by prescription because, under the 2005
Revised Rules of the NLRC, a decision or order may be executed on motion within
five (5) years from the date it becomes final and executory and that the same
decision or order may only be enforced by independent action within a period often
(10) years from the date of its finality.Petitioners' basic contention is that
respondent cannot invoke the defense of prescription because it is guilty of
deliberately causing delay in paying petitioners' claims and that petitioners, on the
other hand, are entitled to protection under the law because they had been vigilant
in exercising their right as provided for under the subject MOA.
Issue:
Whether or not the Petitioners' demand to be paid has prescribed
Ruling:
No, it has not.
The compromise agreement between petitioner and respondent was executed

on August 4, 1998 and was subsequently approved via the NLRC Decision dated
October 12, 1998. However, considering petitioners' allegation that the terms and
conditions of the agreement have not been complied with by respondent, petitioners
should have moved for the issuance of a writ of execution.
It is settled that when a compromise agreement is given judicial approval, it
becomes more than a contract binding upon the parties. Having been sanctioned by
the court, it is entered as a determination of a controversy and has the force and

effect of a judgment. It is immediately executory and not appealable, except for
vices of consent or forgery.The non-fulfillment of its terms and conditions justifies
the issuance of a writ of execution; in such an instance, execution becomes a
ministerial duty of the court. A decision on a compromise agreement is final and
executor and has the force of law and is conclusive between the parties. It becomes a
judgment that is subject to execution in accordance with the Rules.
Section 8, Rule XI, 2005 Revised Rules of Procedure of the NLRC provides
that a judgment may be executed on motion within five years from the date of its
entry or from the date it becomes final and executory. After the lapse of such time,
and before it is barred by the statute of limitations, a judgment may be enforced by
action. If the prevailing party fails to have the decision enforced by a mere motion
after the lapse of five years from the date of its entry (or from the date it becomes
final and executory), the said judgment is reduced to a mere right of action in favor
of the person whom it favors and must be enforced, as are all ordinary actions, by
the institution of a complaint in a regular form.
In the present case, the five-and ten-year periods provided by law and the
rules are more than sufficient to enable petitioners to enforce their right under the
subject MOA. In this case, it is clear that the judgment of the NLRC, having been
based on a compromise embodied in a written contract, was immediately executory
upon its issuance on October 12, 1998. Thus, it could have been executed by motion
within five (5) years. It was not. Nonetheless, it could have been enforced by an
independent action within the next five (5) years, or within ten (10) years from the
time the NLRC Decision was promulgated. It was not. Therefore, petitioners' right
to have the NLRC judgment executed by mere motion as well as their right of action
to enforce the same judgment had prescribed by the time they filed their Motion for
Writ of Execution on January 25, 2010.

10) QUANTUM FOODS, INC., petitioner, vs. MARCELINO ESLOYO
and GLEN MAGSILA, respondents
G.R. No. 213696, [December 9, 2015]
Facts:
Petitioner, Quantum Foods, Inc. (QFI) is a domestic corporation engaged in
the distribution and selling of food products nationwide. It hired respondent, Esloyo
as Major Accounts Representative, and Magsila as Key Accounts Representative.
Esloyo and Magsila were each required to post a cash bond in the amount of
P10,000.00 and P7,000.00, respectively. However, later on, both were terminated,
Esloyo for alleged misbehavior and violations of various company rules and
regulations, such as sexual harassment, misappropriation of company funds/
property, falsification/padding of reports and serious misconduct, and Magsila was
retrenched because QFI decided to reorganize its sales force nationwide following a
drastic drop in net income.
Esloyo asserted that his dismissal was illegal, claiming that: (a) the charges
were all fabricated; (b) no formal investigation was conducted; and (c) he was not
given the opportunity to confront his accusers. Magsila, on the other hand, averred
that there was no valid retrenchment as the losses claimed by QFI were
unsubstantiated and that he was merely replaced
The Labor Arbiter found respondents to have been illegally dismissed.
QFI filed its Notice of Appeal and Memorandum of Appeal before the NLRC,
accompanied by: (a) a Motion to Reduce Bond averring that it was encountering
difficulty raising the amount of the bond and finding an insurance company that
can cover said amount during the short period of time allotted for an appeal; and (b)
a cash bond in the amount of P400,000.00 (partial bond).
Respondents filed a motion to dismiss the appeal for QFI's failure: (a) to
attach a Verification and Certification of Non-Forum Shopping as required by the
New Rules and Procedure of the NLRC; and (b) to post a bond in an amount
equivalent to the monetary judgment as mandated by law.
The NLRC denied respondents' motion to dismiss and gave due course to
QFI's appeal, holding that: (a) the lack of verification was a formal defect that could
be cured by requiring an oath; (b) the belated filing of the certificate of non-forum
shopping may be allowed under exceptional circumstances as technical rules of
procedure should be used to promote, not frustrate justice; and (c) there was
substantial compliance with the bond requirement, and merit in QFI's appeal that
would justify a liberal application of the requirement on the timely filing of the
appeal bond
The CA reversed and set aside the NLRC's ruling and reinstated the LA's
Decision. It ruled that QFI's failure to post the required bond in an amount

equivalent to the monetary judgment impeded the perfection of its appeal, and
rendered the LA's Decision final and executory. Thus, the NLRC was bereft of
jurisdiction and abused its discretion in entertaining the appeal. It also held that
the posting of the partial bond together with the Motion to Reduce Bond did not
stop the running of the period to perfect the appeal, considering that: (a) the
grounds relied upon by QFI are not meritorious; and (b) the partial bond posted was
not reasonable in relation to the monetary judgment
Issue:
Whether or not the CA erred in ascribing grave abuse of discretion on the
part of the NLRC in giving due course to QFI's appeal holding that: (a) the lack of
verification was a formal defect that could be cured by requiring an oath; (b) the
belated filing of the certificate of non-forum shopping may be allowed under
exceptional circumstances as technical rules of procedure should be used to
promote, not frustrate justice;and (c) there was substantial compliance with the
bond requirement, and merit in QFI's appeal that would justify a liberal application
of the requirement on the timely filing of the appeal bond
Ruling:
Yes, there was grave abuse of discretion on the part of the NLRC in giving
due course to QFI's appeals: Art. 229 of the Labor Code provides that decisions,
awards, or orders of the Labor Arbiter are final and executory unless appealed to
the Commission by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. Such appeal may be entertained only on any of
the provided grounds. And an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in
the judgment appealed from.
Posting of a cash or surety bond is indispensable to the perfection of an

appeal in cases involving monetary awards from the decision of the LA,in several
cases, the Court has relaxed this stringent requirement whenever justified. Thus,
the Rules - specifically Section 6, Rule VI - thereof, allow the reduction of the appeal
bond upon a showing of: (a) the existence of a meritorious ground for reduction, and
(b) the posting of a bond in a reasonable amount in relation to the monetary award:
SEC. 6. Bond. - In case the decision of the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a bond, which shall either be in the form of cash deposit or surety
bond equivalent in amount to the monetary award, exclusive of damages and
attorney's fees.
Case law has held that for purposes of justifying the reduction of the appeal
bond, the merit referred to may pertain to (a) an appellant's lack of financial
capability to pay the full amount of the bond, or (b) the merits of the main appeal
such as when there is a valid claim that there was no illegal dismissal to justify the

award, the absence of an employer-employee relationship, prescription of claims,
and other similarly valid issues that are raised in the appeal.
In this case, the NLRC held that a liberal application of the requirement on
the timely filing of the appeal bond is justified, finding that (a) the posting of a
P400,000.00 cash bond within the reglementary period to appeal and the
subsequent posting of a surety bond constitute substantial compliance of the bond
requirement; and (b) there is merit in QFI's appeal. The posting of the said partial
bond coupled with the subsequent posting of a surety bond in an amount equivalent
to the monetary judgment also signified QFI's good faith and willingness to
recognize the final outcome of its appeal.

11) DELA ROSA LINER, INC. AND/OR ROSAURO DELA ROSA, SR.
AND NORA DELA ROSA, petitioners, vs. CALIXTO B. BORELA AND
ESTELO A. AMARILLE, respondents
G.R. No. 207286, [July 29, 2015]
Facts:
On September 23, 2011, respondents Calixto Borela, bus driver, and Estelo
Amarille, conductor, filed separate complaints against petitioners Dela Rosa Liner,
Inc., a public transport company, Rosauro Dela Rosa, Sr., and Nora Dela Rosa, for
underpayment/non-payment of salaries, holiday pay, overtime pay, service incentive
leave pay, 13th month pay, sick leave and vacation leave, night shift differential,
illegal deductions, and violation of Wage Order Nos. 13, 14, 15 and 16.
In a motion dated October 26, 2011, the petitioners asked the labor arbiter to
dismiss the case for forum shopping. They alleged that on September 28, 2011, the
CA 13th Division disposed of a similar case between the parties after they entered
into a compromise agreement which covered all claims and causes of action they
had against each other in relation to the respondents' employment.
The respondents opposed the motion, contending that the causes of action in
the present case are different from the causes of action settled in the case the
petitioners cited.
Labor Arbiter (LA) Danna A. Castillon, in an order dated November 24, 2011,
upheld the petitioners' position and dismissed the complaint on grounds of forum
shopping. Respondents appealed the LA's ruling, and the NLRC 1st Division
granted the appeal. The NLRC held that the respondents could not have committed
forum shopping as there was no identity of causes of action between the two cases.
The first complaint, the NLRC pointed out, charged the petitioners with
illegal dismissal and unfair labor practice; while the second complaint was based on
the petitioners' alleged nonpayment/underpayment of their salaries and monetary
benefits, and violation of several wage orders. The petitioners moved for
reconsideration, but the NLRC denied their motion, prompting them to file with the
CA a petition for certiorari.
.
CA 15th Division denied the petition; it found no grave abuse of discretion in
the NLRC ruling that the respondents did not commit forum shopping when they
filed their second complaint. The NLRC likewise held that neither was the case
barred by res judicata arising from the CA judgment in the first case.
The appeals court explained that the first case involved the issues of
whether respondents had been illegally dismissed and whether petitioners should
be liable for unfair labor practice. The labor arbiter dismissed the first complaint for

lack of merit in his decision of November 6, 2008. On the respondents' appeal
against the LA ruling in this first case, the NLRC 6th Division reversed the
dismissal of the complaint. It awarded respondents back wages (P442,550.00) for
Borela and P215,775.00 for Amarille), damages (P10,000.00 each in moral and
exemplary damages for Borela), and moral and exemplary damages (P25,000.00
each for Amarille), plus 10% attorney's fees for each of them.
On the petitioners' motion for reconsideration of the NLRC issued a new

ruling that followed the LA's ruling, with modification. It awarded the respondents
financial assistance of P10,000.00 each, in consideration of their long years of
service to the company.
The respondents sought relief from the CA through a petition for certiorari
(CA-G.R. SP No. 118038). Thereafter, the parties settled the case (involving the first
complaint) amicably through the compromise agreement adverted to earlier. Under
the terms of this agreement, "(t)he parties has (sic) agreed to terminate the case
now pending before the Court of Appeals and that both parties further agree that no
further action based on the same grounds be brought against each other, and this
Agreement applies to all claims and damages or losses either party may have
against each other whether those damages or losses are known or unknown,
foreseen orunforeseen."
Based on this agreement, Borela and Amarille received from respondents

P350,000.00 and P150,000.00, respectively, and executed a quitclaim. In this
manner, the parties resolved the first case.
To go back to the present case CA-G.R. SP No. 128188, which arose from the
second complaint the respondents subsequently filed), the CA 15th Division upheld
the NLRC's (1st Division) decision and ruled out the presence of forum shopping
and res judicata as bars to the respondents' subsequent money claims against the
petitioners. The petitioners moved for reconsideration, but the CA denied the
motion.
Issue:
The petitioners now ask the Court to nullify the CA judgment in CA-G.R. SP
No. 128188 (arising from the second complaint), contending that the appellate court
erred in upholding the NLRC ruling that there was no forum shopping nor res
judicata that would bar the second complaint.
Respondents contend that their second complaint involved two causes of

action: (1) their claim for sick leave, vacation leave, and 13th-month pay under the
collective bargaining agreement of the company; and (2) the petitioners'
noncompliance with wage orders since the year 2000 until the present.

Ruling:
The petition is dismissed for lack of merit.
The petition for review on certiorari is timely filed pursuant to Rule 45,
Section 2 of the Rules of Court. The last day for filing of the petition, as respondents
claim, fell on June 12, 2013, Independence Day, a legal holiday. The filing of the
petition therefore on June 13, 2013, a working day, fully complied with the rules.
The CA 15th Division committed no reversible error when it affirmed the

NLRC ruling that the second complaint is not barred by the rule on forum shopping
nor by the principle of res judicata. In other words, no grave abuse of discretion
could be attributed to the NLRC when it reinstated the second complaint.
Contrary to the petitioners' submission, respondents' second complaint (CA-

G.R. SP No. 128188), a money claim, is not a "similar case" to the first complaint
(CA-G.R. SP No. 118038). Thus, the filing of the second complaint did not constitute
forum shopping and the judgment in the first case is not a res judicata ruling that
bars the second complaint.
The elements of forum shopping are: (1) identity of parties; (2) identity of
rights asserted and relief prayed for, the relief being founded on the same facts; and
(3) identity of the two preceding particulars such that any judgment rendered in the
other action will, regardless of which party is successful, amount to res judicata in
the action under consideration.
We concur with the CA that forum shopping and res judicata are not applicable in
the present case. There is no identity of rights asserted and reliefs prayed for, and
the judgment rendered in the previous action will not amount to res judicata in the
action now under consideration. There is also no identity of causes of action in the
first complaint and in the second complaint.
The NLRC's and CA's conclusions that there is no identity of causes of action
between the respondents' two complaints against the petitioners is sufficient. The
first complaint involved illegal dismissal/suspension, unfair labor practice with
prayer for damages and attorney's fees; while the second complaint (the subject of
the present appeal) involves claims for labor standards benefits — the petitioners'
alleged violation of Wage Orders Nos. 13, 14, 15 and 16; nonpayment of
respondents' sick and vacation leave pays, 13th-month pay, service incentive leave
benefit, overtime pay, and night shift differential.
The same facts or evidence would not support both action, that is, the facts or
the evidence that would determine whether respondents were illegally dismissed,
illegally suspended, or had been the subject of an unfair labor practice act by the
petitioners are not the same facts or evidence that would support the charge of non-

compliance with labor standards benefits and several wage orders. Thus, there is no
basis for petitioners' claim that "the same action had been settled . . . .‖ and the
petitioners' argument that "The Compromise Agreement covered all claims and
causes of action that the parties may have against each other in relation to the
private respondents' employment."
While the parties agreed that no further action shall be brought by the
parties against each other, they pointedly stated that they referred to actions on the
same grounds. The phrase same grounds can only refer to the grounds raised in the
first complaint and not to any other grounds. The compromise agreement's
application "to all claims and damages or losses either party may have against each
other whether those damages or losses are known or unknown, foreseen or
unforeseen,‖ is also too sweeping and effectively excludes any claims by the
respondents against the petitioners, including those that by law and jurisprudence
cannot be waived without appropriate consideration such as nonpayment or
underpayment of overtime pay and wages.
In labor law, respondents' claim for 13th-month pay, overtime pay, and
statutory wages (under Wages Orders 13, 14, 15 and 16), among others, cannot
simply be generally waived as they are granted for workers' protection and welfare;
it takes more than a general waiver to give up workers' rights to these legal
entitlements.
Lastly, the petitioners' insinuation, that the respondents are not and should
not be entitled to anything more, because they had already "received a considerable
amount for the settlement"(P350,000.00 for Borela and P150,000.00 for Amarille),
should be placed and understood in its proper context. The illegal dismissal case
where the compromise
agreement took place, the NLRC 6th Division (acting on the appeal from theLA's
ruling) awarded Borela P442,550.00 in backwages; P20,000.00 in moral and
exemplary damages, plus 10% attorney's fees; and to Amarille P215,775.00 in back
wages and P50,000.00 in moral and exemplary damages, plus 10% attorney's fees.
Although the NLRC reconsidered these awards and eventually granted

financial assistance of P10,000.00 each to Borela and Amarille, it is reasonable to
regard the amounts they received as a fair compromise in the settlement of the first
complaint in relation with the initial NLRC award, indicated above, before its
reconsideration. The parties, especially the respondents, could not have considered
the P10,000.00 financial assistance or their labor standards claims, particularly the
alleged violation of the wage orders, as a factor in their effort to settle the case
amicably. The compromise agreement, it should be emphasized, was executed on
September 8, 2011, while the labor standards complaint was filed only on
September 23, 2011.

12) FONTANA DEVELOPMENT CORP., DENNIS PAK as General
Manager, PASTOR ISAAC as Director of Human Resources, CHRIS
CHENG * as Deputy Group Financial Controller, JESUS CHUA,
Representative MICHAEL FELICIANO, ALMA EREDIANO, LEILANI
VALIENTE, MAN CHOI as Group Financial Controller, and JAIME
VILLAREAL as Chief Engineer, petitioners, vs. SASCHA
VUKASINOVIC, respondent
G.R. No. 222424, [September 21, 2016]
Facts:
Respondent Sascha Vukasinovic (Sascha) was hired by petitioner Fontana
Development Corporation (FDC) as Director for Business Development for one year.
His employment was renewed for another year at the end of his contract.
Respondent Sascha allegedly received a text message informing him that

Nestor Dischoso and Chief Hotel Engineer Villareal, both officers of FDC, were
receiving commissions from company transactions. The respondent then met with
the person who informed him through a text message and offered offered money in
exchange for evidence that will support the allegation. This informant then gave a
photocopy of a check issued to Engineer Villareal. Since the check had an alteration,
respondent Sascha asked the informant to execute an affidavit to provide more
proof. After that, respondent Sascha then paid the informant.
The informant gave two invoices issued by one of the suppliers of FDC as
proof of her allegations. Because respondent discovered discrepancies, he
recommended to FDC‘s General Manager to conduct further investigations on Engr.
Villareal.
Engr. Villarael and the informant were then brought to the National Bureau
of Investigation for questioning. During the questioning, the informant denied that
Engr. Villarael asked for commissions, and later on revealed that she has been
fabricating stories against the engineer in order to receive money from respondent
Sascha. After the investigation, Engr. Villareal then filed a complaint to petitioner
FDC that respondent Sascha paid the informant a huge amount of money in order
to concoct a story depicting that he was a corrupt employee.
Respondent was then given a Show Cause/Preventive Suspension Order from

petitioner FDC informing him of the complaint filed by Engr. Villareal and directing
him to explain why no disciplinary action should be taken against him for violating
the provisions of the Company Code of Conduct on Dishonesty.

Respondent didn‘t deny the allegations and said that it‘s common practice to
give money to informants who give vital information. Because of this, FDC found
him guilty of acts of dishonesty. In FDC‘s Code of Conduct, this carries a maximum
penalty of dismissal. Respondent however refused to acknowledge the receipt of the
Decision of the Notice of Termination, and instead filed a complaint for illegal
dismissal, illegal suspension, regularization, non-payment of salaries, service
incentive leave, 13th month pay, actual, moral, and exemplary damages, attorney‘s
fees, and demands for his reinstatement with full backwages against petitioner
FDC and its officers.
The Labor Arbiter dismissed the complaint for lack of factual or legal basis,
and ruled that respondent cannot be regularized as he is an employee with a legal
and valid fixed-term employment and that his dismissal was for a just cause. The
National Labor Relations Commission affirmed the decision of the Labor Arbiter.
The National Labor Relations Commission also noted that respondent Sascha had
previously filed another complaint before the same branch of the National Labor
Relations Commission involving the same facts, issues, and prayer.
The CA agreed with the NLRC when it ruled that herein respondent's
employment had not ripened into regular employment and that he was validly
dismissed. Respondent, being a managerial employee, can be terminated on the
ground of loss of trust and confidence. However, contrary to the Decision of the
NLRC, the CA ordered the award of unpaid salaries to respondent. The CA held
that petitioner FDC failed to present evidence to show payment of the salaries of
respondent for the period claimed.
Issue:
Whether or not CA gravely erred in not dismissing the petition for deliberate
forum shopping.
Ruling:
There is forum shopping when a party repetitively avails of several judicial

remedies in different courts, simultaneously or successively, all substantially
founded on the same transactions and the same essential facts and circumstances,
and all raising substantially the same issues either pending in or already resolved
adversely by some other court. Forum shopping is an act of malpractice that is
prohibited and condemned because it trifles with the courts and abuses their
processes. It degrades the administration of justice and adds to the already
congested court dockets.
The test for determining the existence of forum shopping is whether a final
judgment in one case amounts to res judicata in another or whether the following
elements of litis pendentia are present: (a) identity of parties, or at least such

parties as representing the same interests in both actions; (b) identity of rights
asserted and reliefs prayed for, the relief being founded on the same facts; and (c)
the identity of the two preceding particulars, such that any judgment rendered in
the other action will, regardless of which party is successful, amount to res judicata
in the action under consideration. Said requisites are also constitutive of the
requisites for auter action pendant or lis pendens.
In this case, all the elements of litis pendencia are present.
It is well-settled that once there is a finding of forum shopping, the penalty is

summary dismissal not only of the petition pending before this Court, but also of
the other case that is pending in a lower court. This is so because twin dismissal is
the punitive measure to those who trifle with the orderly administration of justice.
The CA should have dismissed the case outright without rendering a decision on the
merits of the case. Respondent should be penalized for willfully and deliberately
trifling with court processes. The purpose of the law will be defeated if respondent
will be granted the relief prayed for despite his act of deliberately committing forum
shopping.

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University of San Carlos

School of Law and Governance

Case Digest (S.Y. 2018-2019)

ANGELIKA U. VEGA JD-2 EH405

ATTY. JEFFERSON M. MARQUEZ

I. THE APPLICABLE LAWS

II. BASIC PRINCIPLES

III. HIRING OF EMPLOYEE:

IV. WAGES & WAGE RATIONALIZATION ACT

IV-A. VIOLATION OF WAGE ORDER

1 ANGELIKA U. VEGA JD - 2 EH405

V. WAGE ENFORCEMENT AND RECOVERY

VI. WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES

VII. PAYMENT OF WAGES

VIII. CONDITIONS OF EMPLOYMENT

IX. MINIMUM LABOR STANDARD BENEFITS

2 ANGELIKA U. VEGA JD - 2 EH405

X. OTHER SPECIAL BENEFITS

XI. JURISDICTION OF THE LABOR ARBITER

XII. 2011 NLRC RULES OF PROCEDURE, AMENDED

3 ANGELIKA U. VEGA JD - 2 EH405

1) JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING

Two years later, petitioner Sonza wrote a letter to ABS-CBN‘s President on

Selection and Engagement of Employees. Independent contractors often

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The Social Security Commission ruled in favor of respondent Laudato. It held

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7 ANGELIKA U. VEGA JD - 2 EH405

Respondent Ricardo De Vera is a physician by profession. He offered his

On December 1996, Philcom wrote a letter to respondent De Vera stating

The Labor Arbiter dismissed respondent De Vera‘s complaint stating that De

Whether or not there is an employer-employee relationship between Philcom

No, there is not employer-employee relationship. Instead, respondent De

The requirements of the four-fold test weren‘t established. It was De Vera

9 ANGELIKA U. VEGA JD - 2 EH405

ABS-CBN (petitioner) hired respondents as production assistants (PAs). The

On December 19, 1996, ABS-CBN and the ABS-CBN rank-and-file employees

ABS-CBN maintained that the respondents were employed on program basis;

10 ANGELIKA U. VEGA JD - 2 EH405

Yes, the respondents are regular employees.

ART. 280. REGULAR AND CASUAL EMPLOYMENT. The provisions of

What determines whether a certain employment is regular or otherwise is

Respondents cannot be considered "talents" because they are not actors or

11 ANGELIKA U. VEGA JD - 2 EH405

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G.R. No. 170087 August 31, 2006

In 1995, Francisco was hired by Kasei. She was designated as Accountant

Respondents, on the other, hand, maintained that she is not an employee of

The Labor Arbiter ruled in favor of Francisco which decision as affirmed by

Whether or not an employer-employee relationship exists.

Yes, she is an employee of Kasei.

13 ANGELIKA U. VEGA JD - 2 EH405

Therefore, the petition was granted.

14 ANGELIKA U. VEGA JD - 2 EH405

15 ANGELIKA U. VEGA JD - 2 EH405

In general, a hospital is not liable for the negligence of an independent

16 ANGELIKA U. VEGA JD - 2 EH405

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18 ANGELIKA U. VEGA JD - 2 EH405

After an incident where Dr. Trinidad overheard a phone conversation

19 ANGELIKA U. VEGA JD - 2 EH405