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LABOR STANDARDS 11-12-16


1

GR. No. 174631. October 19, 2011. *


JHORIZALDY UY, petitioner, vs. CENTRO
CERAMICA CORPORATION and/or RAMONITA
Y. SY and MILAGROS U. GARCIA, respondents.
FACTS: The petition is a review for certiorari for the
illegal dismissal of JHORIZALDE UY, against the
respondent company, its President Ramonita Y. Sy
(Sy) and Vice-President Milagros Uy Garcia
(Garcia).
Jhorizaldy Uy was hired by respondent
Centro Ceramica Corporation as full-time sales
executive on March 21, 1999 under probationary
employment for six months. He became a regular
employee on May 1, 2000. Petitioner alleged that
his predicament began when former VP Garcia was
rehired by respondent company in the last quarter
of 2001. Certain incidents involving longtime clients
led to a strained working relationship between him
and Garcia.
On February 19, 2002 after their weekly
sales meeting, he was informed by his superior,
Sales Supervisor Richard Agcaoili, that he
(petitioner) was to assume a new position in the
marketing department, to which he replied that he
will think it over. His friends had warned him to be
careful saying mainitka kay Ms. Garcia. That
same day, he was summoned by Sy and Garcia for
a closed-door meeting during which Sy informed
him of the termination of his services due to
insubordination and advised him to turn over his
samples and files immediately. Sy even
commented that member ka pa naman ng
[S]ingles for [C]hrist pero napakatigas naman ng
ulo mo.
On February 21, 2002, he was summoned
again by Sy but prior to this he was already
informed by Agcaoili that the spouses Sy will give
him all that is due to him plus goodwill money to
settle everything. However, during his meeting with
Sy, he asked for his termination paper and
thereupon Sy told him that If thats what you want
I will give it to you. She added that pag-isipan mo
ang gagawin mo dahil kilala mo naman kami we
are powerful. Petitioner further narrated that on
February 22, 2002, he turned over company

samples, accounts and receivables to Agcaoili.


Thereafter, he did not report for work anymore. But
on March 6, 2002, he was sent a memo asking for
explanation on his failure to meet the quota for
sales executive. He did not receive said memo
because it was not written on the company
stationery and besides he had already been
dismissed.
Finally, on March 13, 2002, respondents sent him
another memo regarding the notice of absence
without leave.
RULING
OF
THE
ARBITER:
dismissed
petitioners complaint on the basis of his finding
that it was petitioner who opted not to report for
work since February 22, 2002, after offering to
resign (as told to his supervisor) because he could
not accept his possible transfer to another
department.
RULING OF NLRC: The dismissal of petitioner was
made under questionable circumstances, thus
giving weight to petitioners assertion that he was
being singled out notwithstanding that all sales
personnel similarly could not meet the P1.5 million
monthly sales quota. Petitioner is illegally
dismissed and thus, entitled to reinstatement with
backwages.
RULING OF CA: evidence on record supports the
Labor Arbiters finding that petitioner informally
severed
the employment
relationship as
manifested by his voluntary transfer of his
accountabilities to his supervisor and thereafter his
act of not reporting for work anymore.
ISSUE: Whether or not petitioner was dismissed
by the respondents
HELD: Yes. Resignation is defined as the
voluntary act of employees who are compelled
by
personal
reasons
to
disassociate
themselves from their employment. It must be
done with the intention of relinquishing an
office,
accompanied
by
the
act
of
abandonment. In this case, the evidence on
record suggests that petitioner did not resign; he
was orally dismissed by Sy. It is this lack of clear,
valid and legal cause, not to mention due process,
that made his dismissal illegal, warranting
reinstatement and the award of backwages. When

there is no showing of a clear, valid and legal


cause for the termination of employment, the
law considers it a case of illegal dismissal.

G.R. No. 165153. September 23, 2008.*


CARLOS C. DE CASTRO, petitioner, vs.
LIBERTY BROADCASTING NETWORK, INC. and
EDGARDO QUIOGUE, respondents.
FACTS:
The
petitioner
commenced
his
employment with respondent Liberty Broadcasting
Network, Inc. (respondent company) as Building
Administrator on August 7, 1995. On May 16, 1996,
the respondent company, through its HRM Senior
Manager (Personnel Manager) Bernard Mandap,
sent a notice to the petitioner requiring him to
explain within forty-eight (48) hours why he should
not be made liable for violation of the Company
Code of Conduct for acts constituting serious
misconduct, fraud and willful breach of the trust
reposed in him as a managerial employee.
In his answer, the petitioner denied the
allegations against him contained in the affidavits of
respondents witnesses, Vicente Niguidula and Gil
Balais. The petitioner labeled all of the
respondents accusations as completely baseless
and sham, designed to protect Niguidula and Balais
who were the favorite boys of respondent Edgardo
Quiogue, the Executive Vice President of the
respondent company. At the petitioners request,
the respondent company scheduled a formal
hearing at 2:00 p.m. of May 28, 1996. However, the
petitioner sent a notice that he would not participate
when he learned through his wife that criminal
cases for estafa and qualified theft had been filed
against him at the Makati Prosecutors Office. He
felt that the hearing was a moro-moro
investigation. On May 24, 1996, the respondent
company further charged the petitioner with
Violation of Company Code of Conduct, based on
the affidavits of Balais, Cristino Samarita, and Jose
Aying. On May 31, 1996, the respondent company
issued a Notice of Dismissal to the petitioner.
De Castro filed a complaint to the NLRC for
illegal dismissal. He maintained that: he could not
encourage solicitation of commissions from
suppliers considering that he was quite new in the
company; the accusations are belated because the

imputed acts happened in 1995; the one gallon of


Delo oil he allegedly carted away was at the room
of Balais at the time, which circumstance he
immediately relayed to Mandap; the affidavits of
Niguidula and Balais are not reliable because he
had altercations with them; in the first week of May
1996, he reprimanded Balais for incurring
unnecessary overtime work, which Balais resented;
on May 9, 1996, Niguidula verbally assaulted and
challenged him to a fight, which he reported to
respondent Quiogue and to the Makati Police.
Attached to the petitioners position paper were the
affidavits of Aying and Ronalisa O. Rosana, a
telephone operator of the company.
LABOR ARBITER: Labor Arbiter Felipe Pati
rendered a Decision in the petitioners favor,
holding the respondent company liable for illegal
dismissal.
NLRC: NLRC reversed the Labor Arbiters
decision and adopted the findings of Labor Arbiter
Tamayo who had reviewed the appeal on the
NLRCs instructions. It ruled that Arbiter Pati erred
in disregarding the affidavits of the respondents
witnesses.
-MOTION FOR RECONSIDERATION DENIEDCA: the NLRC gravely abused its discretion when it
disregarded the affidavits of all the respondents
witnesses, it could not have been possible that
Balais and Niguidula (who had previous
altercations with the petitioner), and Samarita (who
did not previously knowQuiogue) all committed
perjury to execute respondent Quiogues scheme
of removing the petitioner from the company.
Hence, this petition for review on certiorari.
ISSUE: Whether or not De Castro has been
illegally dismissed
HELD: Yes. Respondents charges against
complainant were never substantiated by any
evidence other than the barefaced allegations in
the affidavits of respondents witnesses who are
employees of the company and who had an
altercation with complainant prior to the execution
of their affidavits and charges.
If doubts exist between the evidence presented
by the employer and the employee, the scales
of justice must be tilted in favor of the latterit
is a time-honored rule in controversies between a

laborer and his master, doubts reasonably arising


from the evidence, or in the interpretation of
agreements and writing should be resolved in the
formers favor. The employer failed to prove a just
cause for the termination of the petitioners
employmenta burden the company, as employer,
carries under the Labor Code31and the CA erred
when it saw grave abuse of discretion in the
NLRCs ruling.
3. G.R. No. 177114. January 21, 2010.*
MANOLO A. PEAFLOR, petitioner, vs.
OUTDOOR
CLOTHING
MANUFACTURING
CORPORATION,
NATHANIEL
T.
SYFU,
President, MEDYLENE M. DEMOGENA, Finance
Manager, and PAUL U. LEE, Chairman,
respondents.
FACTS: Peaflor was hired on September 2, 1999
as probationary Human Resource Department
(HRD) Manager of respondent Outdoor Clothing
Manufacturing Corporation (Outdoor Clothing or the
company). As HRD head, Peaflor was expected to
(1) secure and maintain the right quality and
quantity of people needed by the company; (2)
maintain the harmonious relationship between the
employees and management in a role that supports
organizational goals and individual aspirations; and
(3) represent the company in labor cases or
proceedings. Two staff members were assigned to
work with him to assist him in undertaking these
functions.
He claims that his woes began when
the companys Vice President for Operations,
Edgar Lee (Lee), left the company after a big fight
between Lee and Chief Corporate Officer Nathaniel
Syfu (Syfu). Because of his close association with
Lee, Peaflor claimed that he was among those
who bore Syfus ire. Outdoor began downsizing
which singled out his department. The two staffs
were dismissed leaving him as the only member of
HRD compelling him to perform all personnelrelated work. When an Outdoor Clothing employee,
Lynn Padilla , suffered injuries in a bombing
incident, the company required Peaflor to attend
to her hospitalization needs; he had to work outside
office premises to undertake this task. As he was
acting on the companys orders, Peaflor
considered himself to be on official business, but
was surprised when the company deducted six

days salary corresponding to the time he assisted


Padilla.
After Peaflor returned from his field work
on March 13, 2000, his officemates informed him
that while he was away, Syfu had appointed
Nathaniel Buenaobra as the new HRD Manager.
This information was confirmed by Syfus
memorandum of March 10, 2000 to the entire office
stating that Buenaobra was the concurrent HRD
and Accounting Manager. Peaflor was surprised
by the news; he also felt betrayed and discouraged.
He tried to talk to Syfu to clarify the matter, but was
unable to do so. Peaflor claimed that under these
circumstances, he had no option but to resign. He
submitted a letter to Syfu declaring his irrevocable
resignation from his employment with Outdoor
Clothing effective at the close of office hours on
March 15, 2000.
LABOR ARBITER: Peaflor has been illegally
dismissed and ordered the company to reinstate
him to his former or to an equivalent position, and
to pay him his illegally deducted salary for six days,
proportionate 13th month pay, attorneys fees,
moral and exemplary damages
NLRC: The NLRC apparently found Outdoor
Clothings submitted memoranda sufficient to
overturn the labor arbiters decision. Buenaobras
appointment was made only after Peaflor had
submitted his resignation letter, and this was made
to cover the vacancy Peaflors resignation would
create. Thus, Peaflor was not eased out from his
position as HRD manager. No malice likewise was
present in the companys decision to dismiss
Peaflors two staff members; the company simply
exercised its management prerogative to address
the financial problems it faced. Peaflor, in fact,
drafted the dismissal letters of his staff members.
CA: the CA affirmed the NLRCs decision, stating
that Peaflor failed to present sufficient evidence
supporting his claim that he had been
constructively dismissed. The CA ruled that
Peaflors resignation was knowingly and
voluntarily made. Accordingly, it dismissed
Peaflors certiorari petition.

ISSUE: Whether or not Peaflor has been


constructively dismissed
HELD: Yes. The first is the settled rule that in
employee termination disputes, the employer
bears the burden of proving that the
employees dismissal was for just and valid
cause. There can be no valid resignation where the
act was made under compulsion or under
circumstances approximating compulsion, such as
when an employees act of handing in his
resignation was a reaction to circumstances leaving
him no alternative but to resign. Another basic
principle is that expressed in Article 4 of the
Labor
Codethat
all
doubts
in
the
interpretation and implementation of the Labor
Code should be interpreted in favor of the
workingman. Peaflor has, at very least, shown
serious doubts about the merits of the companys
case, particularly in the appreciation of the clinching
evidence on which the NLRC and CA decisions
were based. In such contest of evidence, the cited
Article 4 compels us to rule in Peaflors favor.
Thus, we find that Peaflor was constructively
dismissed given the hostile and discriminatory
working environment he found himself in,
particularly evidenced by the escalating acts of
unfairness against him that culminated in the
appointment of another HRD manager without any
prior notice to him. Where no less than the
companys chief corporate officer was against him,
Peaflor had no alternative but to resign from his
employment.

BONDAD
NORKIS FREE AND INDEPENDENT WORKERS
UNION, petitioner,
vs. NORKIS TRADING COMPANY, INC.,
respondent.
G.R. No. 157098 JUNE 30, 2005
Ponente: PANGANIBAN, J.
FACTS:
This is a Petition for Review under Rule 45
of the Rules of Court.
Petitioner entered into a Collective
Bargaining Agreement (CBA) effective from
August 1, 1994 to July 31, 1999 with
respondent.

In the CBA, it has been agreed in Section 1


that the respondent shall increase the daily
salary of all its regular or permanent
employees effective August 1, 1994.
Increase - FIFTEEN PESOS (P15.00) per
day. (Minimum wage at this time is
P155.00.)
The CBA also contained in Section 2 that
should a law be enacted to increase the
minimum wage, an across-the-board
increase shall likewise be granted by the
company.
On January 27, 1998, the CBA was
overridden by a Memorandum of Agreement
between the parties which stated that all
regular and permanent employees shall
receive Ten (10) pesos per day increase
effective August 1, 1997 and Ten (10) pesos
per day increase effective August 1, 1998.
Following the MOA, the respondent granted
wage increases of P10.00 per day effective
August 1, 1997 and P10.00 per day
effective August 1, 1998. After the first
increase,
the
employees
received
P165.00/day and P175.00/day after the
second increase.
On March 10, 1998, the Regional Tripartite
Wage Productivity Board (RTWPB) of
Region VII issued Wage Order ROVII-06
which established the minimum wage
of P165.00, by mandating a wage increase
of five (P5.00) pesos per day beginning April
1, 1998 (Wage Order Date of Effective:
October 1, 1998)
In accordance with the Wage Order and
Section 2, Article XII of the CBA, petitioner
demanded an across-the-board increase.
Respondent refused to implement the Wage
Order contending that it has been paying its
workers the minimum wage of P165.00
even before the issuance of the Order.
Petitioner filed a preventive mediation
complaint before the National Conciliation
and Mediation Board, pursuant to which the
parties selected Public Voluntary Arbitrator
(Perfecto R. de los Reyes) to decide said
controversy.
The public voluntary arbitrator found
respondent not to have complied with the
wage order. He stated that the CBA
provision in question is worded and
couched in a vague and unclear manner.
The decision was in favor of the petitioner
and ordered respondent to comply with the
Wage Order.

Respondent elevated the case to CA via a


Petition for Certiorari and Prohibition under
Rule 65 of the Rules of Court. CA reversed
the decision of the Public Voluntary
Arbitrator stating that respondent have
lawfully complied with the Wage Order.
Hence, petitioner filed this case to the
Supreme Court.

ISSUE:
Whether or not respondent violated the CBA
in its refusal to grant its employees an
across-the-board increase as a result of the
passage of Wage Order No. ROVII-06.

HELD/RATIO:
NO. The Wage Order was intended to fix a new
minimum wage only, not to grant across-the-board
wage increases to all employees in Region VII. The
intent of the Order is indicated in its title,
Establishing New Minimum Wage Rates, as well as
in its preamble: the purpose, reason or justification
for its enactment was to adjust the minimum wage
of workers to cushion the impact brought about by
the latest economic crisis not only in the Philippines
but also in the Asian region.
A double burden cannot be imposed upon an
employer except by clear provision of law. It would
be unjust, therefore, to interpret Wage Order No.
ROVII-06 to mean that respondent should grant an
across-the-board increase. Such interpretation of
the Order is not sustained by its text.
The Court has always been guided by the State
policy enshrined in the Constitution: social
justice and the protection of the working
class. Social justice does not, however, mandate
that every dispute should be automatically decided
in favor of labor. In every case, justice is to be
granted to the deserving and dispensed in the light
of the established facts and the applicable law and
doctrine.
Petition is denied and decision of CA is affirmed.

TOPIC: ARISING OUT OF AND IN THE


COURSE OF EMPLOYMENT
SUSANA R. SY, petitioner, vs. PHILIPPINE
TRANSMARINE CARRIERS, INC., and/or SSC
SHIP MANAGEMENT PTE., LTD., respondents
G.R. No. 191740 FEBRUARY 11, 2013

Ponente: PERALTA, J.
FACTS:
This is a Petition for Review on Certiorari.

On June 23, 2003, Alfonso N. Sy (AB Sy)


was hired by respondent for and in behalf of
its foreign principal, co-respondent SSC
Ship Management Pte. Ltd.
In their contract of employment Sy was
assigned to work as Able Seaman (AB) on
board the vessel M/V Chekiang for the
duration of ten months, with a basic monthly
salary of US$512.00.
A set of standard provisions established and
implemented by the POEA, called
the Amended
Standard
Terms
and
Conditions Governing the Employment of
Filipino Seafarers on Board Ocean-Going
Vessels was incorporated in AB Sys
contract.
October 1, 2005
o 1:00PM: AB Sy went on shore leave
while they were at the Port of
Jakarta.
o 7:25PM:
The
vessels
agent
received an advice from the local
police that one of its crew members
died ashore.
o 7:35PM: The agent advised the
vessel's master, Capt. Norman C.
Marquez, about the incident.
o 8:50PM: Capt. Marquez and his 3
crew members went to Cipto
Mangunkusumo Hospital where they
confirmed the cadaver to be that of
AB Sy.
Initial investigation of the local police:
o AB Sy was riding on a motorcycle
when he stopped the driver to
urinate at the riverside of the road.
o Since AB Sy had not returned after a
while, the motorcycle driver went to
look for him at the riverside, but the
former was nowhere to be found.
o At 6:30PM, AB Sy's corpse was
found. A forensic pathologist certified
that AB Sy's death was an accident
due to drowning, and that there was
"alcohol 20mg%" in his urine.
AB Sy's body was then repatriated to the
Philippines.
October 8, 2005: Medico-Legal Officer of
the National Bureau of Investigation (NBI)
certified that the cause of death was
Asphyxia by drowning.
Susana R. Sy, widow of AB Sy, demanded
from respondents payment of her husband's
death benefits and compensation.

Respondents denied such claim, since AB


Sy's death occurred while he was on a
shore leave, hence, his death was not workrelated and, therefore, not compensable.
Due to her repeated demands being denied,
petitioner filed, on March 1, 2006, a
complaint against respondents for death
benefits, burial assistance, moral and
exemplary damages, and attorney's fees.
August 28, 2007: The Labor Arbiter (LA)
rendered
a
decision
ordering
the
respondent to pay the petitioner death
benefits
(US$50,000.00)
and
burial
expenses (US$1,000.00).
The LA found that AB Sy was still under the
respondents' employ at the time he
drowned although he was on shore leave;
that while on shore leave, he was still under
the control and supervision of the master or
captain of the vessel as it was provided
under Section 13 of the Contract that the
seafarer before taking a shore leave must
secure the consent of the master of the
vessel; and his leave was conditioned on
"considerations of operations and safety" of
the vessel;
The LA then ruled that AB Sy died due to
causes under his control while on duty and
no sign of him taking his own life was found.
Respondent appealed to NLRC contending
that the death was not work-related.
October 17, 2008: The NLRC dismissed the
appeal and petitioners appeal is partly
granted; modifying the LAs decision by
stating that aside from the death benefits
and burial expenses, respondents are jointly
and severally liable to Complainant for
attorney's fees equivalent to ten percent
(10% ) of her total monetary award (in Ph
peso).
o The NLRC affirmed the LA's finding
that
AB
Sy's
death
was
compensable, saying that if not for
his employment with respondents,
he would have been in some other
place and would not have been
enjoying any employment benefit of
shore leave in Jakarta, Indonesia on
that fateful day; that if not for said
employment, he would not have
gone to the riverside and urinate,
and would not have accidentally
fallen into the river and drowned.
o It found petitioner entitled to an
award of attorney's fees, since she

was constrained to hire the services


of a lawyer to protect her rights but
found no basis for the grant of moral
and exemplary damages.
December 8, 2008: MR by respondents was
denied by NLRC.
Respondents then filed a certiorari with the
CA to which petitioner was required to file
her Comment, but failed to do so.
On the other hand, petitioner moved for the
execution of the NLRC Resolution.
March 5, 2009: Petitioner executed an
Affidavit stating that she had received from
respondents the sum of two million six
hundred ninety-one thousand one hundred
seventy-three
pesos
and
10/100
(P2,691,173.10) as conditional payment of
all her claims against respondents; and that
the payment was made to prevent further
execution proceedings she initiated with the
NLRC and without prejudice to respondents'
petition then pending with the CA.
September 17, 2009: CA rendered its
assailed Decision wherein it granted the
petition for certiorari and reversed the
decision of NLRC. The NLRC NCR OFW
Case was also dismissed. TRO prayed
cannot be issued as it is already moot and
academic. Susana Sy was also ordered to
return the sum of money stated in her
affidavit to the respondents.
o The CA found AB Sy's death not
work-related based on the following
evidence, to wit:
(1) AB Sy was on a shore leave at the time of the
incident;
(2) he was found dead by the police authorities in
Indonesia and upon autopsy, the cause of death
was established as drowning;
(3) he was intoxicated when he died due to traces
of alcohol in his urine; and
(4) the Philippine government authorities, namely,
the Department of Foreign Affairs and the NBI,
confirmed the cause of his death was drowning.
MR filed by Mrs. Sy was denied by CA on
February 26, 2010.
ISSUE/S:
Whether or not the CA committed grave
abuse of discretion in reversing NLRCs
decision wherein it decided in favor of the
employer.
Whether or not AB Sy died under the workrelated causes.

HELD/RATIO:
NO on both issues. While AB Sy's
employment relationship with respondents did not
stop but continues to be in force even when he was
on shore leave, their contract clearly provides that it
is not enough that death occurred during the term
of the employment contract, but must be workrelated to be compensable.
Clearly, to be entitled for
death
compensation benefits from the employer, the
death of the seafarer (1) must be work-related; and
(2) must happen during the term of the employment
contract. Under the Amended POEA Contract,
work-relatedness is now an important requirement.
The qualification that death must be work-related
has made it necessary to show a causal connection
between a seafarers work and his death to be
compensable.
AB Sy was not in the performance of his
duty as a seaman, but was doing an act for his own
personal benefit at the time of the accident. The
cause of AB Sys death at the time he was on shore
leave which was drowning, was not brought about
by a risk which was only peculiar to his employment
as a seaman. In fact, he was in no different
circumstance with other people walking along the
riverside who might also drown if no due care to
ones safety is exercised. Petitioner failed to
establish by substantial evidence her right to the
entitlement of the benefits provided by law.
Under
the
2000
POEA
Amended
Employment Contract, work-related injury is defined
as an injury(ies) resulting in disability or death
arising out of and in the course of employment.
Thus, there is a need to show that the injury
resulting to disability or death must arise (1) out of
employment, and (2) in the course of employment.
Mrs. Sy cannot be granted her claim for
death compensation benefits in the absence of
substantial evidence to prove her entitlement
thereto, since to do so will cause an injustice to the
employer. Otherwise stated, while it is true that
labor contracts are impressed with public interest
and the provisions of the POEA-SEC must be
construed logically and liberally in favor of Filipino
seaman in the pursuit of their employment on board
ocean-going vessels, still the rule is that justice is in
every case for the deserving to be dispensed with
in the light of established facts, the applicable law,
and existing jurisprudence.
Petition is denied. CAs decision is affirmed.
TOPIC: IN CASES OF DOUBTS, SCALES OF
JUSTICE MUST BE IN FAVOR OF THE
EMPLOYEE

HOCHENG
PHILIPPINES
CORPORATION, petitioner, vs. ANTONIO
M.
FARRALES, respondent.
G.R. No. 211497 March 18, 2015
Ponente: REYES, J.
FACTS:
This is a petition for review on certiorari.
May 12, 1998: Antonio M. Farrales was first
employed by HPC as Production Operator,
followed by promotions as:
o Leadman in 2004,
o Acting Assistant Unit Chief in 2007,
and
o Assistant Unit Chief of Production in
2008, a supervisory position with a
monthly salary of P17,600.00.
He was a consistent recipient of citations for
outstanding performance, as well as
appraisal and year-end bonuses.
December 2, 2009: A report reached HPC
management that a motorcycle helmet of an
employee, Reymar Solas (Reymar), was
stolen at the parking lot within its premises
on November 27, 2009.
December 3, 2009: Security Officer
Francisco Paragas III confirmed a video
sequence recorded on closed-circuit
television (CCTV) around 3:00PM on
November 27, 2009 showing Farrales taking
the missing helmet from a parked
motorcycle. Later that day, HPC sent
Farrales a notice to explain his involvement
in the alleged theft.
The investigation was supported by the
employees union, ULO-Hocheng.
Farrales provided an explanation which
stated that
o November 27, 2009:
He
borrowed
a
helmet from his coworker Eric Libutan
(Eric) since they
reside
in
the
same barangay. They
agreed that Eric could
get it at his house or
he could return it the
next time that they
will see each other.
Eric told him that his
motorcycle was black
in color.

As there were many


motorcycles
with
helmets, he asked
another
employee,
Andy Lopega (Andy)
who was in the
parking area where
he could find Erics
helmet.
Andy handed over to
him the supposed
helmet
which
he
believed to be owned
by Eric, then he went
home.
o November 28, 2009 (6:00AM):
He
saw
Eric
at
their barangay and told him
to get the helmet. But Eric
was in a rush to go to work,
he did not bother to get it.
o December 3, 2009 (morning):
Upon seeing Eric in the
workplace, Farrales asked
him why he did not get the
helmet from his house.
Eric told him that, Hindi po
sa akin yung nakuha nyong
helmet.
Farrales was shocked and
he immediately phoned the
HPCs guard to report the
situation that he mistook the
helmet which he thought
belonged to Eric.
He finally found the owner
thereof,
which
is
Jun
Reyess (Jun) nephew,
Reymar, who was with him
on November 27, 2009.
He promptly apologized to
Jun and undertook to return
the helmet the following day
and explained that it was an
honest mistake.
December 10, 2009 (1:00PM): A hearing
was held.
o Andy Lopega said that at the time of
the alleged incident, he was already
seated on his motorcycle and about
to leave the company compound
when Farrales approached and
asked him to hand to him a yellow
helmet hanging from a motorcycle
parked next to him.

Andy hesitated, Farrales explained


that he owned it, and so Andy
complied.
o Eric also testified and said that he
had specifically told Farrales that his
helmet was colored red and black
and his motorcycle was a black
Honda XRM-125 with plate number
8746-DI, parked near the perimeter
fence away from the walkway to the
pedestrian gate.
o The
CCTV
showed
Farrales
instructing Andy to fetch a yellow
helmet from a blue Rossi 110
motorcycle with plate number 3653DN parked in the middle of the
parking lot, opposite the location
given by Eric.
o Farrales in his defense claimed he
could no longer remember the
details of what transpired that time,
nor could he explain why he missed
Erics specific directions.
February 15, 2010: HPC issued a Notice of
Termination to Farrales dismissing him for
violation of Article 69, Class A, Item No. 29
of the HPC Code of Discipline, which
provides that stealing from the company, its
employees and officials, or from its
contractors, visitors or clients, is akin
to serious misconduct and fraud or willful
breach by the employee of the trust reposed
in him by his employer or duly authorized
representative, which are just causes for
termination of employment under Article 282
of the Labor Code.
March 25, 2010: Farrales filed a complaint
for illegal dismissal, non-payment of
appraisal and mid-year bonuses, service
incentive leave pay and 13th month pay. He
also prayed for reinstatement, or in lieu
thereof, separation pay with full backwages,
plus moral and exemplary damages and
attorneys fees.
During the mandatory conference, HPC
paid Farrales P10,914.51, representing his
13th month pay for the period of January to
February 2010 and vacation leave/sick
leave conversion. Farrales agreed to waive
his claim for incentive bonus.
April 29, 2011, the LA ruled in favor of
Farrales.
On appeal by petitioner, the NLRC reversed
the LA, and denied Farrales motion for
reconsideration,
finding
substantial
o

evidence of just cause to terminate


Farrales.
On petition for certiorari to the CA, it found
that HPC was able to perfect its appeal by
posting a bond equivalent to the monetary
award of P897,893.37 and paying the
appeal fees by postal money order in the
amount of P520.00.
On the substantive issues, the appellate
court agreed with the LA that Farrales act of
taking Reymars helmet did not amount to
theft, holding that HPC failed to prove that
Farrales conduct was induced by a
perverse and wrongful intent to gain, in light
of the admission of Eric that he did let
Farrales borrow one of his two helmets, only
that Farrales mistook Reymars helmet as
the one belonging to him.

ISSUE:
Whether or not Antonio Farrales removal
from office is caused by illegal dismissal for
failure to prove the existence of just cause
on the part of Hocheng Philippines
Corporation.
HELD/RATIO:
YES. To validly dismiss an employee, the
law requires the employer to prove the existence of
any of the valid or authorized causes, which, as
enumerated in Article 282 of the Labor Code, are:
(a)
serious
misconduct
or
willful
disobedience by the employee of the lawful orders
of his employer or the latters representative in
connection with his work;
(b) gross and habitual neglect by the
employee of his duties;
(c) fraud or willful breach by the employee
of the trust reposed in him by his employer or
his duly authorized representative;
(d) commission of a crime or offense by the
employee against the person of his employer
or any immediate member of his family or
his duly authorized representative; and
(e) other causes analogous to the
foregoing.
As a supervisorial employee, Farrales is
admittedly subject to stricter rules of trust and
confidence, and thus pursuant to its management
prerogative HPC enjoys a wider latitude of
discretion to assess his continuing trustworthiness,
than if he were an ordinary rank-and-file
employee. HPC therefore insists that only
substantial proof of Farrales guilt for theft is
needed to establish the just causes to dismiss him,
as the NLRC lengthily asserted in its decision.

Article 4 of the Labor Code mandates that


all doubts in the implementation and interpretation
of the provisions thereof shall be resolved in favor
of labor. Consistent with the States avowed policy
to afford protection to labor, as Article 3 of the
Labor Code and Section 3, Article XIII of the 1987
Constitution have enunciated, particularly in relation
to the workers security of tenure, the Court held
that [t]o be lawful, the cause for termination must
be a serious and grave malfeasance to justify the
deprivation of a means of livelihood. This is merely
in keeping with the spirit of our Constitution and
laws which lean over backwards in favor of the
working class, and mandate that every doubt must
be resolved in their favor. Moreover, the penalty
imposed on the erring employee ought to be
proportionate to the offense, taking into account its
nature
and
surrounding
circumstances.
As aptly pointed out by the LA, while HPC
has the onus probandi that the taking of Reymars
helmet by Farrales was with intent to gain, it failed
to discharge this burden, as shown by the following
circumstances: Farrales sought and obtained the
permission of Eric, his co-employee as well
as barangay co-resident, to borrow his helmet; at
the parking lot, Farrales asked another employee,
Andy, to fetch a yellow helmet from one of the
parked motorcycles, mistakenly thinking it belonged
to Eric (whom he knew owned two helmets); the
following day, November 28, Farrales asked Eric
why he had not dropped by his house to get his
helmet, and Eric replied that Farrales got the wrong
helmet because he still had his other helmet with
him; Farrales immediately sought the help of the
company guards to locate the owner of the yellow
helmet, who turned out to be Reymar; Farrales
apologized to Reymar for his mistake, and his
apology was promptly accepted. All these
circumstances belie HPCs claim that Farrales took
Reymars helmet with intent to gain, the LA said.
The Court agrees with the CA that Farrales
committed no serious or willful misconduct or
disobedience to warrant his dismissal. It is not
disputed that Farrales lost no time in returning the
helmet to Reymar the moment he was apprised of
his mistake by Eric, which proves, according to the
CA, that he was not possessed of a depravity of
conduct as would justify HPCs claimed loss of trust
in him. Farrales immediately admitted his error to
the company guard and sought help to find the
owner of the yellow helmet, and this, the appellate
court said, only shows that Farrales did indeed
mistakenly think that the helmet he took belonged
to
Eric.
As pointed out by CA, although the alleged
theft occurred within its premises, HPC was not

prejudiced in any way by Farrales conduct since


the helmet did not belong to it but to Reymar. In
light of Article 69, Class A, Item No. 29 of the HPC
Code of Discipline, this observation may be
irrelevant, although it may be that the LA regarded
it as proving HPCs bad faith.
Theft committed by an employee against a
person other than his employer, if proven by
substantial evidence, is a cause analogous to
serious misconduct. Misconduct is improper or
wrong conduct, it is the transgression of some
established and definite rule of action, a forbidden
act, a dereliction of duty, wilful in character, and
implies wrongful intent and not mere error in
judgment. The misconduct to be serious must be of
such grave and aggravated character and not
merely trivial or unimportant. Such misconduct,
however serious, must, nevertheless, be in
connection with the employees work to constitute
just cause for his separation.
But where there is no showing of a clear,
valid and legal cause for termination of
employment, the law considers the case a matter of
illegal dismissal. If doubts exist between the
evidence presented by the employer and that of the
employee, the scales of justice must be tilted in
favor of the latter. The employer must affirmatively
show rationally adequate evidence that the
dismissal was for a justifiable cause.
Nonetheless, the Court agrees with the CAs
dismissal of the award of moral and exemplary
damages for lack of merit. There is no satisfactory
proof that the concerned officers of HPC acted in
bad faith or with malice in terminating Farrales.
Notwithstanding the LAs assertion to this effect,
Farrales bare allegations of bad faith deserve no
credence, and neither is the mere fact that he was
illegally dismissed sufficient to prove bad faith on
the part of HPCs officers. But concerning the
award of attorneys fees, Farrales was dismissed
for a flimsy charge, and he was compelled to
litigate to secure what is due him which HPC
unjustifiably
withheld.
Petition for review filed by HPC is denied.

Petitioner Rodolfo J. Serrano was hired on


September 28, 1992 as bus conductor by
respondent Severino Santos Transit, a bus
company owned and operated by its co-respondent
Severino Santos.
After 14 years of service or on July 14, 2006,
petitioner applied for optional retirement from the
company whose representative advised him that he
must first sign the already prepared Quitclaim
before his retirement pay could be released. As
petitioners request to first go over the computation
of his retirement pay was denied, he signed the
Quitclaim on which he wrote U.P. (under protest)
after his signature, indicating his protest to the
amount of P75,277.45 which he received,
computed by the company at 15 days per year of
service.
Petitioners Argument:
Petitioner soon after filed a complaint before the
Labor Arbiter, alleging that the company erred in its
computation since under Republic Act No. 7641,
otherwise known as the Retirement Pay Law, his
retirement pay should have been computed at
22.5 days per year of service to include the
cash equivalent of the 5-day service incentive
leave (SIL) and 1/12 of the 13th month pay which
the company did not.
Respondents Argument:
The company maintained, however, that the
Quitclaim signed by petitioner barred his claim and,
in any event, its computation was correct since
petitioner was not entitled to the 5-day SIL and prorated 13th month pay for, as a bus conductor, he
was paid on commission basis. Respondents,
noting that the retirement differential pay amounted
to only P1,431.15, explained that in the
computation of petitioners retirement pay, five
months were inadvertently not included because
some index cards containing his records had been
lost.
Labor Arbiters Decision:

CARLOS
THIRD DIVISION
RODOLFO J. SERRANO v. SEVERINO SANTOS
TRANSIT and/or SEVERINO SANTOS
August 9, 2010
G.R. No. 187698
CARPIO MORALES, J.:
Facts:

By Decision of February 15, 2007, Labor Arbiter


Cresencio Ramos, Jr. ruled in favor of petitioner,
awarding him P116,135.45 as retirement pay
differential, and 10% of the total monetary award as
attorneys fees. In arriving at such computation, the
Labor Arbiter ratiocinated:
In the same Labor Advisory on Retirement Pay
Law, it was likewise decisively made clear that the
law expanded the concept of one-half month salary

from the usual one-month salary divided by two, to


wit:
B. COMPUTATION OF RETIREMENT PAY
A covered employee who retires pursuant to RA
7641 shall be entitled to retirement pay equivalent
to at least one-half (1/12) month salary for every year
of service, a fraction of at least six (6) months being
considered as one whole year.
The law is explicit that 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 service incentive leaves unless
the parties provide for broader inclusions. Evidently,
the law expanded the concept of one-half month
salary from the usual one-month salary divided by
two.
The retirement pay is equal to half-months pay per
year of service. But half-months pay is expanded
because it means not just the salary for 15 days but
also one-twelfth of the 13th-month pay and the
cash value of five-day service incentive leave. THIS
IS THE MINIMUM. The retirement pay package can
be improved upon by voluntary company policy, or
particular agreement with the employee, or through
a collective bargaining agreement. (The Labor
Code with Comments and Cases, C.A. Azcunea,
Vol. II, page 765, Fifth Edition 2004).
Thus, having established that 22.5 days pay per
year of service is the correct formula in arriving at
the complete retirement pay of complainant and
inasmuch as complainants daily earning is based
on commission earned in a day, which varies each
day, the next critical issue that needs discernment
is the determination of what is a fair and rational
amount of daily earning of complainant to be used
in the computation of his retirement pay.
While complainant endeavored to substantiate his
claim that he earned average daily commission
of P700.00, however, the documents he presented
are not complete, simply representative copies,
therefore unreliable. On the other haNd, while
respondents question complainants use of P700.00
(daily income) as basis in determining the latters
correct retirement pay, however it does not help
their defense that they did not present a single
Conductors Trip Report to contradict the claim of
complainant. Instead, respondents adduced a
handwritten summary of complainants monthly
income from 1993 until June 2006. It must be noted
also that complainant did not contest the amounts

stated on the summary of his monthly income as


reported by respondents. Given the above
considerations, and most importantly that
complainant did not dispute the figures stated in
that document, we find it logical, just and equitable
for both parties to rely on the summary of monthly
income provided by respondent, thus, we added
complainants monthly income from June 2005 until
June 2006 or the last twelve months and we arrived
at P189,591.30) and we divided it by twelve (12) to
arrive at complainants average monthly earning
of P15,799.28. Thereafter, the average monthly
of P15,799.28 is divided by twenty-six (26) days,
the factor commonly used in determining the
regular working days in a month, to arrive at his
average daily income of P607.66. Finally, P607.66
(average daily income) x 22.5 days = P13,672.35 x
14 (length of service) = P191,412.90 (COMPLETE
RETIREMENT
PAY). However,
inasmuch as
complainant already received P75,277.45, the
retirement differential pay due him is P116,135.45
(P191,412.90 P75,277.45). (underscoring partly in
the original and partly supplied)
NLRC Decision:
The National Labor Relations Commission (NLRC)
to which respondents appealed reversed the Labor
Arbiters ruling and dismissed petitioners complaint
by Decision dated April 23, 2008. It, however,
ordered respondents to pay retirement differential
in the amount of P2,365.35.
Citing R & E Transport, Inc. v. Latag, the NLRC
held that since petitioner was paid on purely
commission basis, he was excluded from the
coverage of the laws on 13th month pay and SIL
pay, hence, the 1/12 of the 13thmonth pay and the 5day SIL should not be factored in the computation
of his retirement pay.
Court of Appeals Decision:
By the assailed Decision of February 11, 2009, the
appellate court affirmed the NLRCs ruling, it
merely holding that it was based on substantial
evidence, hence, should be respected.
Supreme Courts Decision:
The petition is meritorious.
Admittedly, petitioner worked for 14 years for the
bus company which did not adopt any retirement
scheme. Even if petitioner as bus conductor was
paid on commission basis then, he falls within the

coverage of R.A. 7641 and its implementing


rules. As thus correctly ruled by the Labor Arbiter,
petitioners retirement pay should include the cash
equivalent of the 5-day SIL and 1/12 of the
13th month pay.
The affirmance by the appellate court of the
reliance by the NLRC on R & E Transport, Inc. is
erroneous. In said case, the Court held that a taxi
driver paid according to the boundary system is not
entitled to the 13th month and the SIL pay, hence,
his retirement pay should be computed on the sole
basis of his salary.
For purposes, however, of applying the law on SIL,
as well as on retirement, the Court notes that there
is a difference between drivers paid under the
boundary system and conductors who are paid on
commission basis.
In practice, taxi drivers do not receive fixed
wages. They retain only those sums in excess of
the boundary or fee they pay to the owners or
operators of the vehicles.[7] Conductors, on the
other hand, are paid a certain percentage of the
bus earnings for the day.
It bears emphasis that under P.D. 851 or the SIL
Law, the exclusion from its coverage of workers
who are paid on a purely commission basis is only
with respect to field personnel. The more recent
case of Auto Bus Transport Systems, Inc., v.
Bautista[8] clarifies that an employee who is paid on
purely commission basis is entitled to SIL:
A careful perusal 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 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.
xxxx
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 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.

SECOND DIVISION
AUTO BUS TRANSPORT
vs. ANTONIO BAUTISTA,
May 16, 2005
G.R. No. 156367
CHICO-NAZARIO, J.:

SYSTEMS,

INC

Facts:
Since 24 May 1995, respondent Antonio Bautista
has been employed by petitioner Auto Bus
Transport Systems, Inc. (Autobus), as driverconductor 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 03 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.
Respondents Argument:
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 respondents 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.
Petitioners Argument:
The respondents employment was replete with
offenses involving reckless imprudence, gross
negligence, and dishonesty. Petitioner presented
copies of letters, memos, irregularity reports, and
warrants of arrest pertaining to several incidents
wherein respondent was involved.
Furthermore, petitioner avers that in the exercise of
its
management
prerogative,
respondents
employment was terminated only after the latter
was provided with an opportunity to explain his side
regarding the accident on 03 January 2000.
Labor Arbiters Decision:
On 29 September 2000, based on the pleadings
and supporting evidence presented by the parties,
Labor Arbiter Monroe C. Tabingan dismissed the
complaint
for
Illegal
Dismissal.
However,
Respondent must pay to the Petitioner the
following:
a. his 13th month pay from the date of his hiring to
the date of his dismissal, presently computed at
P78,117.87;
b. his service incentive leave pay for all the years
he had been in service with the respondent,
presently computed at P13,788.05.
Not satisfied with the decision of the Labor Arbiter,
petitioner appealed the decision to the NLRC on 28
September 2001.
NLRCs Decision:
MODIFIED the decision of the Labor Arbiter by
deleting the award of 13th month pay. The other
findings are AFFIRMED.
[T]he Rules and Regulations Implementing
Presidential Decree No. 851, particularly Sec. 3
provides:

Section 3. Employers covered. The Decree shall


apply to all employers except to:
xxx xxx xxx
e) employers of those who are paid on purely
commission, boundary, or task basis, performing a
specific work, irrespective of the time consumed in
the performance thereof. xxx.
Records show that complainant, in his position
paper, admitted that he was paid on a commission
basis.
In view of the foregoing, we deem it just and
equitable to modify the assailed Decision by
deleting the award of 13th month pay to the
complainant.
Displeased with only the partial grant of its appeal
to the NLRC, petitioner sought the review of said
decision with the Court of Appeals which was
subsequently denied by the appellate court in a
Decision dated 06 May 2002.
ISSUES
Whether or not respondent is entitled to service
incentive leave
RULING OF THE COURT
The disposition of the first issue revolves around
the proper interpretation of Article 95 of the Labor
Code vis--vis Section 1(D), Rule V, Book III of the
Implementing Rules and Regulations of the Labor
Code which provides:
Art. 95. 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.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. 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 perusal 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.[8]
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 general and unlimited terms are
restrained and limited by the particular terms that
they follow.[9] 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.
Therefore, petitioners contention that respondent is
not entitled to the grant of service incentive leave
just because he was paid on purely commission
basis is misplaced. 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 a 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.
To this discussion by the BWC, the petitioner differs
and postulates that under said advisory opinion, no
employee would ever be considered a field
personnel because every employer, in one way or
another, exercises control over his employees.
Petitioner further argues that the only criterion that
should be considered is the nature of work of the
employee in that, if the employees job requires that
he works away from the principal office like that of a
messenger or a bus driver, then he is inevitably a
field personnel.

We are not persuaded. 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 employees
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
employees time and performance are constantly
supervised by the employer.
Therefore, as correctly concluded by the appellate
court, respondent is not a field personnel but a
regular employee who performs tasks usually
necessary and desirable to the usual trade of
petitioners business. Accordingly, respondent is
entitled to the grant of service incentive leave.
SECOND DIVISION
ARIEL L. DAVID, doing business under the
name and style "YIELS HOG DEALER
vs. JOHN G. MACASIO
July 2, 2014
G.R. No. 195466
BRION, J.:
Facts:
In January 2009, Macasio filed before the Labor
Arbiter (LA) a complaint against petitioner Ariel L.
David, doing business under the name and style
"Yiels Hog Dealer," for non-payment of overtime
pay, holiday pay and 13th month pay. He also
claimed payment for moral and exemplary
damages and attorneys fees. Macasio also
claimed payment for service incentive leave (SIL).
Respondents Argument:
he had been working as a butcher for David since
January 6, 1995. He 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.
He further alleged that David did not start his
business only in 2005. He pointed to the Certificate
of Employment that David issued in his favor which
placed the date of his employment, albeit
erroneously, in January 2000. Second, he reported
for work every day which the payroll or time record
could have easily proved had David submitted them
in evidence.
Petitioners Argument:
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.
David further claimed that Macasio was not his
employee as he hired the latter on "pakyaw" or task
basis. He also claimed that he issued the
Certificate of Employment, upon Macasios request,
only for overseas employment purposes. He
pointed to the "Pinagsamang Sinumpaang
Salaysay, executed by Presbitero Solano and
Christopher (Antonio Macasios co-butchers), to
corroborate his claims.
Labor Arbiters Decision:
On the April 30, 2009, the LA dismissed
Macasios complaint for lack of merit.
The LA gave credence to Davids claim that he
engaged Macasio on "pakyaw" or task basis. The
LA noted the following facts to support this finding:
(1) Macasio received the fixed amount of P700.00
for every work done, regardless of the number of
hours that he spent in completing the task and of
the volume or number of hogs that he had to chop
per engagement; (2) Macasio usually worked for
only four hours, beginning from 10:00 p.m. up to
2:00 a.m. of the following day; and (3) the P700.00
fixed wage far exceeds the then prevailing daily
minimum wage of P382.00. The LA added that the

nature of Davids business as hog dealer supports


this "pakyaw" or task basis arrangement.
The LA concluded that as Macasio was engaged on
"pakyaw" or task basis, he is not entitled to
overtime, holiday, SIL and 13th month pay.
NLRCs Decision:
On May 26, 2010, the NLRC affirmed the LA
ruling.
The NLRC observed that David did not require
Macasio to observe an eight hour work schedule to
earn the fixed P700.00 wage; and that Macasio had
been performing a non-time work, pointing out that
Macasio was paid a fixed amount for the
completion of the assigned task, irrespective of the
time consumed in its performance. Since Macasio
was paid by result and not in terms of the time that
he spent in the workplace, Macasio is not covered
by the Labor Standards laws on overtime, SIL and
holiday pay, and 13th month pay under the Rules
and Regulations Implementing the 13th month pay
law.
Court of Appeals Decision:
On November 22, 2010, the CA partly granted
Macasios certiorari petition and reversed the
NLRCs ruling for having been rendered with grave
abuse of discretion.
While the CA agreed with the LA and the NLRC that
Macasio was a task basis employee, it
nevertheless found Macasio entitled to his
monetary claims following the doctrine laid
down in Serrano v. Severino Santos Transit..
The CA explained that as a task basis employee,
Macasio is excluded from the coverage of holiday,
SIL and 13th month pay only if he is likewise a
"field personnel." As defined by the Labor Code, a
"field personnel" is one who performs the work
away from the office or place of work and whose
regular work hours cannot be determined with
reasonable certainty. In Macasios case, the
elements that characterize a "field personnel" are
evidently lacking as he had been working as a
butcher at Davids "Yiels Hog Dealer" business in
Sta. Mesa, Manila under Davids supervision and
control, and for a fixed working schedule that starts
at 10:00 p.m.
Accordingly, the CA awarded Macasios claim for
holiday, SIL and 13th month pay for three years,
with 10% attorneys fees on the total monetary
award. The CA, however, denied Macasios claim
for moral and exemplary damages for lack of basis.
The Issue
The issue revolves around the proper application
and interpretation of the labor law provisions on
holiday, SIL and 13th month pay to a worker
engaged on "pakyaw" or task basis. In the context
of the Rule 65 petition before the CA, the issue is

whether the CA correctly found the NLRC in grave


abuse of discretion in ruling that Macasio is entitled
to these labor standards benefits.
The Courts Ruling
We partially grant the petition.
In this petition, David essentially asks the question
whether Macasio is entitled to holiday, SIL and
13th month pay. This one is a question of law. The
determination of this question of law however is
intertwined with the largely factual issue of whether
Macasio falls within the rule on entitlement to these
claims or within the exception. In either case, the
resolution of this factual issue presupposes another
factual matter, that is, the presence of an employeremployee relationship between David and Macasio.
In insisting before this Court that Macasio was not
his employee, David argues that he engaged the
latter on "pakyaw" or task basis. Very noticeably,
David confuses engagement on "pakyaw" or task
basis with the lack of employment relationship.
Impliedly, David asserts that their "pakyawan" or
task basis arrangement negates the existence of
employment relationship.
At the outset, we reject this assertion of the
petitioner. Engagement on "pakyaw" or task
basis does not characterize the relationship
that may exist between the parties, i.e., whether
one
of
employment
or
independent
contractorship. Article 97(6) of the Labor Code
defines wages as "xxx the remuneration or
earnings, however designated, capable of being
expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission
basis, or other method of calculating the same,
which is payable by an employer to an employee
under a written or unwritten contract of employment
for work done or to be done, or for services
rendered or to be rendered[.]"35 In relation to Article
97(6), Article 10136 of the Labor Code speaks of
workers paid by results or those whose pay is
calculated in terms of the quantity or quality of their
work output which includes "pakyaw" work and
other non-time work.
First, the LA and the NLRC denied Macasios claim
not because of the absence of an employeremployee but because of its finding that since
Macasio is paid on pakyaw or task basis, then he is
not entitled to SIL, holiday and 13th month pay.
Second, we consider it crucial, that in the separate
illegal dismissal case Macasio filed with the LA, the
LA, the NLRC and the CA uniformly found the
existence of an employer-employee relationship.37
In other words, aside from being factual in nature,
the existence of an employer-employee relationship
is in fact a non-issue in this case. To reiterate, in
deciding a Rule 45 petition for review of a labor

decision rendered by the CA under 65, the narrow


scope of inquiry is whether the CA correctly
determined the presence or absence of grave
abuse of discretion on the part of the NLRC. In
concrete question form, "did the NLRC gravely
abuse its discretion in denying Macasios claims
simply because he is paid on a non-time basis?"
At any rate, even if we indulge the petitioner, we
find his claim that no employer-employee
relationship exists baseless. Employing the control
test,38 we find that such a relationship exist in the
present case.
Even a factual review shows that Macasio is
Davids employee
To determine the existence of an employeremployee relationship, four elements generally
need to be considered, namely:
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the power to control the employees conduct.
These elements or indicators comprise the socalled "four-fold" test of employment relationship.
Macasios relationship with David satisfies this test.
First, David engaged the services of Macasio, thus
satisfying the element of "selection and
engagement of the employee." David categorically
confirmed this fact when, in his "Sinumpaang
Salaysay," he stated that "nag apply po siya sa akin
at kinuha ko siya na chopper[.] Also, Solano and
Antonio stated in their "Pinagsamang Sinumpaang
Salaysay that "[k]ami po ay nagtratrabaho sa Yiels
xxx na pag-aari ni Ariel David bilang butcher" and
"kilalanamin si xxx Macasio na isa ring butcher xxx
ni xxx David at kasama namin siya sa aming
trabaho."
Second, David paid Macasios wages.Both David
and Macasio categorically stated in their respective
pleadings before the lower tribunals and even
before this Court that the former had been paying
the latter P700.00 each day after the latter had
finished the days task. Solano and Antonio also
confirmed this fact of wage payment in their
"Pinagsamang
Sinumpaang
Salaysay.
This
satisfies the element of "payment of wages."
Third, David had been setting the day and time
when Macasio should report for work. This power to
determine the work schedule obviously implies
power of control. By having the power to control
Macasios work schedule, David could regulate
Macasios work and could even refuse to give him
any assignment, thereby effectively dismissing him.
And fourth, David had the right and power to control
and supervise Macasios work as to the means and
methods of performing it. In addition to setting the
day and time when Macasio should report for work,

the established facts show that David rents the


place where Macasio had been performing his
tasks. Moreover, Macasio would leave the
workplace only after he had finished chopping all of
the hog meats given to him for the days task. Also,
David would still engage Macasios services and
have him report for work even during the days
when only few hogs were delivered for butchering.
Under this overall setup, all those working for
David, including Macasio, could naturally be
expected to observe certain rules and requirements
and David would necessarily exercise some degree
of control as the chopping of the hog meats would
be subject to his specifications. Also, since Macasio
performed his tasks at Davids workplace, David
could easily exercise control and supervision over
the former. Accordingly, whether or not David
actually exercised this right or power to control is
beside the point as the law simply requires the
existence of this power to control or, as in this
case, the existence of the right and opportunity to
control and supervise Macasio.
In sum, the totality of the surrounding
circumstances of the present case sufficiently
points to an employer-employee relationship
existing between David and Macasio.
Macasio is engaged on "pakyaw" or task basis
At this point, we note that all three tribunals the
LA, the NLRC and the CA found that Macasio
was engaged or paid on "pakyaw" or task basis.
This factual finding binds the Court under the rule
that factual findings of labor tribunals when
supported by the established facts and in accord
with the laws, especially when affirmed by the CA,
is binding on this Court.
A distinguishing characteristic of "pakyaw" or task
basis engagement, as opposed to straight-hour
wage payment, is the non-consideration of the time
spent in working. In a task-basis work, the
emphasis is on the task itself, in the sense that
payment is reckoned in terms of completion of the
work, not in terms of the number of time spent in
the completion of work. Once the work or task is
completed, the worker receives a fixed amount as
wage,
without
regard
to
the
standard
measurements of time generally used in pay
computation.
In Macasios case, the established facts show that
he would usually start his work at 10:00 p.m.
Thereafter, regardless of the total hours that he
spent at the workplace or of the total number of the
hogs assigned to him for chopping, Macasio would
receive the fixed amount of P700.00 once he had
completed his task. Clearly, these circumstances
show a "pakyaw" or task basis engagement that all
three tribunals uniformly found.

In sum, the existence of employment relationship


between the parties is determined by applying the
"four-fold" test; engagement on "pakyaw" or task
basis does not determine the parties relationship
as it is simply a method of pay computation.
Accordingly, Macasio is Davids employee, albeit
engaged on "pakyaw" or task basis.
As an employee of David paid on pakyaw or task
basis, we now go to the core issue of
whether Macasio is entitled to holiday, 13th month,
and SIL pay.
To resolve these issues, we need tore-visit the
provisions involved.
Provisions governing SIL and holiday pay
Article 82 of the Labor Code provides the
exclusions from the coverage of Title I, Book III of
the Labor Code - provisions governing working
conditions and rest periods.
Art. 82. Coverage. The provisions of [Title I] shall
apply to employees in all establishments and
undertakings whether for profit or not, but not to
government employees, managerial employees,
field personnel, members of the family of the
employer who are dependent on him for support,
domestic helpers, persons in the personal service
of another, and workers who are paid by results as
determined by the Secretary of Labor in appropriate
regulations.
xxxx
"Field personnel" shall refer to non-agricultural
employees who regularly perform their duties away
from the principal place of business or branch office
of the employer and whose actual hours of work in
the field cannot be determined with reasonable
certainty. [emphases and underscores ours]
Among the Title I provisions are the provisions on
holiday pay (under Article 94 of the Labor Code)
and SIL pay (under Article 95 of the Labor Code).
Under Article 82,"field personnel" on one hand and
"workers who are paid by results" on the other
hand, are not covered by the Title I provisions. The
wordings of Article82 of the Labor Code additionally
categorize workers "paid by results" and "field
personnel" as separate and distinct types of
employees who are exempted from the Title I
provisions of the Labor Code.
The pertinent portion of Article 94 of the Labor
Code and its corresponding provision in the
IRR reads:
Art. 94. Right to holiday pay. (a) Every worker shall
be paid his regular daily wage during regular
holidays,
except
in
retail
and
service
establishments regularly employing less than (10)
workers[.]
xxxx

SECTION 1. Coverage. This Rule shall apply to


all employees except:
xxxx
(e)Field personnel and other employees whose
time and performance is unsupervised by the
employer including those who are engaged on task
or contract basis, purely commission basis, or
those who are paid a fixed amount for performing
work irrespective of the time consumed in the
performance thereof. [emphases ours]
On the other hand, Article 95 of the Labor Code
and
its
corresponding
provision
in
the
IRR48 pertinently provides:
Art. 95. Right to service incentive. (a) Every
employee who has rendered at least one year of
service shall be entitled to a yearly service
incentive leave of five days with pay.
(b) This provision shall not apply to those who are
already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five
days and those employed in establishments
regularly employing less than ten employees or in
establishments exempted from granting this benefit
by the Secretary of Labor and Employment after
considering the viability or financial condition of
such establishment.
xxxx
Section 1. Coverage. This rule shall apply to all
employees except:
xxxx
(e) Field personnel and other employees whose
performance is unsupervised by the employer
including those who are engaged on task or
contract basis, purely commission basis, or those
who are paid a fixed amount for performing work
irrespective of the time consumed in the
performance thereof. [emphasis ours]
Under these provisions, the general rule is that
holiday and SIL pay provisions cover all
employees. To be excluded from their coverage, an
employee must be one of those that these
provisions expressly exempt, strictly in accordance
with the exemption. Under the IRR, exemption from
the coverage of holiday and SIL pay refer to "field
personnel and other employees whose time and
performance is unsupervised by the employer
including those who are engaged on task or
contract basis[.]" Note that unlike Article 82 of the
Labor Code, the IRR on holiday and SIL pay do not
exclude employees "engaged on task basis" as a
separate and distinct category from employees
classified as "field personnel." Rather, these
employees are altogether merged into one
classification of exempted employees.
Because of this difference, it may be argued that
the Labor Code may be interpreted to mean that

those who are engaged on task basis, per se, are


excluded from the SIL and holiday payment since
this is what the Labor Code provisions, in contrast
with the IRR, strongly suggest. The arguable
interpretation of this rule may be conceded to be
within the discretion granted to the LA and NLRC
as the quasi-judicial bodies with expertise on labor
matters.
However, as early as 1987 in the case of Cebu
Institute of Technology v. Ople49 the phrase "those
who are engaged on task or contract basis" in the
rule has already been interpreted to mean as
follows:
[the phrase] should however, be related with "field
personnel" applying the rule on ejusdem generis
that general and unlimited terms are restrained and
limited by the particular terms that they follow xxx
Clearly, petitioner's teaching personnel cannot be
deemed field personnel which refers "to nonagricultural 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. [Par. 3, Article 82, Labor Code
of the Philippines]. Petitioner's claim that private
respondents are not entitled to the service incentive
leave benefit cannot therefore be sustained.
In short, the payment of an employee on task or
pakyaw basis alone is insufficient to exclude one
from the coverage of SIL and holiday pay. They are
exempted from the coverage of Title I (including the
holiday and SIL pay) only if they qualify as "field
personnel." The IRR therefore validly qualifies and
limits the general exclusion of "workers paid by
results" found in Article 82 from the coverage of
holiday and SIL pay. This is the only reasonable
interpretation since the determination of excluded
workers who are paid by results from the coverage
of Title I is "determined by the Secretary of Labor in
appropriate regulations."
In short, in determining whether workers engaged
on "pakyaw" or task basis" is entitled to holiday and
SIL pay, the presence (or absence) of employer
supervision as regards the workers time and
performance is the key: if the worker is simply
engaged on pakyaw or task basis, then the general
rule is that he is entitled to a holiday pay and SIL
pay unless exempted from the exceptions
specifically provided under Article 94 (holiday pay)
and Article95 (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.
Macasio does not fall under the classification of
"field personnel"

Based on the definition of field personnel under


Article 82, we agree with the CA that Macasio does
not fall under the definition of "field personnel." The
CAs finding in this regard is supported by the
established facts of this case: first, Macasio
regularly performed his duties at Davids principal
place of business; second, his actual hours of work
could be determined with reasonable certainty; and,
third, David supervised his time and performance of
duties. Since Macasio cannot be considered a "field
personnel," then he is not exempted from the grant
of holiday, SIL pay even as he was engaged on
"pakyaw" or task basis.
Not being a "field personnel," we find the CA to be
legally correct when it reversed the NLRCs ruling
dismissing Macasios complaint for holiday and SIL
pay for having been rendered with grave abuse of
discretion.
Entitlement to 13th month pay
With respect to the payment of 13th month pay
however, we find that the CA legally erred in finding
that the NLRC gravely abused its discretion in
denying this benefit to Macasio.
The governing law on 13th month pay is PD No.
851.53
As with holiday and SIL pay, 13th month pay
benefits generally cover all employees; an
employee must be one of those expressly
enumerated to be exempted. Section 3 of the Rules
and
Regulations
Implementing
P.D.
No.
85154 enumerates the exemptions from the
coverage of 13th month pay benefits. Under
Section 3(e), "employers of those who are paid on
xxx task basis, and those who are paid a fixed
amount for performing a specific work, irrespective
of the time consumed in the performance
thereof"55 are exempted.
Note that unlike the IRR of the Labor Code on
holiday and SIL pay, Section 3(e) of the Rules and
Regulations Implementing PD No. 851 exempts
employees "paid on task basis" without any
reference to "field personnel." This could only mean
that insofar as payment of the 13th month pay is
concerned, the law did not intend to qualify the
exemption from its coverage with the requirement
that the task worker be a "field personnel" at the
same time.
CAYETANO
ROBINA FARMS vs VILLA
GR 175869 April 18, 2016
OT Work

Facts: Respondent Elizabeth Villa brought against


the petitioner her complaint for illegal suspension,
illegal dismissal, nonpayment of overtime pay,
and nonpayment of service incentive leave pay in
the Regional Arbitration Branch No. VII of the
NLRC in Cebu City.
Villa averred that she had been employed by
petitioner Robina Farms as sales clerk since
August 1981; that in the later part of 2001, the
petitioner had enticed her to avail herself of the
company's special retirement program; that on
March 2, 2002, she had received a memorandum
from Lily Ngochua requiring her to explain her
failure to issue invoices for unhatched eggs in the
months of January to February 2002; that she had
explained that the invoices were not delivered on
time because the delivery receipts were delayed
and overlooked; that despite her explanation, she
had been suspended for 10 days from March 8,
2012 until March 19, 2002; that upon reporting back
to work, she had been advised to cease working
because her application for retirement had already
been approved however was subsequently
disapproved, and had then been advised to tender
her resignation with a request for financial
assistance; that she had manifested her intention to
return to work but the petitioner had confiscated her
gate pass; and that she had since then been
prevented from entering the company premises and
had been replaced by another employee.
The petitioner added that after the administrative
hearing Villa was found to have violated the
company rule on the timely issuance of the invoices
that had resulted in delay in the payment of buyers
considering that the payment had depended upon
the receipt of the invoices; that she had been
suspended
from
her
employment
as a
consequence; that after serving the suspension,
she had returned to work and had followed up her
application for retirement with Lucina de Guzman,
who had then informed her that the management
did not approve the benefits equivalent to 86% of
her salary rate applied for, but only 1/2 month for
every year of service; and that disappointed with
the outcome, she had then brought her complaint
against the petitioners.
Ruling of the Labor Arbiter: Labor Arbiter Violeta
Ortiz-Bantug rendered her decision finding that Villa
had not been dismissed from employment.
Although ordering Villa's reinstatement, the Labor
Arbiter denied her claim for backwages and
overtime pay because she had not adduced
evidence of the overtime work actually performed.
The Labor Arbiter declared that Villa was entitled to
service incentive leave pay for the period of the last
three years counted from the filing of her complaint

because the petitioner did not refute her claim


thereon.
Judgment of the NLRC: The NLRC rendered its
judgment dismissing the appeal by the petitioner
but granting that of Villa. The decision of the Labor
Arbiter is REVERSED and SET ASIDE and a new
one ENTERED declaring complainant to have been
illegally dismissed.
Decision of the CA: The CA promulgated its
assailed decision dismissing the petition for
certiorari.
Issues:
1. Whether or not Villa had been illegally
dismissed.
2. Whether or not Villa is entitled for overtime
pay.
Held:
1. Yes. We note that the CA and the NLRC
agreed on their finding that the petitioner did not
admit Villa back to work after the completion of
her 10 day suspension.
Neither did Villa's application for early retirement
manifest her intention to sever the employeremployee relationship. Although she applied for
early retirement, she did so upon the belief that she
would receive a higher benefit based on the
petitioner's offer. As such, her consent to be retired
could not be fairly deemed to have been knowingly
and freely given.
The difficulty in the case of Villa arises from
determining whether the retirement was voluntary
or involuntary. The line between the two is thin but
it is one that the Court has drawn. On one hand,
voluntary retirement cuts the employment ties
leaving no residual employer liability; on the other,
involuntary retirement amounts to a discharge,
rendering the employer liable for termination
without cause.
Under the circumstances, the CA did not err in
declaring the petitioner guilty of illegal dismissal for
violating Article 28229 of the Labor Code and the
twin notice rule.
2. No. Firstly, entitlement to overtime pay must
first be established by proof that the overtime
work was actually performed before the
employee may properly claim the benefit. The
burden of proving entitlement to overtime pay
rests on the employee because the benefit is
not incurred in the normal course of business.
Failure to prove such actual performance
transgresses the principles of fair play and
equity.

And, secondly, the NLRC's reliance on the daily


time records (DTRs) showing that Villa had stayed
in the company's premises beyond eight hours was
misplaced. The DTRs did not substantially prove
the actual performance of overtime work. The
petitioner correctly points out that any employee
could render overtime work only when there was a
prior authorization therefor by the management.
Without the prior authorization, therefore, Villa
could not validly claim having performed work
beyond the normal hours of work.
Moreover, Section 4(c), Rule I, Book III of the
Omnibus Rules Implementing the Labor Code
relevantly states as follows:
Section 4. Principles in determining hours worked.
The following general principles shall govern in
determining whether the time spent by an
employee is considered hours worked for purposes
of this Rule:
(a) XX X.
(b) xx x.
(c) If the work performed was necessary, or it
benefited the employer, or the employee could not
abandon his work at the end of his normal working
hours because he had no replacement, all time
spent for such work shall be considered as hours
worked, if the work was with the knowledge of his
employer or immediate supervisor.
WHEREFORE, the Court DENIES the petition for
review on certiorari for lack of merit; AFFIRMS the
decision by the Court of Appeals, with the
MODIFICATION that the award of overtime pay in
favor of respondent Elizabeth Villa is DELETED;
and ORDERS the petitioner to pay the costs of suit.
Employer-Employee Relationship
MAXICARE vs CONTRERAS
GR 194352 January 30, 2013
Timely raise employer-employee relationship
Facts: Maxicare Healthcare Corporation hired Dr.
Marian Brigitte A. Contreras as a retainer doctor at
the PNB Head Office.
Under their verbal
agreement, Dr. Contreras would render medical
services for one year at P250.00 per hour. Her
retainer fee would be paid every 15th and 30th of
each month based on her work schedule which was
every Tuesday, Thursday and Friday from 6:00
oclock in the morning to 5:00 oclock in the
afternoon.
The controversy started when Dr. Ruth A. Asis,
Maxicares medical specialist on Corporate
Accounts, informed Dr. Contreras that she was
going to be transferred to another account after a
month. The Service Agreement between Dr.

Contreras and Dr. Eric S. Nubla, Maxicares VicePresident for Medical Services, was executed,
effecting the transfer of the former to Maybank
Philippines for a period of four (4) months, from
August 5, 2003 to November 29, 2003, with a
retainer fee of P168.00 per hour.
Dr. Contreras reported to Maybank for one day only
then she filed a complaint before the LA claiming
that she was constructively dismissed.
Maxicare, on the other hand, insisted that there
was no constructive dismissal.
The LA rendered a decision dismissing the
complaint of Dr. Contreras for lack of merit. Upon
appeal, the NLRC rendered a decision reversing
and setting aside the LAs decision. It declared that
Dr. Contreras was illegally dismissed and ordered
her reinstatement to her former or substantially
equivalent position and the payment of her
backwages. The CA affirmed the conclusions
reached by the NLRC.
On the issue regarding the existence or nonexistence of an employer-employee relationship,
the CA ruled that Maxicare could not raise the said
issue for the first time on appeal. Nonetheless, the
CA ruled that the records showed that there existed
an employer-employee relationship between
Maxicare and Dr. Contreras for the following
reasons: 1] Maxicare exercised significant control in
her hiring and the conduct of her work; 2] Maxicare
was the one who engaged her services; 3]
Maxicare determined and prepared her work
assignments, like attending to PNB members
needing medical consultation and performing such
other duties as may be assigned by Maxicare to her
from time to time; 4] Maxicare determined her
specific work schedules, which was for her to
render services from 1:00 to 5:00 oclock in the
afternoon "every Tuesday and Thursday;" and 5]
Maxicare prescribed the conditions of work for her,
which were a) that she had to abide by the
company rules and regulations, b) that she would
keep inviolate all company records, documents,
and properties and from disclosing or reproducing
these records and documents to anyone without
proper authority, c) that she had to surrender upon
request for, or upon termination of her services,
such records, documents, and properties to
Maxicare; d) that Maxicare, through its Customer
Care coordinator, Ms. Cecile Samonte, would
monitor her work; and e) that she was
compensated not according to the result of her
efforts, but according to the amount of time she
spent at the PNB clinic.
The CA added that Maxicare impliedly admitted that
an
employer-employee
relationship
existed
between both parties by arguing that she was not

constructively dismissed. Hence, Maxicare was


estopped from questioning her status as its
employee.
Issue: Whether or not the lack or absence of
jurisdiction (for non-existence of employeremployee relationship) can be raised for the first
time on appeal.
Held: No. As a rule, a party who deliberately
adopts a certain theory upon which the case is tried
and decided by the lower court, will not be
permitted to change theory on appeal. Points of
law, theories, issues and arguments not brought to
the attention of the lower court need not be, and
ordinarily will not be, considered by a reviewing
court, as these cannot be raised for the first time at
such late stage. It would be unfair to the adverse
party who would have no opportunity to present
further evidence material to the new theory, which it
could have done had it been aware of it at the time
of the hearing before the trial court. To permit
Maxicare in this case to change its theory on
appeal would thus be unfair to Dr. Contreras, and
would offend the basic rules of fair play, justice and
due process.
Indeed, Maxicare is already estopped from
belatedly raising the issue of lack of jurisdiction
considering that it has actively participated in the
proceedings before the LA and the NLRC. The
Court has consistently held that "while jurisdiction
may be assailed at any stage, a partys active
participation in the proceedings before a court
without jurisdiction will estop such party from
assailing the lack of it." It is an undesirable practice
of a party to participate in the proceedings, submit
his case for decision and then accept the judgment,
if favorable, but attack it for lack of jurisdiction,
when adverse.
Undeniably, Maxicare never questioned the LAs
jurisdiction from the very beginning and never
raised the issue of employer-employee relationship
throughout the LA proceedings. Surely, Maxicare is
not unaware of Article 217 of the Labor Code which
enumerates the cases where the LA has exclusive
and original jurisdiction. Maxicare definitely knows
the basic rule that the LA can exercise jurisdiction
over cases only when there is an employeremployee relationship between the parties in
dispute.
If Maxicare was of the position that there was no
employer-employee relationship existing between
Maxicare and Dr. Contreras, it should have
questioned the jurisdiction of the LA right away.
Surprisingly, it never did. Instead, it actively
participated in the LA proceedings without bringing
to the LAs attention the issue of employeremployee relationship.

On appeal before the NLRC, the subject issue was


never raised either. Maxicare only raised the
subject issue for the first time when it filed a petition
in the CA challenging the adverse decision of the
NLRC. It is, therefore, estopped from assailing the
jurisdiction of the LA and the NLRC.
It is true that questions of jurisdiction may be raised
at any stage. It is also true, however, that in the
interest of fairness, questions challenging the
jurisdiction of courts will not be tolerated if the party
questioning such jurisdiction actively participates in
the court proceedings and allows the court to pass
judgment on the case, and then questions the
propriety of said judgment after getting an
unfavorable decision. It must be noted that
Maxicare had two (2) chances of raising the issue
of jurisdiction: first, in the LA level and second, in
the NLRC level. Unfortunately, it remained silent on
the issue of jurisdiction while actively participating
in both tribunals. It was definitely too late for
Maxicare to open up the issue of jurisdiction in the
CA.
In this case, petitioner insisted that respondent was
dismissed from employment for cause and after the
observance of the proper procedure for termination.
Consequently, petitioner cannot now deny that
respondent is its employee. While indeed,
jurisdiction cannot be conferred by acts or omission
of the parties, petitioner's belated denial that it is
the employer of respondent is obviously an
afterthought, a devise to defeat the law and evade
its obligations.
It is a fundamental rule of procedure that higher
courts are precluded from entertaining matters
neither alleged in the pleadings nor raised during
the proceedings below, but ventilated for the first
time only in a motion for reconsideration or on
appeal. Petitioner is bound by its submissions that
respondent is its employee and it should not be
permitted to change its theory. Such change of
theory cannot be tolerated on appeal, not due to
the strict application of procedural rules, but as a
matter of fairness.
SEMBLANTE vs CA
GR 196426 August 15, 2011
Facts: Petitioners Marticio Semblante and Dubrick
Pilar assert that they were hired by respondentsspouses Vicente and Maria Luisa Loot, the owners
of Gallera de Mandaue (the cockpit), as the
official masiador and sentenciador, respectively, of
the cockpit sometime in 1993.
As the masiador, Semblante calls and takes the
bets from the gamecock owners and other bettors
and orders the start of the cockfight. He also

distributes the winnings after deducting the arriba,


or the commission for the cockpit. Meanwhile, as
the sentenciador, Pilar oversees the proper gaffing
of fighting cocks, determines the fighting cocks
physical condition and capabilities to continue the
cockfight, and eventually declares the result of the
cockfight.
For
their
services
as masiador and sentenciador, Semblante receives
PhP 2,000 per week or a total of PhP 8,000 per
month, while Pilar gets PhP 3,500 a week or PhP
14,000 per month. They work every Tuesday,
Wednesday, Saturday, and Sunday every week,
excluding monthly derbies and cockfights held on
special holidays. Their working days start at 1:00
p.m. and last until 12:00 midnight, or until the early
hours of the morning depending on the needs of
the cockpit. Petitioners had both been issued
employees identification cardsthat 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.
In answer, respondents denied that petitioners
were their employees and alleged that they were
associates of respondents independent contractor,
Tomas Vega. Respondents claimed that petitioners
have no regular working time or day and they are
free to decide for themselves whether to report for
work or not on any cockfighting day. In times when
there are few cockfights in Gallera de Mandaue,
petitioners go to other cockpits in the vicinity. Lastly,
petitioners, so respondents assert, were only
issued identification cards to indicate that they were
free from the normal entrance fee and to
differentiate them from the general public.
Labor Arbiter found petitioners to be regular
employees of respondents as they performed work
that was necessary and indispensable to the usual
trade or business of respondents for a number of
years.
The NLRC held that there was no employeremployee relationship between petitioners and
respondents, respondents having no part in the
selection and engagement of petitioners, and that
no separate individual contract with respondents
was ever executed by petitioners.
The appellate court found for respondents, noting
that referees and bet-takers in a cockfight need to
have the kind of expertise that is characteristic of
the game to interpret messages conveyed by mere

gestures. Hence, petitioners are akin to


independent contractors who possess unique skills,
expertise, and talent to distinguish them from
ordinary employees. Further, respondents did not
supply
petitioners
with
the
tools
and
instrumentalities they needed to perform work.
Petitioners only needed their unique skills and
talents
to
perform
their
job
as masiador and sentenciador.
Issue:
Whether
relationship exists.

or

not

employer-employee

Held: No. It is evident that petitioners are NOT


employees of respondents, since their relationship
fails to pass muster the four-fold test of
employment. We have repeatedly mentioned in
countless decisions: (1) the selection and
engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the
power to control the employees conduct, which is
the most important element.
As found by both the NLRC and the CA,
respondents had no part in petitioners selection
and management; petitioners compensation was
paid out of the arriba (which is a percentage
deducted from the total bets), not by
petitioners; and petitioners performed their
functions
as masiador and sentenciador free
from the direction and control of respondents.
In the conduct of their work, petitioners relied
mainly on their expertise that is characteristic of the
cockfight gambling, and were never given by
respondents any tool needed for the performance
of their work.
Respondents, not being petitioners employers,
could never have dismissed, legally or illegally,
petitioners, since respondents were without power
or prerogative to do so in the first place.
WHEREFORE,
We DENY this
petition
and AFFIRM the Resolution of the CA and NLRC.
FUERTE
PSI
vs
CA
Facts: PSI (as owner, operator, and manager of
hospital), Dr Ampil and Dr Fuentes were impleaded
by Enrique and Natividad Agana for the injuries
suffered by the latter when Dr Ampil and Fuentes
neglected to remove from her body 2 gauzes which
were used in the surgery they performed in her.
RTC = PSI is solidarily liable with 2 Dr. CA =
acquitted Dr. Fuentes.

Issue: W/N a hospital may be liable for the


negligence of physician-consultants allowed to
practice in its premise.
Held: Yes by the Principle of Apparent Authority and
Principle of ostensible agency. There are 3 legal
relationship: 1. Hospital-doctor 2. Hospital-patient
3. Doctor-patient. If there is an employment
relationship, hospital can be liable for principle
respondeat superior. If theres no employment
relation, hospital can be liable for principle of
apparent authority. Regardless of its relationship
with the doctor, the hospital may be held directly
liable to the patient for its own negligence or failure
to follow established standard of conduct to which it
should
conform
as
a
corporation.
To determine the relationship, Court employed
Control Test in which the hospital controls the
means and details of the process by which the
physician is to accomplish his task.Due to
insufficient evidence that PSI has such control
however, there is ample evidence that PSI held out
to the patient that the doctor was his agent or the
Principle of ostensible agency for the negligence of
Dr Ampil, and pro hac vice for the failure to perform
their duty as hospital (follow established standard
of conduct).
Calamba

Medical

Center

vs

NLRC

Facts: Dr Trinidad overheard a telephone


conversation between Dr Lanzanas and Miscala
discussing the low census or admission of patients.
Dr Lanzanas was given a memorandum by Dr
Desipeda. Former admitted that he spoke with
Misacala but their conversation was taken out of
context by Dr Trinidad. The hospital did not give Dr
Merciditha any work schedule after sending her
husband the memo. Dr Lanzanas and Dr
Merceditha filed a complaint for illegal dismissal. 11
employees of petitioner went on strike and was
ordered to return to work by Sec Trajano (DOLE)
and Dr Desipeda. Petitioner later snet Dr Lanzanas
a notice of termination for failure to report back to
work despite of DOLEs Order. Labor Arbiter
Macam dismissed the spouses complains for there
was no employer-employee relationship, control
test being absent.
Issue: W/N there is an employer-employee
relationship between petitioner and respondents
Held: CAs decision was Affirmed. There is an
employer-employee relationship between Dr.
Lanzanas and Calamba Medical Center. (Please
see the highlighted sentences in Cases Syllabi)

Tongko
vs
Manulife
(2008)
Facts: Tongko started his professional relationship
as an agent with an agreement that he is an
independent contractor and theres no employeremployee relationship between the company and
agent. Then he became a unit manager then
branch manger. When Manulife instituted
manpower devt programs, De Dios, President of
Manulife, addressed a letter to Tongko (november)
regarding his latters performance and managerial
skills. As a course of action, he was advised to hire
his own competent assistant and lessen his span of
control. In december, De Dios sent another letter
terminating Tongkos services for failing to align his
directions with the company. Subsequently, Tongko
filed a complaint for illegal dismissal but was
dismissed by Arbiter Padolina for lack of employeremployee relationship
Issue: W/N there is an employer-employee
relationship between petitioner and respondents
Held: Petition granted. There is an employeremployee relationship between Tongko and
Manulife (Please see the highlighted sentences in
Cases Syllabi)
GARIN
Tongko vs Manufacturers G.R. No. 167622 2010
FACTS:
This resolves the Motion for Reconsideration
dated December 3, 2008 filed by respondent
(Manulife) to set aside Decision of November 7,
2008. In the assailed decision, we found that an
employer-employee relationship existed between
Manulife and petitioner Gregorio Tongko and
ordered Manulife to pay Tongko backwages and
separation
pay
for
illegal
dismissal.
The contractual relationship between Tongko and
Manulife had two basic phases.
The first or initial phase, under a Career Agents
Agreement
that
provided:
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 Agent shall canvass for applications for Life
Insurance, Annuities, Group policies and other
products offered by the Company, and collect, in

exchange for provisional receipts issued by the


Agent, money due to or become due to the
Company in respect of applications or policies
obtained by or through the Agent or from
policyholders allotted by the Company to the Agent
for servicing, subject to subsequent confirmation of
receipt of payment by the Company as evidenced
by an Official Receipt issued by the Company
directly
to
the
policyholder.
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.
The second phase started in 1983 when Tongko
was named Unit Manager in Manulifes Sales
Agency Organization.
In 1990, he became a Branch Manager. Six years
later, Tongko became a Regional Sales Manager.
Tongkos gross earnings consisted of commissions,
persistency income, and management overrides.
Since the beginning, Tongko consistently declared
himself self-employed in his income tax returns.
Thus, under oath, he declared his gross business
income and deducted his business expenses to
arrive at his taxable business income. Manulife
withheld the corresponding 10% tax on Tongkos
earnings.
Sometime in 2001, De Dios addressed a letter to
Tongko, then one of the Metro North Managers,
regarding meetings wherein De Dios found
Tongko's views and comments to be unaligned with
the directions the company was taking. De Dios
also expressed his concern regarding the Metro
North Managers' interpretation of the company's
goals. He maintains that Tongko's allegations are
unfounded. Some allegations state that some
Managers are unhappy with their earnings, that
they're earning less than what they deserve and
that these are the reasons why Tonko's division is
unable to meet agency development objectives.
However, not a single Manager came forth to
confirm these allegations. Finally, De Dios related
his worries about Tongko's inability to push for

company

development

and

growth.

De Dios subsequently sent Tongko a letter of


termination in accordance with Tongko's Agents
Contract. Tongko filed a complaint with the NLRC
against Manulife for illegal dismissal, alleging that
he had an employer-employee relationship with De
Dios instead of a revocable agency by pointing out
that the latter exercised control over him through
directives regarding how to manage his area of
responsibility and setting objectives for him relating
to the business. Tongko also claimed that his
dismissal was without basis and he was not
afforded due process. The NLRC ruled that there
was an employer-employee relationship as
evidenced by De Dios's letter which contained the
manner and means by which Tongko should do his
work. The NLRC ruled in favor of Tongko, affirming
the
existence
of
the
employer-employee
relationship
Tongko responded by filing an illegal dismissal
complaint with the National Labor Relations
Commission (NLRC) Arbitration Branch. He
essentially alleged despite the clear terms of the
letter terminating his Agency Agreement that he
was Manulifes employee before he was illegally
dismissed.
The labor arbiter decreed that no employeremployee relationship existed between the parties.
However, the NLRC reversed the labor arbiters
decision on appeal; it found the existence of an
employer-employee relationship and concluded that
Tongko had been illegally dismissed. In the petition
for certiorari with the Court of Appeals (CA), the
appellate court found that the NLRC gravely
abused its discretion in its ruling and reverted to the
labor arbiters decision that no employer-employee
relationship existed between Tongko and Manulife.
Our
Decision
of
November
7,
2008
In our Decision of November 7, 2008, we reversed
the CA ruling and found that an employment
relationship existed between Tongko and
Manulife.
The

Motion

for

Reconsideration

Manulife disagreed with our Decision and filed the


present motion for reconsideration on the following
GROUNDS:
1. Decision violates Manulifes right to due process
by: (a) confining the review only to the issue of
control and utterly disregarding all the other
issues that had been joined in this case; (b)

mischaracterizing
the
divergence
of
conclusions between the CA and the NLRC
decisions as confined only to that on control;
2. Decision contravenes settled rules in contract
law and agency, distorts not only the legal
relationships of agencies to sell but also
distributorship and franchising, and ignores the
constitutional and policy context of contract law
vis--vis
labor
law.
3. Decision ignores the findings of the CA on the
three elements of the four-fold test other than the
control
test
Issue:
Whether or not there is the existence of an
employment relationship.
Held:
Labor Code concept of control has to be
compared and distinguished with the control
that must necessarily exist in a principal-agent
relationship. The principal cannot but also have
his or her say in directing the course of the
principal-agent relationship, especially in cases
where the company-representative relationship
in the insurance industry is an agency.
Generally, the determinative element is the control
exercised over the one rendering service. The
employer controls the employee both in the results
and in the means and manner of achieving this
result. The principal in an agency relationship, on
the other hand, also has the prerogative to exercise
control over the agent in undertaking the assigned
task based on the parameters outlined in the
pertinent
laws.
With particular relevance to the present case is the
provision that In the execution of the agency, the
agent shall act in accordance with the instructions
of the principal This provision is pertinent for
purposes of the necessary control that the principal
exercises over the agent in undertaking the
assigned task, and is an area where the
instructions can intrude into the labor law concept
of control so that minute consideration of the facts
is necessary. A related article is Article 1891 of the
Civil Code which binds the agent to render an
account of his transactions to the principal.
By the Agreements express terms, Tongko served
as an insurance agent for Manulife, not as an
employee. To be sure, the Agreements legal
characterization of the nature of the relationship

cannot be conclusive and binding on the courts; as


the dissent clearly stated, the characterization of
the juridical relationship the Agreement embodied is
a matter of law that is for the courts to determine.
At the same time, though, the characterization the
parties gave to their relationship in the Agreement
cannot simply be brushed aside because it
embodies their intent at the time they entered the
Agreement, and they were governed by this
understanding throughout their relationship. At the
very least, the provision on the absence of
employer-employee relationship between the
parties can be an aid in considering the Agreement
and its implementation, and in appreciating the
other
evidence
on
record.
Significantly, evidence shows that Tongkos role as
an insurance agent never changed during his
relationship with Manulife. If changes occurred at
all, the changes did not appear to be in the nature
of their core relationship. Tongko essentially
remained an agent, but moved up in this role
through Manulifes recognition that he could use
other agents approved by Manulife, but operating
under his guidance and in whose commissions he
had a share. For want of a better term, Tongko
perhaps could be labeled as a lead agent who
guided under his wing other Manulife agents
similarly tasked with the selling of Manulife
insurance.
Like Tongko, the evidence suggests that these
other agents operated under their own agency
agreements. Thus, if Tongkos compensation
scheme changed at all during his relationship with
Manulife, the change was solely for purposes of
crediting him with his share in the commissions the
agents under his wing generated. As an agent who
was recruiting and guiding other insurance agents,
Tongko likewise moved up in terms of the
reimbursement of expenses he incurred in the
course of his lead agency, a prerogative he enjoyed
pursuant to Article 1912 of the Civil Code. Thus,
Tongko received greater reimbursements for his
expenses and was even allowed to use Manulife
facilities in his interactions with the agents, all of
whom were, in the strict sense, Manulife agents
approved and certified as such by Manulife with the
Insurance
Commission.
That Tongko assumed a leadership role but
nevertheless wholly remained an agent is the
inevitable conclusion that results from the reading
of the Agreement (the only agreement on record in
this case) and his continuing role thereunder as

sales agent, from the perspective of the Insurance


and the Civil Codes and in light of what Tongko
himself attested to as his role as Regional Sales
Manager. To be sure, this interpretation could have
been contradicted if other agreements had been
submitted as evidence of the relationship between
Manulife and Tongko on the latters expanded
undertakings. In the absence of any such evidence,
however, this reading based on the available
evidence and the applicable insurance and civil law
provisions must stand, subject only to objective and
evidentiary Labor Code tests on the existence of an
employer-employee
relationship.
In applying such Labor Code tests, however, the
enforcement of the Agreement during the course of
the parties relationship should be noted. From 1977
until the termination of the Agreement, Tongkos
occupation was to sell Manulifes insurance policies
and products. Both parties acquiesced with the
terms and conditions of the Agreement. Tongko, for
his part, accepted all the benefits flowing from the
Agreement, particularly the generous commissions.
Evidence indicates that Tongko consistently
clung to the view that he was an independent
agent selling Manulife insurance products since
he invariably declared himself a business or
self-employed person in his income tax returns.
This consistency with, and action made
pursuant to the Agreement were pieces of
evidence that were never mentioned nor
considered in our Decision of November 7,
2008. Had they been considered, they could, at
the very least, serve as Tongkos admissions
against his interest. Strictly speaking, Tongkos
tax returns cannot but be legally significant
because he certified under oath the amount he
earned as gross business income, claimed
business deductions, leading to his net taxable
income. This should be evidence of the first
order that cannot be brushed aside by a mere
denial. Even on a laymans view that is devoid of
legal considerations, the extent of his annual
income alone renders his claimed employment
status doubtful.[27]
Hand in hand with the concept of admission against
interest in considering the tax returns, the concept
of estoppel a legal and equitable concept[28]
necessarily must come into play. Tongkos previous
admissions in several years of tax returns as an
independent agent, as against his belated claim
that he was all along an employee, are too
diametrically opposed to be simply dismissed or
ignored.

The conclusion with respect to Tongkos


employment as a manager is, of course,
unacceptable for the legal, factual and practical
reasons discussed in this Resolution. In brief, the
factual reason is grounded on the lack of
evidentiary support of the conclusion that Manulife
exercised control over Tongko in the sense
understood in the Labor Code. The legal reason,
partly based on the lack of factual basis, is the
erroneous legal conclusion that Manulife controlled
Tongko and was thus its employee. The practical
reason, on the other hand, is the havoc that the
dissents unwarranted conclusion would cause the
insurance industry that, by the laws own design,
operated along the lines of principal-agent
relationship in the sale of insurance.
A glaring evidentiary gap for Tongko in this
case is the lack of evidence on record showing
that Manulife ever exercised means-and-manner
control, even to a limited extent, over Tongko
during his ascent in Manulifes sales ladder. In
1983, Tongko was appointed unit manager.
Inexplicably, Tongko never bothered to present any
evidence at all on what this designation meant. This
also holds true for Tongkos appointment as branch
manager in 1990, and as Regional Sales Manager
in 1996. The best evidence of control the
agreement or directive relating to Tongkos
duties
and
responsibilities
was
never
introduced as part of the records of the case.
The reality is, prior to de Dios letter, Manulife
had practically left Tongko alone not only in
doing the business of selling insurance, but
also in guiding the agents under his wing. As
discussed below, the alleged directives covered by
de Dios letter, heretofore quoted in full, were policy
directions and targeted results that the company
wanted Tongko and the other sales groups to
realign with in their own selling activities. This is the
reality that the parties presented evidence
consistently
tells
us.
What, to Tongko, serve as evidence of labor law
control are the codes of conduct that Manulife
imposes on its agents in the sale of insurance. The
mere presentation of codes or of rules and
regulations, however, is not per se indicative of
labor law control as the law and jurisprudence
teach
us.
From jurisprudence, an important
first Insular Life case teaches
commitment to abide by the rules
of an insurance company does not

lesson that the


us is that a
and regulations
ipso facto make

the insurance agent an employee. Neither do


guidelines somehow restrictive of the insurance
agents conduct necessarily indicate control as this
term is defined in jurisprudence. Guidelines
indicative of labor law control, as the first Insular
Life case tells us, should not merely relate to
the mutually desirable result intended by the
contractual relationship; they must have the
nature of dictating the means or methods to be
employed in attaining the result, or of fixing the
methodology and of binding or restricting the
party hired to the use of these means. In fact,
results-wise, the principal can impose production
quotas and can determine how many agents, with
specific territories, ought to be employed to achieve
the companys objectives. These are management
policy decisions that the labor law element of
control cannot reach. Our ruling in these respects in
the first Insular Life case was practically reiterated
in Carungcong. Thus, as will be shown more fully
below, Manulifes codes of conduct,[30] all of which
do not intrude into the insurance agents means and
manner of conducting their sales and only control
them as to the desired results and Insurance Code
norms, cannot be used as basis for a finding that
the labor law concept of control existed
between Manulife and Tongko.
These statements, read with the above
comparative analysis of the Manulife and the
Grepalife cases, would have readily yielded the
conclusion that no employer-employee relationship
existed
between
Manulife
and
Tongko.
Even de Dios letter is not determinative of control
as it indicates the least amount of intrusion into
Tongkos exercise of his role as manager in guiding
the sales agents. Strictly viewed, de Dios directives
are merely operational guidelines on how Tongko
could align his operations with Manulifes redirected goal of being a big league player. The
method is to expand coverage through the use of
more agents. This requirement for the recruitment
of more agents is not a means-and-method control
as it relates, more than anything else, and is
directly relevant, to Manulifes objective of
expanded business operations through the use of a
bigger sales force whose members are all on a
principal-agent relationship. An important point to
note here is that Tongko was not supervising
regular full-time employees of Manulife engaged in
the running of the insurance business; Tongko was
effectively guiding his corps of sales agents, who
are bound to Manulife through the same Agreement
that he had with Manulife, all the while sharing in
these agents commissions through his overrides.

This is the lead agent concept mentioned above for


want of a more appropriate term, since the title of
Branch Manager used by the parties is really a
misnomer given that what is involved is not a
specific regular branch of the company but a corps
of non-employed agents, defined in terms of
covered territory, through which the company sells
insurance. Still another point to consider is that
Tongko was not even setting policies in the way a
regular company manager does; company aims
and objectives were simply relayed to him with
suggestions on how these objectives can be
reached through the expansion of a non-employee
sales
force.
Interestingly, a large part of de Dios letter focused
on income, which Manulife demonstrated, in
Tongkos case, to be unaffected by the new goal
and direction the company had set. Income in
insurance agency, of course, is dependent on
results, not on the means and manner of selling a
matter for Tongko and his agents to determine and
an area into which Manulife had not waded.
Undeniably, de Dios letter contained a directive to
secure a competent assistant at Tongkos own
expense. While couched in terms of a directive, it
cannot strictly be understood as an intrusion into
Tongkos method of operating and supervising the
group of agents within his delineated territory. More
than anything else, the directive was a signal to
Tongko that his results were unsatisfactory, and
was a suggestion on how Tongkos perceived
weakness in delivering results could be remedied. It
was a solution, with an eye on results, for a
consistently underperforming group; its obvious
intent was to save Tongko from the result that he
then failed to grasp that he could lose even his own
status as an agent, as he in fact eventually did.
The present case must be distinguished from the
second Insular Life case that showed the hallmarks
of an employer-employee relationship in the
management system established. These were:
exclusivity of service, control of assignments and
removal of agents under the private respondents
unit, and furnishing of company facilities and
materials as well as capital described as Unit
Development Fund. All these are obviously absent
in the present case. If there is a commonality in
these cases, it is in the collection of premiums
which is a basic authority that can be delegated to
agents
under
the
Insurance
Code.
As previously discussed, what simply happened in
Tongkos case was the grant of an expanded sales
agency role that recognized him as leader amongst

agents in an area that Manulife defined. Whether


this consequently resulted in the establishment of
an employment relationship can be answered by
concrete evidence that corresponds to the following
questions:
as lead agent, what were Tongkos specific
functions and the terms of his additional
engagement;
was he paid additional compensation as a socalled Area Sales Manager, apart from the
commissions he received from the insurance sales
he
generated;
what can be Manulifes basis to terminate his
status
as
lead
agent;
can Manulife terminate his role as lead agent
separately from his agency contract; and
to what extent does Manulife control the
means and methods of Tongkos role as lead
agent?
The answers to these questions may, to some
extent, be deduced from the evidence at hand, as
partly discussed above. But strictly speaking, the
questions cannot definitively and concretely be
answered through the evidence on record. The
concrete evidence required to settle these
questions is simply not there, since only the
Agreement and the anecdotal affidavits have been
marked
and
submitted
as
evidence.
Given this anemic state of the evidence,
particularly on the requisite confluence of the
factors determinative of the existence of
employer-employee relationship, the Court
cannot conclusively find that the relationship
exists in the present case, even if such
relationship only refers to Tongkos additional
functions. While a rough deduction can be
made, the answer will not be fully supported by
the
substantial
evidence
needed.
Under this legal situation, the only conclusion
that can be made is that the absence of
evidence showing Manulifes control over
Tongkos contractual duties points to the
absence of any employer-employee relationship
between Tongko and Manulife. In the context of
the established evidence, Tongko remained an
agent all along; although his subsequent duties
made him a lead agent with leadership role, he
was nevertheless only an agent whose basic
contract yields no evidence of means-andmanner
control.
This

conclusion

renders

unnecessary

any

further discussion of the question of whether


an
agent
may
simultaneously
assume
conflicting dual personalities. But to set the
record straight, the concept of a single person
having the dual role of agent and employee
while doing the same task is a novel one in our
jurisprudence, which must be viewed with
caution especially when it is devoid of any
jurisprudential
support
or
precedent.
WHEREFORE,
considering
the
foregoing
discussion, we REVERSE our Decision of
November 7, 2008, GRANT Manulifes motion for
reconsideration
and,
accordingly,
DISMISS
Tongkos
petition.
No
costs.
SO ORDERED.

Benares

Vs.

SECOND
[G.R.
No.

Pancho
151827.

G.R.

No.

151827

April

29,

DIVISION
2005]

Facts:
Assailed in this Petition for Review on Certiorar is
the Decision of the Court of Appeals which affirmed
the National Labor Relations Commissions (NLRC)
decision[3] holding that respondents were illegally
dismissed and ordering petitioner to pay
respondents
separation
pay,
backwages,
13th month pay, Cost of Living Allowance (COLA),
emergency relief allowance (ERA), salary
differentials and attorneys fees. The NLRC
reversed the Labor Arbiters finding that
respondents failed to lay down the facts and
circumstances surrounding their dismissal and to
prove their entitlement to monetary awards. [
Complainants alleged to have started working as
sugar farm workers on various dates, to wit:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Jaime
Pancho
November
15,
Rodolfo Pancho, Jr. February 1,
Joselito Medalla November 15,
Paquito Magallanes March 10,
Felomino Magallanes November 15,
Alicia Magallanes January 15,
Evelyn Magallanes January 1,
Violeta Villacampa December 1,
Maritess Pancho December 15,
Rogelio Pancho December 1,
Arnolfo
Pancho
February
1,

1964
1975
1964
1973
1964
1964
1974
1979
1985
1979
1975

Respondent Hda. Maasin II is a sugar cane


plantation located in Murcia, Negros Occidental,

owned and managed by Josefina Benares,


individual
co-respondent.

On July 24, 1991, complainants thru counsel


wrote the Regional Director of the Department of
Labor and Employment, Bacolod City for
intercession particularly in the matter of wages and
other
benefits
mandated
by
law.

On October 15, 1991, complainants alleged to


have been terminated without being paid
termination benefits by respondent in retaliation to
what they have done in reporting to the Department
of Labor and Employment their working conditions
viz-a-viz wages and other mandatory benefits.

From the records, summons and notices of


hearing were served to the parties and apparently
no amicable settlement was arrived, hence, the
parties were directed to file their respective position
papers.

On August 17, 1994, from the Minutes of the


scheduled hearing, respondent failed to appear,
and that the Office will evaluate the records of the
case whether to conduct a formal trial on the merits
or not, and that the corresponding order will be
issued.

Labor Arbiter a quo issued the assailed


decision dismissing the complaint for lack of merit.

complainants not satisfied with the ruling


interposed the instant appeal anchored on the
ground that:
Whether or not THE HONORABLE LABOR
ARBITER GRAVELY ABUSED ITS DISCRETION
AND SERIOUSLY ERRED IN HOLDING THAT
THE COMPLAINANTS FAILED TO DISCUSS THE
FACTS AND CIRCUMSTANCES SURROUNDING
THEIR DISMISSAL, HENCE, THERE IS NO
DISMISSAL TO SPEAK OF AND THAT
COMPLAINANTS FAILED TO ALLEGE AND
PROVE THAT THEIR CLAIMS ARE VALID,
HENCE THE DISMISSAL OF THEIR COMPLAINT
WOULD CAUSE GRAVE AND IRREPARABLE
DAMAGE TO HEREIN COMPLAINANTS

The NLRC held that respondents attained the


status of regular seasonal workers of Hda. Maasin
II having worked therein from 1964-1985. It found
that petitioner failed to discharge the burden of
proving that the termination of respondents was for
a just or authorized cause. Hence, respondents
were illegally dismissed and should be awarded
their
money
claims.

The Court of Appeals affirmed the NLRCs


ruling, with the modification that the backwages and
other monetary benefits shall be computed from the
time compensation was withheld in accordance
with Article 279 of the Labor Code, as amended by
Republic Act No. 6715

Petitioner is now before this Court averring


that the Court of Appeals erred in affirming
the decision of the NLRC. While petitioner
concedes that the factual findings of the
NLRC are generally binding on the
appellate court, petitioner insists that the
findings of the NLRC are vague and
contradictory, thereby necessitating review.
Petitioner avers that the NLRC should have
at least remanded the case to the labor
arbiter to thresh out gray areas. She
further claims that the NLRC was overly
zealous in awarding COLA and ERA
despite the fact that respondents did not
even pray for these awards in their
complaint. She also questions the NLRCs
general statement to the effect that the
payroll she submitted is not convincing
asserting that she submitted 235 sets of
payroll, not just one, and that the NLRC
did not even bother to explain why it found
the
payroll
unconvincing.

Issues:
whether
respondents
are
regular
employees of Hacienda Maasin and thus entitled to
their monetary claims. Related to this is the issue of
whether respondents were illegally terminated
Held:
This case presents a good opportunity to reiterate
the Courts rulings on the subject of seasonal
employment. The Labor Code defines regular and
casual
employment,
viz:
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

activity

exists.

The law provides for three kinds of employees:


(1) regular employees or those who have been
engaged to perform activities which are usually
necessary or desirable in the usual business or
trade of the employer;
(2) project employees or those whose employment
has been fixed for a specific project or undertaking,
the completion or termination of which has been
determined at the time of the engagement of the
employee or where the work or service to be
performed is seasonal in nature and the
employment is for the duration of the season; and
(3) casual employees or those who are neither
regular
nor
project
employees.
In Mercado v. NLRC,[16] the Court ruled that
seasonal workers do not become regular
employees by the mere fact that they have
rendered at least one year of service, whether
continuous or broken, because the proviso in the
second paragraph of Article 280 demarcates as
casual employees, all other employees who do not
fall under the definition of the preceding paragraph.
It deems as regular employees those casual
employees who have rendered at least one year of
service regardless of the fact that such service may
be
continuous
or
broken.
The factual circumstances obtaining in the Mercado
case, however, are peculiar. In that case, the
workers were engaged to do a particular phase of
agricultural work necessary for rice and/or
sugarcane production, after which they would be
free to render services to other farm workers who
need
their
services.
In contrast, in the case of Hacienda Fatima v.
National Federation of Sugarcane Workers-Food
and General Trade,[17] respondents performed the
same tasks for petitioners every season for several
years. Thus, they were considered the latters
regular employees for their respective tasks. The
fact that they do not work continuously for one
whole year but only for the duration of the season
does not detract from considering them in regular
employment since in a litany of cases this Court
has already settled that seasonal workers who are
called to work from time to time and are temporarily
laid off during off-season are not separated from
service in that period, but merely considered on
leave
until
re-employed.[18]
Citing jurisprudence, the Court, in Hacienda
Fatima, condensed the rule that the primary

standard for determining regular employment is the


reasonable connection between the particular
activity performed by the employee vis--vis the
usual trade or business of the employer. This
connection can be determined by considering the
nature of the work performed and its relation to the
scheme of the particular business or trade in its
entirety. If the employee has been performing the
job for at least a year, even if the performance is
not continuous and merely intermittent, the law
deems repeated and continuing need for its
performance as sufficient evidence of the necessity
if not indispensability of that activity to the business.
Hence, the employment is considered regular, but
only with respect to such activity and while such
activity
exists.[19]
In this case, petitioner argues that respondents
were not her regular employees as they were
merely pakiao workers who did not work
continuously in the sugar plantation. They
performed such tasks as weeding, cutting and
loading canes, planting cane points, fertilizing,
cleaning the drainage, etc. These functions
allegedly do not require respondents daily
presence in the sugarcane field as it is not
everyday that one weeds, cuts canes or applies
fertilizer. In support of her allegations,
petitioner submitted cultivo and milling
payrolls.
The probative value of petitioners evidence,
however, has been passed upon by the labor
arbiter, the NLRC and the Court of Appeals.
Although the labor arbiter dismissed respondents
complaint because their position paper is
completely devoid of any discussion about their
alleged dismissal, much less of the probative facts
thereof,[20] the ground for the dismissal of the
complaint implies a finding that respondents are
regular
employees.
The issue, therefore, of whether respondents
were regular employees of petitioner has been
adequately dealt with. The labor arbiter, the
NLRC and the Court of Appeals have similarly
held that respondents were regular employees
of petitioner. Since it is a settled rule that the
factual findings of quasi-judicial agencies
which have acquired expertise in the matters
entrusted to their jurisdiction are accorded by
this Court not only respect but even finality, we
shall
no
longer
disturb
this
finding.
Petitioner next underscores the NLRC decisions
mention of the payroll she presented despite the

fact that she allegedly presented 235 sets of


payroll, not just one payroll. This circumstance
does not in itself evince any grave abuse of
discretion on the part of the NLRC as it could well
have been just an innocuous typographical error.
Verily, the NLRCs decision, affirmed as it was by
the Court of Appeals, appears to have been arrived
at after due consideration of the evidence
presented
by
both
parties.
We also find no reason to disturb the finding that
respondents were illegally terminated. When there
is no showing of clear, valid and legal cause for the
termination of employment, the law considers the
matter a case of illegal dismissal and the burden is
on the employer to prove that the termination was
for a just or authorized cause.[25] In this case, as
found both by the NLRC and the Court of Appeals,
petitioner failed to prove any such cause for the
dismissal
of
respondents.
WHEREFORE, the instant petition is DENIED. The
assailed Decision and Resolution of the Court of
Appeals respectively dated June 29, 2001 and
November 28, 2001 are hereby AFFIRMED. Costs
against
petitioner.
SO
FRANCISCO
August

ORDERED.
VS
31,

NLRC
2006

FACTS:

In 1995, petitioner was hired by Kasei


Corporation during its incorporation stage. She was
designated as Accountant and Corporate Secretary
and was assigned to handle all the accounting
needs
of
the
company

She was also designated as Liaison Officer to


the City of Makati to secure business permits,
construction permits and other licenses for the
initial
operation
of
the
company.

Although she was designated as Corporate


Secretary, she was not entrusted with the corporate
documents; neither did she attend any board
meeting nor required to do so. She never prepared
any legal document and never represented the
company as its Corporate Secretary. However, on
some occasions, she was prevailed upon to sign
documentation
for
the
company.

In 1996, petitioner was designated Acting


Manager.

The corporation also hired Gerry Nino as


accountant
in
lieu
of
petitioner.


As Acting Manager, petitioner was assigned
to handle recruitment of all employees and perform
management administration functions; represent
the company in all dealings with government
agencies, especially with the Bureau of Internal
Revenue (BIR), Social Security System (SSS) and
in the city government of Makati; and to administer
all other matters pertaining to the operation of
Kasei Restaurant which is owned and operated by
Kasei
Corporation.

For five years, petitioner performed the duties


of
Acting
Manager.

As of December 31, 2000 her salary was


P27,500.00 plus P3,000.00 housing allowance and
a 10% share in the profit of Kasei Corporation.

In January 2001, petitioner was replaced by


Liza R. Fuentes as Manager. Petitioner alleged that
she was required to sign a prepared resolution for
her replacement but she was assured that she
would still be connected with Kasei Corporation.
Timoteo Acedo, the designated Treasurer,
convened a meeting of all employees of Kasei
Corporation and announced that nothing had
changed and that petitioner was still connected with
Kasei Corporation as Technical Assistant to Seiji
Kamura and in charge of all BIR matters.

Thereafter, Kasei Corporation reduced her


salary by P2,500.00 a month beginning January up
to September 2001 for a total reduction of
P22,500.00 as of September 2001. Petitioner was
not paid her mid-year bonus allegedly because the
company was not earning well. On October 2001,
petitioner did not receive her salary from the
company. She made repeated follow-ups with the
company cashier but she was advised that the
company
was
not
earning
well.

On October 15, 2001, petitioner asked for her


salary from Acedo and the rest of the officers but
she was informed that she is no longer connected
with
the
company.

Since she was no longer paid her salary,


petitioner did not report for work and filed an action
for constructive dismissal before the labor arbiter.

Private respondents averred that petitioner is


not an employee of Kasei Corporation. They
alleged that petitioner was hired in 1995 as one of
its technical consultants on accounting matters and
act concurrently as Corporate Secretary. As
technical consultant, petitioner performed her work
at her own discretion without control and
supervision of Kasei Corporation. Petitioner had no
daily time record and she came to the office any
time she wanted. The company never interfered
with her work except that from time to time, the
management would ask her opinion on matters
relating to her profession. Petitioner did not go

through the usual procedure of selection of


employees, but her services were engaged through
a Board Resolution designating her as technical
consultant.

The money received by petitioner from the


corporation was her professional fee subject to the
10% expanded withholding tax on professionals,
and that she was not one of those reported to the
BIR or SSS as one of the companys
employees.Petitioners designation as technical
consultant depended solely upon the will of
management. As such, her consultancy may be
terminated any time considering that her services
were only temporary in nature and dependent on
the
needs
of
the
corporation.

The Labor Arbiter found that petitioner was


illegally
dismissed

NLRC affirmed with modification the Decision


of the Labor Arbiter.They are directed to pay
complainant separation pay, salary differentials,
housing allowance, mid year bonus and 13th month
pay.

The appellate court denied petitioners motion


for reconsideration, hence, the present recourse.
Issues:
Whether there was an employer-employee
relationship between petitioner and private
respondent Kasei Corporation; and if in the
affirmative,
whether

petitioner

was

illegally

dismissed

HELD:
We held in Sevilla v. Court of Appeals[18] that in
this jurisdiction, there has been no uniform test to
determine the existence of an employer-employee
relation. Generally, courts have relied on the socalled right of control test where the person for
whom the services are performed reserves a right
to control not only the end to be achieved but also
the means to be used in reaching such end. In
addition to the standard of right-of-control, the
existing economic conditions prevailing between
the parties, like the inclusion of the employee in the
payrolls, can help in determining the existence of
an
employer-employee
relationship.
However, in certain cases the control test is not
sufficient to give a complete picture of the
relationship between the parties, owing to the
complexity of such a relationship where several
positions have been held by the worker. There are
instances when, aside from the employers power to

control the employee with respect to the means and


methods by which the work is to be accomplished,
economic realities of the employment relations help
provide a comprehensive analysis of the true
classification of the individual, whether as
employee, independent contractor, corporate officer
or
some
other
capacity.
The better approach would therefore be to adopt a
two-tiered test involving: (1) the putative employers
power to control the employee with respect to the
means and methods by which the work is to be
accomplished; and (2) the underlying economic
realities
of
the
activity
or
relationship.
This two-tiered test would provide us with a
framework of analysis, which would take into
consideration the totality of circumstances
surrounding the true nature of the relationship
between the parties. This is especially appropriate
in this case where there is no written agreement or
terms of reference to base the relationship on; and
due to the complexity of the relationship based on
the various positions and responsibilities given to
the worker over the period of the latters
employment.
The control test initially found application in the
case of Viaa v. Al-Lagadan and Piga,and lately in
Leonardo v. Court of Appeals,where we held that
there is an employer-employee relationship when
the person for whom the services are performed
reserves the right to control not only the end
achieved but also the manner and means used to
achieve
that
end.
In Sevilla v. Court of Appeals,[21] we observed the
need to consider the existing economic conditions
prevailing between the parties, in addition to the
standard of right-of-control like the inclusion of the
employee in the payrolls, to give a clearer picture in
determining the existence of an employeremployee relationship based on an analysis of the
totality of economic circumstances of the worker.
Thus, the determination of the relationship between
employer and employee depends upon the
circumstances of the whole economic activity, such
as: (1) the extent to which the services performed
are an integral part of the employers business; (2)
the extent of the workers investment in equipment
and facilities; (3) the nature and degree of control
exercised by the employer; (4) the workers
opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for the
success of the claimed independent enterprise; (6)

the permanency and duration of the relationship


between the worker and the employer; and (7) the
degree of dependency of the worker upon the
employer for his continued employment in that line
of
business.
The proper standard of economic dependence is
whether the worker is dependent on the alleged
employer for his continued employment in that line
of
business.
By applying the control test, there is no doubt that
petitioner is an employee of Kasei Corporation
because she was under the direct control and
supervision of Seiji Kamura, the corporations
Technical Consultant. She reported for work
regularly and served in various capacities as
Accountant, Liaison Officer, Technical Consultant,
Acting Manager and Corporate Secretary, with
substantially the same job functions, that is,
rendering accounting and tax services to the
company and performing functions necessary and
desirable for the proper operation of the corporation
such as securing business permits and other
licenses over an indefinite period of engagement.
Under the broader economic reality test, the
petitioner can likewise be said to be an employee of
respondent corporation because she had served
the company for six years before her dismissal,
receiving
check
vouchers
indicating
her
salaries/wages, benefits, 13th month pay, bonuses
and allowances, as well as deductions and Social
Security contributions from August 1, 1999 to
December 18, 2000.[26] When petitioner was
designated
General
Manager,
respondent
corporation made a report to the SSS signed by
Irene Ballesteros. Petitioners membership in the
SSS as manifested by a copy of the SSS specimen
signature card which was signed by the President
of Kasei Corporation and the inclusion of her name
in the on-line inquiry system of the SSS evinces the
existence of an employer-employee relationship
between petitioner and respondent corporation.[27]
It is therefore apparent that petitioner is
economically dependent on respondent corporation
for her continued employment in the latters line of
business.
Furthermore, the affidavit of Seiji Kamura dated
December 5, 2001 has clearly established that
petitioner never acted as Corporate Secretary and
that her designation as such was only for
convenience. The actual nature of petitioners job
was as Kamuras direct assistant with the duty of

acting as Liaison Officer in representing the


company to secure construction permits, license to
operate and other requirements imposed by
government agencies. Petitioner was never
entrusted with corporate documents of the
company, nor required to attend the meeting of the
corporation. She was never privy to the preparation
of any document for the corporation, although once
in a while she was required to sign prepared
documentation
for
the
company.[30]
The second affidavit of Kamura dated March 7,
2002 which repudiated the December 5, 2001
affidavit has been allegedly withdrawn by Kamura
himself from the records of the case.[31]
Regardless of this fact, we are convinced that the
allegations in the first affidavit are sufficient to
establish that petitioner is an employee of Kasei
Corporation.
Granting arguendo, that the second affidavit validly
repudiated the first one, courts do not generally
look with favor on any retraction or recanted
testimony, for it could have been secured by
considerations other than to tell the truth and would
make solemn trials a mockery and place the
investigation of the truth at the mercy of
unscrupulous witnesses.[32] A recantation does not
necessarily cancel an earlier declaration, but like
any other testimony the same is subject to the test
of credibility and should be received with caution.
[33]
Based on the foregoing, there can be no other
conclusion that petitioner is an employee of
respondent Kasei Corporation. She was selected
and engaged by the company for compensation,
and is economically dependent upon respondent
for her continued employment in that line of
business. Her main job function involved
accounting and tax services rendered to
respondent corporation on a regular basis over an
indefinite period of engagement. Respondent
corporation hired and engaged petitioner for
compensation, with the power to dismiss her for
cause. More importantly, respondent corporation
had the power to control petitioner with the means
and methods by which the work is to be
accomplished.
The corporation constructively dismissed petitioner
when it reduced her salary by P2,500 a month from
January to September 2001. This amounts to an
illegal termination of employment, where the
petitioner is entitled to full backwages. Since the
position of petitioner as accountant is one of trust

and confidence, and under the principle of strained


relations, petitioner is further entitled to separation
pay,
in
lieu
of
reinstatement.[34]
A diminution of pay is prejudicial to the employee
and
amounts
to
constructive
dismissal.
Constructive dismissal is an involuntary resignation
resulting in cessation of work resorted to when
continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion
in rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an
employer becomes unbearable to an employee.
In affording full protection to labor, this Court must
ensure equal work opportunities regardless of sex,
race or creed. Even as we, in every case, attempt
to carefully balance the fragile relationship between
employees and employers, we are mindful of the
fact that the policy of the law is to apply the Labor
Code to a greater number of employees. This
would enable employees to avail of the benefits
accorded to them by law, in line with the
constitutional mandate giving maximum aid and
protection to labor, promoting their welfare and
reaffirming it as a primary social economic force in
furtherance of social justice and national
development.
WHEREFORE, the petition is GRANTED. The
Decision and Resolution of the Court of Appeals
dated October 29, 2004 and October 7, 2005,
respectively, in CA-G.R. SP No. 78515 are
ANNULLED and SET ASIDE. The Decision of the
National Labor Relations Commission dated April
15, 2003 in NLRC NCR CA No. 032766-02, is
REINSTATED. The case is REMANDED to the
Labor Arbiter for the recomputation of petitioner
Angelina Franciscos full backwages from the time
she was illegally terminated until the date of finality
of this decision, and separation pay representing
one-half month pay for every year of service, where
a fraction of at least six months shall be considered
as one whole year.
JALALON
1. JESUS G. REYES, petitioner, vs. GLAUCOMA
RESEARCH
FOUNDATION,
INC.,
EYE
REFERRAL CENTER and MANUEL B. AGULTO,
respondents. Reyes vs. Glaucoma Research
Foundation, Inc.,
Facts: The instant petition arose from a complaint
for illegal dismissal filed by petitioner against
respondents with the NLRC, National Capital
Region, Quezon City. Petitioner alleged that: on

August 1, 2003, he was hired by respondent


corporation as administrator of the latter's Eye
Referral Center (ERC); he performed his duties as
administrator and continuously received his
monthly salary of P20,000.00 until the end of
January 2005;
beginning February 2005,
respondent withheld petitioner's salary without
notice but he still continued to report for work; on
April 11, 2005, petitioner wrote a letter to
respondent Manuel Agulto (Agulto), who is the
Executive Director of respondent corporation,
informing the latter that he has not been receiving
his salaries since February 2005 as well as his
14th month pay for 2004; petitioner did not receive
any response from Agulto; on April 21, 2005,
petitioner was informed by the Assistant to the
Executive Director as well as the Assistant
Administrative Officer, that he is no longer the
Administrator of the ERC; subsequently, petitioner's
office was padlocked and closed without notice; he
still continued to report for work but on April 29,
2005 he was no longer allowed by the security
guard on duty to enter the premises of the ERC.
On their part, respondents contended that: there is
no employer-employee relationship between them
because respondents had no control over petitioner
in terms of working hours as he reports for work at
anytime of the day and leaves as he pleases;
respondents also had no control as to the manner
in which he performs his alleged duties as
consultant.
On January 20, 2006, the LA assigned to the case
rendered a Decision3 dismissing petitioner's
complaint. On appeal, the NLRC reversed and set
aside the Decision of the LA. The CA annulled and
set aside the judgment of the NLRC and reinstated
the Decision of the LA. The CA held that the LA
was correct in ruling that, under the control test and
the economic reality test, no employer-employee
relationship existed between respondents and
petitioner.
Issue:
exists.

WON

employer-employee

relationship

Ruling: No. Etched in an unending stream of cases


are four standards in determining the existence of
an employer-employee relationship, namely: (a) the
manner of selection and engagement of the
putative employee; (b) the mode of payment of
wages; (c) the presence or absence of power of
dismissal; and, (d) the presence or absence of
control of the putative employee's conduct. Most
determinative among these factors is the so-called

"control test." This test 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.
Well settled is the rule that where a person who
works for another performs his job more or less at
his own pleasure, in the manner he sees fit, not
subject to definite hours or conditions of work, and
is compensated according to the result of his efforts
and not the amount thereof, no employer-employee
relationship exists. What was glaring in the present
case is the undisputed fact that petitioner was
never subject to definite working hours. He never
denied that he goes to work and leaves therefrom
as he pleases.
Aside from the control test, the Supreme Court has
also used the economic reality test in determining
whether an employer-employee relationship exists
between the parties. Under this test, the economic
realities prevailing within the activity or between the
parties are examined, taking into consideration the
totality of circumstances surrounding the true
nature of the relationship between the parties. In
the instant case, petitioner was not dependent to
the respondent company as he was also a
consultant in many firms while he was working with
the respondent company.
2. EFREN P. PAGUIO, petitioner, vs. NATIONAL
LABOR
RELATIONS
COMMISSION,
METROMEDIA TIMES CORPORATION, ROBINA
Y. GOKONGWEI, LIBERATO GOMEZ, JR.,
YOLANDA E. ARAGON, FREDERICK D. GO and
ALDA IGLESIA, respondents.
Facts: On 22 June 1992, respondent Metromedia
Times Corporation entered, for the fifth time, into an
agreement with petitioner Efren P. Paguio,
appointing the latter to be an account executive of
the firm.[1] Again, petitioner was to solicit
advertisements for "The Manila Times," a
newspaper of general circulation, published by
respondent company. Apart from commissions,
petitioner was also entitled to a monthly allowance
of P2,000.00 as long as he met the P30,000.00monthly quota. Basically, the contentious points
raised by the parties had something to do with the
following stipulations of the agreement: that either
party may terminate the employment by giving
written notice 30 days prior to the termination. Two
months after his employment, respondent company
terminated petitioner.

Aggrieved, petitioner filed a case before the labor


arbiter, asking that his dismissal be declared
unlawful and that his reinstatement, with
entitlement to backwages without loss of seniority
rights, be ordered. The labor arbiter found for
petitioner and declared his dismissal illegal. The
arbiter ordered respondent Metromedia Times
Corporation and its officers to reinstate petitioner to
his former position, without loss of seniority rights.
On appeal, the National Labor Relations
Commission (NLRC) reversed the ruling of the
labor arbiter and declared the contractual
relationship between the parties as being for a
fixed-term employment.
Issue: WON the petitioner is a regular employee of
the company therefore ruling that employeremployee relationship exists.
Ruling: Yes. A regular employment, whether it is
one or not, is aptly gauged from the concurrence,
or the non-concurrence, of the following factors - a)
the manner of selection and engagement of the
putative employee, b) the mode of payment of
wages, c) the presence or absence of the power of
dismissal; and d) the presence or absence of the
power to control the conduct of the putative
employee or the power to control the employee with
respect to the means or methods by which his work
is to be accomplished. The "control test" assumes
primacy in the overall consideration.
Metromedia Times Corporation exercised such
control by requiring petitioner, among other things,
to submit a daily sales activity report and also a
monthly sales report as well. Various solicitation
letters would indeed show that Robina Gokongwei,
company president, Alda Iglesia, the advertising
manager, and Frederick Go, the advertising
director, directed and monitored the sales activities
of petitioner.
That petitioner performed activities which were
necessary and desirable to the business of the
employer, and that the same went on for more than
a year, could hardly be denied. Petitioner was an
account executive in soliciting advertisements,
clearly necessary and desirable, for the survival
and continued operation of the business of
respondent corporation.
The decision of LA was reinstated.
3. OSIAS I. CORPORAL, SR., PEDRO
TOLENTINO, MANUEL CAPARAS, ELPIDIO
LACAP, SIMPLICIO PEDELOS, PATRICIA NAS,

and TERESITA FLORES, petitioners, vs.


NATIONAL LABOR RELATIONS COMMISSION,
LAO ENTENG COMPANY, INC. and/or TRINIDAD
LAO ONG, respondents.
Facts: The records of the case show that the five
male petitioners, worked as barbers, while two
females were employed as manicurists in New
Look Barber Shop located at 651 P. Paterno Street,
Quiapo, Manila owned by private respondent Lao
Enteng Co. Inc..
Petitioners claim that at the start of their
employment with the New Look Barber Shop, it was
a single proprietorship owned and managed by Mr.
Vicente Lao. On 1982, the corporation made by Mr.
Lao's children took over the management of
barbershop. All the petitioners were allowed to
continue working with the new company until April
15, 1995 when respondent Trinidad Ong informed
them that the building wherein the New Look
Barber Shop was located had been sold and that
their services were no longer needed.
On April 28, 1995, petitioners filed with the
Arbitration Branch of the NLRC, a complaint for
illegal dismissal, illegal deduction, separation pay,
non-payment of 13th month pay, and salary
differentials. Private respondent in its position
paper averred that the petitioners were joint venture
partners and were receiving fifty percent
commission
of
the
amount
charged
to
customers. Thus, there was no employer-employee
relationship between them and petitioners. Trinidad
also added that private respondents had no control
over petitioners who were free to come and go as
they wished.
In a Decision dated September 28, 1995, Labor
Arbiter Potenciano S. Caizares, Jr. ordered the
dismissal of the complaint on the basis of his
findings that the complainants and the respondents
were engaged in a joint venture and that there
existed no employer-employee relation between
them. NLRC affirmed the decision of LA.
Issue: WON NLRC committed grave abuse of
discretion in confirming that no employer-employee
relationship exists between the petitioner and
respondent.
Ruling: Yes. The following elements must be
present for an employer-employee relationship to
exist: (1) the selection and engagement of the
workers; (2) power of dismissal; (3) the payment of
wages by whatever means; and (4) the power to

control the worker's conduct, with the latter


assuming primacy in the overall consideration. all
these three elements were present in the case.
Private respondent claims it had no control over
petitioners. The power to control refers to the
existence of the power and not necessarily to the
actual exercise thereof, nor is it essential for the
employer to actually supervise the performance of
duties of the employee. It is enough that the
employer has the right to wield that power.[12] As
to the "control test", the following facts indubitably
reveal that respondent company wielded control
over the work performance of petitioners, in
that: (1) they worked in the barber shop owned and
operated by the respondents; (2) they were
required to report daily and observe definite hours
of work; (3) they were not free to accept other
employment elsewhere but devoted their full time
working in the New Look Barber Shop for all the
fifteen (15) years they have worked until April 15,
1995; (4) that some have worked with respondents
as early as in the 1960's; (5) that petitioner Patricia
Nas was instructed by the respondents to watch the
other six (6) petitioners in their daily task. Certainly,
respondent company was clothed with the power to
dismiss any or all of them for just and valid cause.
Petitioners were unarguably performing work
necessary and desirable in the business of the
respondent company.
4. OSCAR VILLAMARIA, JR., petitioner, vs.
COURT OF APPEALS and JERRY V.
BUSTAMANTE, respondents.
Facts: Petitioner Oscar Villamaria, Jr. was the
owner of Villamaria Motors, a sole proprietorship
engaged in assembling passenger jeepneys with a
public utility franchise to operate along the
Baclaran-Sucat route. By 1995, Villamaria stopped
assembling jeepneys and retained only nine, four of
which he operated by employing drivers on a
boundary basis. One of those drivers was
respondent Bustamante who drove the jeepney
with
Plate
No.
PVU-660.
Bustamante
remitted P450.00 a day to Villamaria as boundary
and kept the residue of his daily earnings as
compensation for driving the vehicle. In August
1997, Villamaria verbally agreed to sell the jeepney
to Bustamante under the boundary-hulog scheme,
where
Bustamante
would
remit
to
Villarama P550.00 a day for a period of four years;
Bustamante would then become the owner of the
vehicle and continue to drive the same under
Villamarias franchise. It was also agreed that

Bustamante would
of P10,000.00.

make

downpayment

Under the Kasunduan, Bustamante was prohibited


from driving the vehicle without prior authority from
Villamaria
Motors. Thus,
Bustamante
was
authorized to operate the vehicle to transport
passengers only and not for other purposes. He
was also required to display an identification card in
front of the windshield of the vehicle. In case the
vehicle sustained serious damage, Bustamante
was obliged to notify Villamaria Motors before
commencing repairs. Bustamante was not allowed
to wear slippers, short pants or undershirts while
driving. He was required to be polite and respectful
towards the passengers. Aside from the boundaryhulog, Bustamante was also obliged to pay for the
annual registration fees of the vehicle and the
premium for the vehicles comprehensive insurance.
On July 24, 2000, Villamaria took back the jeepney
driven by Bustamante and barred the latter from
driving the vehicle. On August 15, 2000,
Bustamante filed a Complaint[7] for Illegal
Dismissal against Villamaria and his wife Teresita.
The spouses Villamaria argued that Bustamante
was
not
illegally
dismissed
since
the Kasunduan executed
on August
7,
1997 transformed
the
employer-employee
relationship into that of vendor-vendee. Hence, the
spouses concluded, there was no legal basis to
hold them liable for illegal dismissal.
The LA rendered the decision in favor of spouses
Villamaria. On appeal, NLRC dismissed the petition
for lack of merit. Respondent appealed to CA which
set aside the decision of NLRC and holding that the
dual relationship of that of vendor-vendee and
employer-employee exists.
Issue: WON employer-employee relationship can
co -exist with vendor-vendee relationship.
Ruling: Yes. In this case, Villamarias directives (to
drive carefully, wear an identification card, don
decent attire, park the vehicle in his garage, and to
inform him about provincial trips, etc.) was a means
to control the way in which Bustamante was to go
about his work. In view of Villamarias supervision
and control as employer, the fact that the boundary
represented installment payments of the purchase
price on the jeepney did not remove the parties
employer-employee relationship.
We agree with the ruling of the CA that, under the
boundary-hulog scheme
incorporated
in

the Kasunduan, a dual juridical relationship was


created between petitioner and respondent: that of
employer-employee
and
vendorvendee. The Kasunduan did not extinguish the
employer-employee relationship of the parties
extant before the execution of said deed. As early
as 1956, the Court ruled in National Labor Union v.
Dinglasan[40] that the jeepney owner/operatordriver relationship under the boundary system is
that of employer-employee and not lessor-lessee.
Indeed, petitioner, as the owner of the vehicle and
the holder of the franchise, is entitled to exercise
supervision and control over the respondent, by
seeing to it that the route provided in his franchise,
and the rules and regulations of the Land
Transportation Regulatory Board are duly complied
with. The decision of CA was affirmed.
LEGASPI
Jardin vs NLRC
G.R. No. 119268. February 23, 2000.

Facts: Petitioners were drivers of private


respondent, Philjama International Inc., a domestic
corporation engaged in the operation of "Goodman
Taxi." Petitioners used to drive private respondent's
taxicabs every other day on a 24-hour work
schedule under the boundary system. Under this
arrangement, the petitioners earned an average of
P400.00 daily. Nevertheless, private respondent
admittedly regularly deducts from petitioners, daily
earnings the amount of P30.00 supposedly for the
washing of the taxi units. Believing that the
deduction is illegal, petitioners decided to form a
labor union to protect their rights and interests.
Upon learning about the plan of petitioners, private
respondent refused to let petitioners drive their
taxicabs when they reported for work on August 6,
1991, and on succeeding days. Petitioners
suspected that they were singled out because they
were the leaders and active members of the
proposed union. Aggrieved, petitioners filed with the
labor arbiter a complaint against private respondent
for unfair labor practice, illegal dismissal and illegal
deduction of washing fees. In a decision3 dated
August 31, 1992, the labor arbiter dismissed said
complaint for lack of merit.
On appeal, the NLRC reversed and set aside the
judgment of the labor arbiter (April 28, 1994), and

declared that petitioners are employees of private


respondents, and as such, their dismissal must be
for just cause and after due process.
The first motion for reconsideration filed by the
private respondents was denied, but another
motion was filed and was granted by the public
respondents. It ruled that it lacks jurisdiction over
the case as petitioners and private respondent
have no employer-employee relationship. It held
that the relationship of the parties is leasehold
which is covered by the Civil Code rather than the
Labor Code.
Petitioners sought reconsideration
denied, hence the instant petition.

which

was

Issue: Whether or not there an employer-employee


relationship exist between the petitioner and the
private respondent.
Held: [in the determination the existence of
employer-employee relationship, the Supreme
Court in the case of Sara, et al., vs. Agarrado, et al.
(G.R. No. 73199, 26 October 1988) has applied the
following four-fold test: "(1) the selection and
engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the
power of control the employees conduct."
"Among the four (4) requisites", the Supreme Court
stresses that "control is deemed the most important
that the other requisites may even be disregarded".
Under the control test, an employer-employee
relationship exists if the "employer" has reserved
the right to control the "employee" not only as to the
result of the work done but also as to the means
and methods by which the same is to be
accomplished. Otherwise, no such relationship
exists.]
In a number of cases decided by this Court, we
ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers
on the other under the boundary system is that of
employer-employee and not of lessor-lessee. We
explained that in the lease of chattels, the lessor
loses complete control over the chattel leased
although the lessee cannot be reckless in the use
thereof, otherwise he would be responsible for the
damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former
exercise supervision and control over the latter. The
management of the business is in the owner's
hands. The owner as holder of the certificate of
public convenience must see to it that the driver
follows the route prescribed by the franchising
authority and the rules promulgated as regards its

operation. Now, the fact that the drivers do not


receive fixed wages but get only that in excess of
the so-called "boundary" they pay to the
owner/operator is not sufficient to withdraw the
relationship between them from that of employer
and employee. We have applied by analogy the
above stated doctrine to the relationships between
bus owner/operator and bus conductor,20 autocalesa owner/operator and driver,21 and recently
between taxi owners/operators and taxi drivers.
Hence, petitioners are undoubtedly employees of
private respondent because as taxi drivers they
perform activities which are usually necessary or
desirable in the usual business or trade of their
employer.
WHEREFORE, the instant petition is GRANTED.
The assailed DECISION of public respondent dated
October 28, 1994, is hereby SET ASIDE. The
DECISION of public respondent dated April 28,
1994, and its RESOLUTION dated December 13,
1994, are hereby REINSTATED subject to
MODIFICATION. Private respondent is directed to
reinstate petitioners to their positions held at the
time of the complained dismissal. Private
respondent is likewise ordered to pay petitioners
their full backwages, to be computed from the date
of dismissal until their actual reinstatement.
However, the order of public respondent that
petitioners be reimbursed the amount paid as
washing charges is deleted. Costs against private
respondents.
Martinez vs NLRC
G.R. No. 117495. May 29, 1997

Facts: RAUL MARTINEZ was operator of two (2)


taxicab units under the business name PAMA TX
and two (2) additional units under the name P. J.
TIGER TX. Private respondents worked for him as
drivers. On 18 March 1992 Raul Martinez died
leaving behind his mother, petitioner Nelly Acta
Martinez, as his sole heir. The private respondents
alleged that they have been regular drivers of Raul
Martinez since 20 October 1989 earning no less
than P400.00 per day driving twenty-four (24) hours
every other day. For the duration of employment,
not once did they receive a 13th month pay. After
the death of Raul Martinez, petitioner took over the
management and operation of the business. On or
about 22 June 1992 she informed them that
because of difficulty in maintaining the business,
she was selling the units together with the
corresponding franchises. However, petitioner did

not proceed with her plan; instead, she assigned


the units to other drivers.
Petitioner traversed the claim for 13th month pay by
contending that it was personal and therefore did
not survive the death of her son. Besides, private
respondents were not entitled thereto as Sec. 3,
par. (e), of the Rules and Regulations Implementing
P. D. 851 is explicit that employers of those who are
paid on purely boundary basis are not covered
therein.
On 30 August 1993 the Labor Arbiter dismissed the
complaint on the following grounds: (a) private
respondents' claims being personal were
extinguished upon the death of Raul Martinez; (b)
petitioner was a mere housewife who did not
possess the required competence to manage the
business; and, (c) private respondents were not
entitled to 13th month pay because the existence of
employer-employee relationship was doubtful on
account of the boundary system adopted by the
parties.
However, respondent National Labor Relations
Commission viewed the case differently. According
to NLRC, (a) private respondents were regular
drivers because payment of wages, which is one of
the essential requisites for the existence of
employment relation, may either be fixed, on
commission, boundary, piece-rate or task basis; (b)
the management of the business passed on to
petitioner who even replaced private respondents
with a new set of drivers; and, (c) the claims of
private respondents survived the death of Raul
Martinez considering that the business did not
cease operation outright but continued presumably,
in the absence of proof of sale, up to the moment.
As regards the claim for 13th month pay, NLRC
upheld the stand of petitioner based on the express
provision of P. D. 851.
NLRC thus set aside the appealed decision. Hence,
this recourse of petitioner.
Issue:
1. Whether or not employer-employee
relationship exist between the Raul Martinez and
the private reapondents.
2. Whether or not employer-employees
relationship exist between the petitioner Nelly
Marinez.
Held: 1. As early as 3 March 1956, in National
Labor Union v. Dinglasan,[9] this Court ruled that
the relationship between jeepney owners/operators
on one hand and jeepney drivers on the other
under the boundary system is that of employer-

employee and not of lessor-lessee. Therein we


explained that in the lease of chattels the lessor
loses complete control over the chattel leased
although the lessee cannot be reckless in the use
thereof, otherwise he would be responsible for the
damages to the lessor. In the case of jeepney
owners/operators and jeepney drivers, the former
exercise supervision and control over the latter. The
fact that the drivers do not receive fixed wages but
get only that in excess of the so-called "boundary"
they pay to the owner/operator is not sufficient to
withdraw the relationship between them from that of
employer and employee. The doctrine is applicable
by analogy to the present case. Thus, private
respondents were employees of Raul Martinez
because they had been engaged to perform
activities which were usually necessary or desirable
in the usual business or trade of the employer.[10]
The records show that private respondents had
been employed since 20 October 1989 except for
Ogana, the Delvos, Albao and Colibao who were
employed on later dates.
2. The above findings, however, were culled from
mere allegations in private respondents' position
paper. But mere allegation is not evidence. It is a
basic rule in evidence that each party must prove
his affirmative allegation. In Opulencia Ice Plant
and Storage v. NLRC[16] we ruled 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 that case, the
relationship was sufficiently proved by testimonial
evidence. In the present case, however, private
respondents simply assumed the continuance of an
employer-employee relationship between them and
petitioner, when she took over the operation of the
business after the death of her son Raul Martinez,
without any supporting evidence. Consequently, we
cannot sustain for lack of basis the factual finding of
respondent NLRC on the existence of employeremployee relationship between petitioner and
private respondents. Clearly, such finding
emanates from grave abuse of discretion. With this
conclusion, consideration of the issue on illegal
dismissal becomes futile and irrelevant.
WHEREFORE, the petition is GRANTED. The
Decision of respondent National Labor Relations
Commission dated 28 January 1994 ordering
petitioner Nelly Acta Martinez to grant respondents
separation pay as well as its Order of 30
September 1994 denying reconsideration is SET
ASIDE. The Decision of the Labor Arbiter dated 30
August 1993 dismissing the complaint is
REINSTATED.

Calamba Medical vs NLRC


G.R. No. 176484 November 25, 2008

Facts: The Calamba Medical Center (petitioner), a


privately-owned hospital, engaged the services of
medical doctors-spouses Ronaldo Lanzanas (Dr.
Lanzanas) and Merceditha Lanzanas (Dr.
Merceditha) in March 1992 and August 1995,
respectively, 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.[1] It appears
that resident physicians were also given a
percentage share out of fees charged for outpatient 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 petitioners
medical director Dr. Raul Desipeda (Dr. Desipeda).
And they were issued identification cards by
petitioner and were enrolled in the Social Security
System (SSS).[4] Income taxes were withheld from
them.
On March 7, 1998, Dr. Meluz Trinidad (Dr.
Trinidad), also a resident physician at the hospital,
inadvertently overheard a telephone conversation
of respondent Dr. Lanzanas with a fellow employee,
Diosdado Miscala, through an extension telephone
line. Apparently, Dr. Lanzanas and Miscala were
discussing the low census or admission of patients
to the hospital.[6]
Dr. Desipeda whose attention was called to the
above-said telephone conversation issued to Dr.
Lanzanas a Memorandum.
The petitioner did not give respondent Dr.
Merceditha, who was not involved in the said
incident, any work schedule after sending her
husband Dr. Lanzanas the memorandum,[8] nor
inform her the reason therefor, albeit she was later
informed by the Human Resource Department
(HRD) officer that that was part of petitioners costcutting measures.
On March 14, 1998,[11] the rank-and-file
employees union of petitioner went on strike due to
unresolved grievances over terms and conditions of
employment.
On March 20, 1998, Dr. Lanzanas filed a complaint
for illegal suspension [13] before the National Labor

Relations Commission (NLRC)-Regional Arbitration


Board (RAB) IV. Dr. Merceditha subsequently filed
a complaint for illegal dismissal.
Sec. Cresenciano Trajano of the Department of
Labor and Employment (DOLE) certified the labor
dispute to the NLRC for compulsory arbitration and
issued on April 21, 1998 return-to-work Order to the
striking union officers and employees of petitioner
In a memorandum, Dr. Desipeda thus ordered the
officers and members of the union to report for
work as soon as possible to the hospitals personnel
officer and administrator for work scheduling,
assignments and/or re-assignments. Petitioner later
sent Dr. Lanzanas a notice of termination which he
received on April 25, 1998, indicating as grounds
therefor his failure to report back to work despite
the DOLE order and his supposed role in the
striking union.
On a decision, Labor Arbiter Antonio R. Macam
dismissed the spouses complaints for want of
jurisdiction upon a finding that there was no
employer-employee relationship between the
parties. On appeal, the NLRC, by Decision[20] of
May 3, 2002, reversed the Labor Arbiters findings.
Petitioners motion for reconsideration having been
denied, it brought the case to the Court of Appeals
on certiorari. The appellate court, by June 30, 2004
Decision, initially granted petitioners petition and
set aside the NLRC ruling.
Preliminarily, the present petition calls for a
determination of whether there exists an employeremployee relationship between petitioner and the
spouses-respondents.
Issue: Whether or not there exists an employeremployee relationship between petitioner and the
spouses-respondents.
Held: This Court is unimpressed.
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.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. Where a
person who works for another does so more or less
at his own pleasure and is not subject to definite
hours or conditions of work, and is compensated
according to the result of his efforts and not the

amount thereof, the element of control is absent. As


priorly stated, private respondents maintained
specific work-schedules, as determined by
petitioner through its medical director, which
consisted of 24-hour shifts totaling forty-eight hours
each week and which were strictly to be observed
under pain of administrative sanctions.
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.
Petitioner itself provided incontrovertible proof of
the employment status of respondents, namely, the
identification
cards
it
issued
them,
the
payslips[33]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[34] is premised on the existence of an
employer-employee relationship,[35] except in
cases of compulsory coverage of the selfemployed. It would be preposterous for an
employer to report certain persons as employees
and pay their SSS premiums as well as their wages
if they are not its employees.
On March 7, 1998, a memorandum explicitly stated
that respondent is employed in it and of the
subsequent termination letter indicating respondent
Lanzanas employment status.
Finally, under Section 15, Rule X of Book III of the
Implementing Rules of the Labor Code, an
employer-employee relationship exists between the
resident physicians and the training hospitals,
unless there is a training agreement between them,
and the training program is duly accredited or
approved by the appropriate government agency. In
respondents case, they were not undergoing any
specialization training. They were considered nontraining general practitioners.
Turning now to the issue of dismissal, the Court
upholds the appellate courts conclusion that private
respondents were illegally dismissed.

WHEREFORE, the Decision of the Court of


Appeals in CA-G.R. SP No. 75871 is AFFIRMED
with MODIFICATION in that the award by the
National Labor Relations Commission of 10% of the
total judgment award as attorneys fees is
reinstated. In all other aspects, the decision of the
appellate court is affirmed.
SIP Food House vs Batolina
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 SIPs contract
as GMPC concessionaire, because of GMPCs
decision to take direct investment in and
management of the GMPC canteen; SIPs
continued refusal to heed GMPCs directives for
service improvement; and the alleged interference
of the Pablos two sons with the operation of the
canteen.[5] 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.
They did not receive overtime pay although they
worked from 6:30 in the morning until 5:30 in the
afternoon, or other employee benefits such as
service incentive leave, and maternity benefit (for
their co-employee Flordeliza Matias). Their
employee contributions were also not remitted to
the Social Security System.
To avoid liability, SIP argued that it operated the
canteen in behalf of GMPC since it had no authority
by itself to do so. The respondents were not its
employees, but GMPCs, as shown by their
identification cards.
Labor Arbiter Francisco A. Robles rendered a
Decision on June 30, 2005 dismissing the
complaint for lack of merit.[6] He found that the
respondents were GMPCs employees, and not

SIPs, as there existed a labor-only contracting


relationship between the two entities. The labor
arbiter, however, opined that even if respondents
were considered as SIPs employees, their
dismissal would still not be illegal because the
termination of its contract to operate the canteen
came as a surprise and was against its will,
rendering the canteens closure involuntary.
The respondents brought their case, on appeal, to
the National Labor Relations Commission (NLRC).
NLRC found that SIP was the respondents
employer, but it sustained the labor arbiters ruling
that the employees were not illegally dismissed as
the termination of SIPs concession to operate the
canteen constituted an authorized cause for the
severance of employer-employee relations.
SIP moved for, but failed to secure, a
reconsideration of the NLRC decision. It then
elevated the case to the CA through a petition for
certiorari charging the NLRC with grave abuse of
discretion in rendering the assailed decision. The
CA sustained NLRCs decision. SIP moved for
reconsideration, but the CA denied the motion.
Hence, the present petition.
Issue: Whether or not there exists an employeremployee relationship between the petitioner and
respondent.
Held: We affirm the CA ruling that SIP was the
respondents employer. The NLRC decision, which
the CA affirmed.
That complainants were employees of respondents
is further bolstered by the fact that respondents do
not deny that they were the ones who paid
complainants salary. When complainants charged
them of underpayment, respondents even
interposed the defense of file (sic) board and
lodging given to complainants.
Furthermore, these IDs issued to complainants
bear the signature of respondent Alejandro C.
Pablo Likewise, the memoranda issued to
complainants regarding their absences without
leave were signed by respondent Alejandro C.
Pablo. All these pieces of evidence clearly show
that respondents are the employer of complainants.
SIP and its proprietors could not be considered as
mere agents of GMPC because they exercised the
essential elements of an employment relationship
with the respondents such as hiring, payment of
wages and the power of control, not to mention that
SIP operated the canteen on its own account as it
paid a fee for the use of the building and for the

privilege of running the canteen. The fact that the


respondents applied with GMPC in February 2004
when it terminated its contract with SIP, is another
clear indication that the two entities were separate
and distinct from each other. We thus see no
reason to disturb the CAs findings.

the evaluation of evidence which supports the labor


tribunals findings of fact. NO. Overload pay should
be excluded in the computation of the 13th month
pay of the Associations members. The peculiarity
of an overload lies in the fact that it may be
performed within the normal eight-hour working
day. This is the only reason why the DOLE, in
its explanatory bulletin, finds it proper to include a
teachers overload pay in the determination of his
or her 13th month pay. However, the DOLE loses
sight of the fact that even if it is performed within
the normal eight-hour working day, an overload
is still an additional or extra teaching work which is
performed after the regular teaching load has been
completed. Hence, any pay given as compensation
for such additional work should be considered as
extra and not deemed as part of the regular or
basic salary

REPANCOL
Letran Calamba Faculty v. NLRCGR No. 156225
FACTS:
In 1992, the Letran Calamba Faculty and
Employees Association filed with the NLRC a
complaint against Colegio de San Juan de Letran,
Calamba for collection of various monetary claims
due to its members. In 1994, the Association held a
strike. The Labor Arbiter dismissed the
Associations money claims, and also dismissed
Letrans petition to declare the strike illegal. The
NLRC affirmed the Labor Arbiter on appeal. The CA
also affirmed the NLRC
ISSUE:
1. W/N the CA can review the factual findings
and legal conclusions of the NLRC in
a special civil action for certiorari.
2. W/N a teachers overload pay should be
considered in the computation of his or
her 13th month pay.

HELD:
NO. The Court finds no error in the ruling of the CA
that since nowhere in the petition is there any
acceptable demonstration that the LA or the NLRC
acted either with grave abuse of discretion or
without or in excess of its jurisdiction, the appellate
court has no reason to look into the correctness of

RATIONALE:
The appellate courts jurisdiction to review a
decision of the NLRC in a petition for certiorari is
confined to issues of jurisdiction or grave abuse
of discretion. An extraordinary remedy, a petition for
certiorari is available only and restrictively in truly
exceptional cases. The sole office of the writ of
certiorari is the correction of errors of jurisdiction
including the commission of grave abuse of
discretion amounting to lack or excess of
jurisdiction. The writ of certiorari does not include
correction of the NLRCs evaluation of the evidence
or of its factual findings. Such findings are generally
accorded not only respect but also finality. A party
assailing such findings bears the burden of showing
that the tribunal acted capriciously and whimsically
or in total disregard of evidence material to the
controversy, in order that the extraordinary writ of
certiorari will lie .Settled is the rule that the findings
of the LA, when affirmed by the NLRC and the CA,
are binding on the Supreme Court, unless patently
erroneous. The Supreme Court is not a trier of
facts, and this applies with greater force in labor
cases. Findings of fact of administrative agencies
and quasi-judicial bodies, which have acquired
expertise because their jurisdiction is confined to
specific matters, are generally accorded not only
great respect but even finality. Basic wage means
all remuneration or earnings paid by an employer to
a worker for services rendered on normal working
days and hours but does not include cost of living
allowances, 13th month pay or other monetary

benefits which are not considered as part of or


integrated into the regular salary of the workers.
Overload vs. Overtime: Overtime work is work
rendered in excess of normal working hours of
eight in a day. Overload work is additional work
after completing the regular workload, may be
performed either within or outside eight hours in a
day, and may or may not be considered overtime
work. What are deemed not part of the basic salary:
a. Cost of living allowances granted pursuant to PD
525 and LOI 174;
b. Profit sharing payments
c. All allowances and monetary benefits which are
not considered or integrated as part of the regular
basic salary of the employee at the time of
the promulgation of the Decree; Overtime pay,
earnings, and other remunerations as provided for
by PD 851s IRR.

RB Michael Press v Galit GR 153510

FACTS

Respondent was employed by petitioner


R.B. Michael Press as an offset machine
operator. During his employment, Galit was
tardy for a total of 190 times and was
absent without leave for a total of nine and a
half days.
Respondent was ordered to render overtime
service in order to comply with a job order
deadline, but he refused to do so. The
following day, respondent reported for work
but petitioner Escobia told him not to work,
and to return later in the afternoon for a
hearing. When he returned, a copy of an
Office Memorandum was served on him

Petitioners aver that Galit was dismissed


due to the following offenses: (1) tardiness
constituting neglect of duty; (2) serious
misconduct; and (3) insubordination or
willful disobedience.

Respondent
was
terminated
from
employment, gave him his two-day salary
and a termination letter.

Respondent subsequently filed a complaint


for illegal dismissal and money claims
before
the National
Labor
Relations
Commission (NLRC)

The CA found that it was not the tardiness


and absences committed by respondent,
but his refusal to render overtime work
which caused the termination of his
employment. It ruled that the timeframe in
which respondent was afforded procedural
due process is dubitable; he could not
have been afforded ample opportunity to
explain his side and to adduce evidence on
his behalf. It further ruled that the basis
for computing his backwages should be his
daily salary at the time of his dismissal
which was PhP 230, and that his
backwages should be computed from
the time of his dismissal up to the finality of
the CAs decision.

ISSUES
1. W/N there was just cause to terminate the
employment of respondent
2. W/N due process
dismissal process

was observed in

the

3. W/N respondent is entitled to backwages


and other benefits despite his refusal to be
reinstated.

RULING

Respondents tardiness cannot be considered


condoned by petitioners
In the case at bar, respondent did not adduce any
evidence to show waiver or condonation on the
part of petitioners. Thus, the finding of the CA
that petitioners cannot use the previous absences
and tardiness because respondent was not
subjected to any penalty is bereft of legal basis.
The petitioners did not impose any punishment for
the
numerous
absences
and
tardiness
of respondent. Thus, said infractions can be used
collectively by petitioners as a ground for dismissal.

Respondent is admittedly a daily wage earner


and hence is paid based on such arrangement. For
said daily paid workers, the principle of "a days pay
for a days work" is squarely applicable. Hence it
cannot be construed in any wise that such non
payment of the daily wage on the days he was
absent constitutes a penalty.

Insubordination or willful disobedience

For willful disobedience to be a valid cause for


dismissal, these two elements must concur:
(1) the employees assailed conduct must have
been willful, that is, characterized by a wrongful and
perverse attitude
(2) the order violated must have been reasonable,
lawful, made known to the employee, and must
pertain to the duties which he had been engaged to
discharge.

The issue now is, whether respondents refusal or


failure to render overtime work was willful; that is,
whether such refusal or failure was characterized
by a wrongful and perverse attitude. The fact that
respondent refused to provide overtime work
despite his knowledge that there is a production
deadline that needs to be met, and that without
him, the offset machine operator, no further printing
can be had, shows his wrongful and perverse
mental attitude; thus, there is willfulness. The Court
rule that respondent unjustifiably refused to render
overtime work despite a valid order to do so. The
totality of his offenses against petitioner R.B.
Michael Press shows that he was a difficult
employee.

Due process:
requirement

twin

notice

and

hearing

Under the twin notice requirement, the employees


must be given two (2) notices before his
employment could be terminated: (1) a first notice
to apprise the employees of their fault, and (2) a
second notice to communicate to the employees
that their employment is being terminated.

On the surface, it would seem that petitioners


observed due process (twin notice and hearing
requirement): On February 23, 1999 petitioner
notified respondent of the hearing to be conducted
later that day. On the same day before the hearing,
respondent was furnished a copy of an office
memorandum which contained a list of his
offenses, and a notice of a scheduled hearing in the
afternoon of the same day. The next day, February
24, 1999, he was notified that his employment with
petitioner R.B. Michael Press had been terminated.

The hearing was immediately set in the afternoon


of February 23, 1999the day respondent received
the first notice. Therefore, he was not given any
opportunity at all to consult a union official or
lawyer, and, worse, to prepare for his defense.

Regarding the February 23, 1999 afternoon


hearing, it can be inferred that respondent, without
any lawyer or friend to counsel him, was not given
any chance at all to adduce evidence in his
defense. In the February 24, 1999 notice of
dismissal, petitioners simply justified respondents
dismissal by citing his admission of the offenses
charged. It did not specify the details surrounding
the offenses and the specific company rule or
Labor Code provision upon which the dismissal
was grounded.

The Court concludes that termination of respondent


was railroaded in serious breach of his right to due
process.

Therefore, the CA decision is REVERSED and SET


ASIDE. The Court declares respondents dismissal
from employment VALID and LEGAL. Petitioners
are, however, ordered jointly and solidarily to pay
respondent nominal damages in the amount of PhP
30,000 for violation of respondents right to due
process.

ROWENA DE LEON CRUZ vs. BANK OF THE PH


ILIPPINE ISLANDS
G.R. No. 173357, 13 February 2013

FACTS:
Petitioner was the Assistant Branch Manager of the
BPI Ayala Avenue Branch in Makati City, and she
was in charge of the Trading Section. After 13 years
of continuous service, respondent terminated
petitioner on grounds of gross negligence and
breach
of trust. Petitioners dismissal was brought about
by the fraud perpetrated against three depositors in
respondents Ayala Avenue Branch.
She asserted that she followed the bank
procedure/policy on pre-termination of accounts,
opening of transitory accounts and reactivation of
dormant accounts. She explained that upon
verifying the authenticity of the signatures of
the depositors involved, she approved the withdraw
als from certain accounts of these clients.
The Labor Arbiter held that petitioner cannot be
considered a managerial employee, and that her
dismissal
on
grounds
of gross negligence and breach of trust was unjustif
ied. But this was reversed by the NLRC.
ISSUE:
Whether or not dismissal on the ground of loss of c
onfidence requires proof beyond reasonable doubt.
RULING:
No. Respondent dismissed petitioner from her
employment on grounds of gross negligence and
breach of trust reposed on her by respondent under
Article 282(b) and (c) of the Labor Code. Gross
negligence connotes want or absence of or failure
to exercise slight care or diligence, or the entire
absence of care. It evinces a thoughtless disregard
of consequences without exerting any effort to
avoid them. On the other hand, the basic premise
for dismissal on the ground of loss of confidence is
that the employees concerned hold a position of
trust and confidence. It is the breach of this trust
that results in the employers loss of confidence in
the employee. Petitioner holds a managerial status
since she is tasked to act in the interest of her
employer
as
she
exercises
independent
judgment when she approves pre-termination of US
D CDs or the withdrawal of deposits.
Petitioner was remiss in the performance of her
duty to approve the pre-termination of certificates of
deposits by legitimate depositors or their dulyauthorized representatives, resulting in prejudice to
the bank, which reimbursed the monetary loss
suffered by the affected clients. Hence, respondent

was justified in dismissing petitioner on the ground


of breach of trust. As long as there is some basis
for such loss of confidence, such as when the
employer has reasonable ground to believe that the
employee concerned is responsible for the
purported misconduct, and the nature of his
participation therein renders him unworthy of the
trust
and
confidence
demanded of his position, a managerial employee
may be dismissed.
SME Bank, et al. v. De Guzman, et al.
No. 184517 : October 8, 2013

G.R.

FACTS:
Respondent employees Elicerio Gaspar (Elicerio),
Ricardo Gaspar, Jr. (Ricardo), Eufemia Rosete
(Eufemia), Fidel Espiritu (Fidel), Simeon Espiritu,
Jr. (Simeon, Jr.), and Liberato Mangoba (Liberato)
were employees of Small and Medium Enterprise
Bank, Incorporated (SME Bank).Originally, the
principal shareholders and corporate directors of
the bank were Eduardo M. Agustin, Jr. (Agustin)
and Peregrin de Guzman, Jr. (De Guzman).
SME Bank experienced financial difficulties. To
remedy the situation, the bank officials proposed its
sale
to
Samson.
Accordingly,
negotiations
ensued,
Letter
Agreements were sent to Agustin and De Guzman,
conditioning that it shall guarantee the peaceful
turnover of all assets as well as the peaceful
transition of management of the bank and shall
terminate/retire the employees mutually agreed
upon, upon transfer of shares in favor of groups
nominees; and all retirement benefits, if any of the
above officers/stockholders/board of directors are
hereby waived upon consummation of the above
sale. The retirement benefits of the rank and file
employees including the managers shall be
honored by the new management. Thereafter, the
Letter
Agreement
was
accepted.
Simeon Espiritu (Espiritu), then the general
manager of SME Bank, held a meeting with all the
employees and persuaded them to tender their
resignations, with the promise that they would be
rehired upon reapplication. His directive was
allegedly done at the behest of petitioner Olga
Samson.

Relying on this representation, Elicerio, Ricardo,


Fidel, Simeon, Jr., and Liberato tendered their
resignations. As for Eufemia, she first tendered a
resignation letter and then a retirement letter.

should be held jointly and severally liable for the


employees separation pay and backwages.

On appeal, the CA affirmed the decision of the


NLRC.
Agustin and De Guzman signified their conformity
to the Letter Agreements and sold 86.365% of the
shares of stock of SME Bank to spouses Abelardo
and Olga Samson. Spouses Samson then became
the principal shareholders of SME Bank, while
Aurelio Villaflor, Jr. was appointed bank president.
As it turned out, respondent employees, except for
Simeon, Jr., were not rehired. After a month in
service, Simeon, Jr. again resigned on October
2001.
Respondent-employees demanded the payment of
their respective separation pays, but their requests
were denied. Aggrieved by the loss of their jobs,
respondent employees filed a Complaint before
NLRC and sued SME Bank, spouses Abelardo and
Olga Samson and Aurelio Villaflor (the Samson
Group). Subsequently, they amended their
Complaint to include Agustin and De Guzman as
respondents to the case.

The Labor Arbiter ruled that the buyer of an


enterprise is not bound to absorb its employees,
unless there is an express stipulation to the
contrary. However, he also found that respondent
employees were illegally dismissed, because they
had involuntarily executed their resignation letters
after relying on representations that they would be
given their separation benefits and rehired by the
new management. Accordingly, the Labor Arbiter
decided the case against Agustin and De Guzman,
but dismissed the Complaint against the Samson
Group.
Respondent employees questioned the Labor
Arbiters failure to award backwages, while Agustin
and De Guzman contended that they should not be
held liable for the payment of the employees
claims.

The NLRC found that there was only a mere


transfer of shares and therefore, a mere change of
management. As the change of management was
not a valid ground to terminate respondent bank
employees, the NLRC ruled that they had indeed
been illegally dismissed. It further ruled that
Agustin, De Guzman and the Samson Group

ISSUE:
W/N the respondents were illegally dismissed.
HELD
The decision of the Court of Appeals is
overruled.
LABOR LAW
Here, the records show that Elicerio, Ricardo, Fidel,
and Liberato only tendered resignation letters
because they were led to believe that, upon
reapplication, they would be reemployed by the
new management. As it turned out, except for
Simeon, Jr., they were not rehired by the new
management. Their reliance on the representation
that they would be reemployed gives credence to
their argument that they merely submitted courtesy
resignation letters because it was demanded of
them, and that they had no real intention of leaving
their posts. We therefore conclude that Elicerio,
Ricardo, Fidel, and Liberato did not voluntarily
resign from their work; rather, they were terminated
from their employment.

Retirement, like resignation, should be an act


completely voluntary on the part of the employee. If
the intent to retire is not clearly established or if the
retirement is involuntary, it is to be treated as a
discharge. [De Leon v. NLRC, 188 Phil. 666 (1980)]

In San Miguel Corporation v. NLRC, 354 Phil. 815


(1998), we have explained that involuntary
retirement is tantamount to dismissal, as
employees can only choose the means and
methods of terminating their employment, but are
powerless as to the status of their employment and
have no choice but to leave the company.
This rule squarely applies to Eufemias case.
Indeed, she could only choose between resignation
and retirement, but was made to understand that
she had no choice but to leave SME Bank. Thus,
we conclude that, similar to her other co-

employees, she was illegally dismissed from


employment.

LABOR LAW
The law permits an employer to dismiss its
employees in the event of closure of the business
establishment. However, the employer is required
to serve written notices on the worker and the
Department of Labor at least one month before the
intended date of closure. Moreover, the dismissed
employees are entitled to separation pay, except if
the closure was due to serious business losses or
financial reverses. However, to be exempt from
making such payment, the employer must justify
the closure by presenting convincing evidence that
it actually suffered serious financial reverses. Indino
v. NLRC, 258 Phil. 792, 799 (1989).

LABOR LAW
Petitioner bank also argues that, there being a
transfer of the business establishment, the innocent
transferees no longer have any obligation to
continue employing respondent employees, and
that the most that they can do is to give preference
to the qualified separated employees; hence, the
employees
were
validly
dismissed.
The argument is misleading and unmeritorious.
Contrary to petitioner banks argument, there was
no transfer of the business establishment to speak
of, but merely a change in the new majority
shareholders
of
the
corporation.
There are two types of corporate acquisitions: asset
sales and stock sales. In asset sales, the corporate
entity sells all or substantially all of its assets to
another entity. In stock sales, the individual or
corporate shareholders sell a controlling block of
stock to new or existing shareholders.

of their just claims. Furthermore, the corporation or


its new majority share holders are not entitled to
lawfully dismiss corporate employees absent a just
or
authorized
cause.
In the case at bar, the Letter Agreements show that
their main object is the acquisition by the Samson
Group of 86.365% of the shares of stock of SME
Bank. Hence, this case involves a stock sale,
whereby the transferee acquires the controlling
shares of stock of the corporation. Thus, following
the rule in stock sales, respondent employees may
not be dismissed except for just or authorized
causes
under
the
Labor
Code.
The right to security of tenure guarantees the right
of employees to continue in their employment
absent a just or authorized cause for termination.

It is thus erroneous on the part of the corporation to


consider the employees as terminated from their
employment when the sole reason for so doing is a
change of management by reason of the stock
sale. The conformity of the employees to the
Corporations Act of considering them as terminated
and their subsequent acceptance of separation pay
does not remove the taint of illegal dismissal.
Acceptance of separation pay does not bar the
employees from subsequently contesting the
legality of their dismissal, nor does it estop them
from challenging the legality of their separation
from the service. Sari-sari Group of Companies,
Inc. v. Piglas Kamao, G.R. No. 164624, 11 August
2008

ROXAS
LRT-A VS. PILI et. al
June 8, 2016

FACTS:
In contrast with asset sales, in which the assets of
the selling corporation are transferred to another
entity, the transaction in stock sales takes place at
the shareholder level. Because the corporation
possesses a personality separate and distinct from
that of its shareholders, a shift in the composition of
its shareholders will not affect its existence and
continuity. Thus, notwithstanding the stock sale, the
corporation continues to be the employer of its
people and continues to be liable for the payment

Pili was a Liaison Assistant under the operation of


Metro Transit Organization, Inc., a company hired
by the LRTA for its maintenance. On July 31, 2000,
the contract of Metro and LRTA expired which
resulted also to the termination of Metro
employees. Noel Pili contended that his termination
was illegal and other employees along with him
demanded their monetary benefits such as the
separation pays and other unpaid claims in which
they claim that LRT-A and Metro have an

agreement that the former would shoulder all the


operating expenses, salaries, benefits. Also on July
28, 2000, LRTA issued Resolution No. 00-44 where
it officially assumed the obligation to ensure that
the Metro Inc. Employees Retirement Fund is
updated and that it fully covers all retirement
benefits payable to the employees of Metro. Based
on the foregoing, the respondents - except Pili argue that the LRTA is liable for their monetary
claims.

On 27 October 2005, Labor Arbiter Catalino R.


Laderas rendered his Decision in favor of Pili and
the rest of the respondents. The Labor Arbiter
found that Pili was illegally dismissed and that
LRTA was solidarity liable with Metro for the
monetary claims. LRTA appealed this decision to
the NLRC. The NLRC partly granted the petition of
the LRTA by not declaring Pili was illegally
dismissed and just ordered the LRTA to pay
backwages and separation pays to other
respondents. With this, the LRTA appealed this
decision to the Court of Appeals which reversed the
decision of the NLRC and ruled that Pili was
illegally dismissed. Hence, this petition.

ISSUES:

1.) Whether or not LRTA and Pili and other


respondents
have
employer-employee
relationship

2.a) YES. The NLRC acquired jurisdiction over


LRTA not because of the employer-employee
relationship of the respondents and LRTA (because
there is none) but rather because LRTA expressly
assumed the monetary obligations of Metro to its
employees. In the Agreement, LRTA was obligated
to reimburse Metro for the latter's Operating
Expenses which included the salaries, wages and
fringe benefits of certain employees of Metro.
Moreover, the Board of Directors of LRTA issued
Resolution No. 00-44 where again, LRTA assumed
the monetary obligations of Metro more particularly
to update the Metro Inc. Employees Retirement
Fund and to ensure that it fully covers all the
retirement benefits payable to the employees of
Metro.

2.b.) NO. As far as the claim of illegal dismissal is


concerned, we find that NLRC cannot exercise
jurisdiction over LRTA. The Labor Arbiter and the
NLRC do not have jurisdiction over LRTA
because LRTA is a government agency organized
and existing pursuant to an original charter
(Executive Order No. 603) and thus, LRTA has a
separate juridical entity and not a wholly
government owned agency. But if the Pili is directly
employed by the LRTA, the case of illegal dismissal
must be heard before the CSC. However, the fact
remains that Pili was an employee of Metro alone the Labor Arbiter and NLRC could not have
acquired jurisdiction over LRTA insofar as the illegal
dismissal complaint is concerned.

SOUTH COTABATO COMMS VS. STO. TOMAS


2.) Whether or not the NLRC has a jurisdiction
over LRTA in terms of

June 15, 2016

a.) monetary claims of other respondents

FACTS:

b.) illegal dismissal of Noel Pili

The DOLE conducted a complaint Inspection at the


premises of DXCP Radio Station, which is owned
by petitioner South Cotabato Communications
Corporation. The inspection yielded a finding of
violation of labor standards provisions of the Labor
Code involving the nine (9) private respondents,
such
as
Underpayment of Wages and 13th Month Pay, Nonpayment of the five (5) days Service Incentive
Leave Pay, Rest Day Premium Pay, Holiday
Premium
Pay,
Non-remittance
of
SSS
Contributions, and that some employees are paid
on commission basis aside from their allowances.

RULING:
1.) NO. It is evident that Pili and other
respondents are direct hire of Metro and
Metro is only a contractor of the LRTA. And
under the four fold test, LRTA has no direct
supervision to Pili and other respondents.

The DOLE also issued a Notice of Inspection


ordering the petitioners to restitute the violations
that the former found within 5 days upon the receipt
of the order. Due to the petitioners non-compliance
of the order, DOLE scheduled a summary
investigation but the petitioners failed to attend
during the scheduled investigations. With this, the
Secretary of Labor (DOLE) ordered the petitioners
to indemnify the 9 private respondents their wage
differentials, 13th month pay, and the like. The
NLRC affirmed the order of the Secretary of Labor
and dismissed Engr. Benzonan, the President of
the petitioner. The CA affirmed the decision of
NLRC.

The petitioner assails the order because they are


denied of due process to present their evidence
that the private respondents were not their
employees and to rebut the findings of the DOLEs
inspection. Also, the petitioner contends that DOLE
failed to establish the employer-employee
relationship with the private respondent to warrant
the inspection and labor standards set by the DOLE

ISSUE:
1.) Whether or not the petitioners were denied
of due process

2.) Whether or not the employer-employee


relationship between the petitioner and the
appellee has been established to warrant
the jurisdiction of DOLE over this case

RULING:
1.) NO.
The petitioners were given ample
opportunity to present their evidence before
the Regional Director is indisputable. They
were notified of the summary investigations
conducted on March 3, 2004 and April 1,
2004, both of which they failed to attend. To
justify their non-appearance, petitioners
claim they requested a resetting of the April
1, 2004 hearing due to the unavailability of
their counsel.
However, no such
explanation was proffered as to why they

failed to attend the first hearing. Clearly,


their negligence did them in.

2.) NO. It can be assumed that the DOLE in


the exercise of its visitorial and enforcement
power as provided in ART. 128 of the labor
code which authorized the DOLE to access
the employers records and to investigate
them but DOLE has to make a
determination of the existence of an
employer-employee relationship first. The
existence of an employer-employee
relationship is a statutory prerequisite to
and a limitation on the power of the
Secretary of Labor, one which the
legislative branch is entitled to impose.
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. However, the DOLE failed to determine
these elements when they ordered the petitioner to
indemnify the private respondents and to dismiss
Engr. Benzonan.

In case at bar, DOLE through the Regional Director


merely noted the discovery of violations of labor
standards provisions in the course of inspection of
the DXCP premises. No such categorical
determination was made on the existence of an
employer-employee relationship utilizing any of the
guidelines set forth. In a word, the Regional
Director had presumed, not demonstrated, the
existence of the relationship. Of particular note is
the DOLE'S failure to show that petitioners, thus,
exercised control over private respondents' conduct
in the workplace. The power of the employee to
control the work of the employee, or the control
test, is considered the most significant determinant
of the existence of an employer-employee
relationship.

VALEROSO VS. SKYCABLE CORP.


July 13, 2016

FACTS:
Petitioners Valeroso and Legatona are hired as
account executives tasked to solicit cable for the
respondent. From being direct hires of respondent,
they were transferred to Skill Plus Manpower
Services sans any agreement for their transfer.
They were also informed that their commissions
would be reduced due to the introduction of prepaid
cards sold to cable subscribers resulting in lower
monthly cable subscriptions. Dismayed, they
notified their manager, Pasta their intention to file a
labor case with the NLRC, which they did on
February 25, 2009. Pasta then informed them that
they will be dropped from the roster of its account
executives, which act, petitioners claimed,
constitutes unfair labor practice. Further, petitioners
claimed that they did not receive 13th month pay for
2006 and were underpaid of such benefit for the
years 2007 and 2008; and that in January 2008,
petitioner Legatona signed a Release and
Quitclaim9 in consideration of the amount of
P25,000.00 as loyalty bonus from respondent.
Respondent, on the other hand, claimed that it did
not terminate the services of petitioners for there
was never an employer-employee relationship to
begin with. The respondent added that the
petitioners were merely hired as contractors under
a Sales Agency Agreement. In 2007, respondents
decided to streamline its operations and instead of
contracting with numerous independent account
executives such as petitioners, respondent
engaged the services of an independent contractor,
Armada Resources & Marketing Solutions, Inc.
under a Sales Agency Agreement. As a result,
petitioners' contracts were terminated but they,
together with other sales account executives, were
referred for transfer to Armada. Petitioners then
became employees of Armada. In 2009,
respondent and Armada again entered into a Sales
Agency Agreement, wherein petitioners were again
tasked to solicit accounts generate sales for
respondent. The Labor Arbiter and CA ruled in
favor of respondents. The NLRC ruled in favor of
the petitioners. Hence, this petition.

ISSUE:

Whether or not the petitioners are regular


employees of the respondent which proves
the illegal dismissal of the respondent to the
petitioners

RULING:

NO. To prove the claim of an employeremployee relationship, the following should


be established by competent evidence: (1)
the selection and engagement of the
employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the employer's
power to control the employee with respect
to the means and methods by which the
work is to be accomplished. Among the four,
the most determinative factor in ascertaining
the existence of employer-employee
relationship is the "right of control
test." Under this control test, the person for
whom the services are performed reserves
the right to control not only the end to be
achieved, but also the means by which such
end
is
reached.
We rule that an employer-employee
relationship is absent in this case. The
evidence presented by petitioners did not
prove their claim that they were employees
of respondent. The employment certification
of the petitioners are not competent
evidence of employer-employee relation as
these merely certified that respondent had
engaged the services of petitioners without
specifying the true nature of such
engagement. These documents did not
certify that petitioners were employees but
were only issued to accommodate
petitioners' request for loan applications,
which fact was not refuted by petitioners. As
for the payslips presented, it appears that
only the payslips for the years 2001 to 2006
were submitted. No payslips for the years
material to this case (2007 to 2009) were
submitted. It is undisputed that petitioners
were transferred to Armada in 2007, thus,
we cannot give much credence to the
payslips issued before this period.
We, further, find no merit in petitioners'
assertion that respondent's control over
them was demonstrated. "Guidelines
indicative of labor law 'control' do not merely
relate to the mutually desirable result
intended by the contractual relationship,
they must have the nature of dictating the
means and methods to be employed in
attaining the result. Here, we find that
respondent's act of regularly updating
petitioners of new promos, new price

listings, meetings and trainings of new


account executives; imposing quotas and
penalties; and giving commendations for
meritorious performance do not pertain to
the means and methods of how petitioners
were to perform and accomplish their task
of soliciting cable subscriptions. At most,
these indicate that respondent regularly
monitors the result of petitioners' work but in
no way dictate upon them the manner in
which they should perform their duties.
Absent any intrusion by respondent into the
means and manner of conducting
petitioners' tasks, bare assertion that
petitioners' work was supervised and
monitored does not suffice to establish
employer-employee relationship.

CENTURY PROPERTIES VS. BABIANO


July 5, 2016
FACTS:
Babiano was hired by CPI as Director of Sales,
and was eventually appointed as Vice President
for Sales on 2007. As CPI' s Vice President for
Sales, Babiano with monetary benefits. His
employment
contract also
contained
a
"Confidentiality of Documents and Non-Compete
Clause" which, among others, barred him from
disclosing confidential information, and from
working in any business enterprise that is in
direct competition with CPI. Should Babiano
breach any of the terms thereof, his forms of
compensation,
including
commissions
and
incentives will be forfeited. Along with this, Ms.
Concepcion was hired as Sales Agent and soon
promoted as Project Director. As Project Director,
she will directly report to the respondent. She was
also given an employment agreement with the CPI
that she was under a Contract of Agency and that
no employer-employee relationship between the
CPI and Concepcion.

After receiveing reports that Babiano provided a


competitor
with information regarding
CPI's
marketing strategies, spread false information
regarding CPI and its projects, recruited CPI's
personnel to join the competitor, and for being
absent without official leave (AWOL) for five (5)
days, CPI sent Babiano a Notice to Explain
directing him to explain why he should not be
charged with disloyalty, conflict of interest, and
breach of trust and confidence for his actuations.

Babiano resigned from CPI and explained that he


has been hired as the VP of the competitor
company of the latter. But Babiano was not given
his monetary benefits because he breached the
confidentiality contract. Concepcion also resigned
as Project Director.

Babiano filed with NLRC against the respondents


for the non-payment of commissions and damages
against the CPI and Concepcion also filed with
NLRC for not rendering her monetary claim. CPI
contended that NLRC has no jurisdiction over
Concepcion because there was no employeremployee relationship between her and the CPI, so
she should have litigated to a separate ordinary
civil course of action. The Labor Arbiter ruled in
favor of CPI. The NLRC and CA ruled in favor of
Babiano. Hence, this petition.

ISSUE:

Whether or not CPI is liable to the unpaid


monetary damages and commissions to
Babiano and Conception

RULING:

The petition is partly meritorious. Under the


Article Article 1370 of the Civil Code
provides that if the terms of a contract
are clear and leave no doubt upon the
intention of the contracting parties, the
literal meaning of its stipulations shall
control. Since there is no ambiguity on the
contract, thus the Court ruled in favor of CPI
for not awarding the damages to Babiano.

On the employer-employee relationship


establishment of Concepcions case, 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 Eeriod
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.

And although the Concepcion was under a Contract


of Agency, the Court ruled that the employeremployee status shall not be repudiated by a mere
contract or parties but must be attained by the fourfold test, as stated above.