Remedial Law; Evidence; Substantial Evidence; It is an oft-repeated rule that in labor cases, as in

other administrative and quasi-judicial proceedings, ‘the quantum of proof necessary is

substantial evidence, or such amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.’—“It is an oft-repeated rule that in labor cases, as in
other administrative and quasi-judicial proceedings, ‘the quantum of proof necessary is
substantial evidence, or such amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.’ ‘The burden of proof rests upon the party who
asserts the affirmative of an issue.’” Since it is Valencia here who is claiming to be an employee
of Classique Vinyl, it is thus incumbent upon him to proffer evidence to prove the existence of
employer-employee relationship between them. He “needs to show by substantial evidence
that he was indeed an employee of the company against which he claims illegal dismissal.”
Corollary, the burden to prove the element of an employer-employee relationship, viz.: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power of control, lies upon Valencia.

Labor Law; Labor-only Contracting; “Generally, the presumption is

that the contractor is a labor-only [contractor] unless such
contractor overcomes the burden of proving that it has the
substantial capital, investment, tools and the like.”—“Generally,
the presumption is that the contractor is a labor-only [contractor]
unless such contractor overcomes the burden of proving that it
has the substantial capital, investment, tools and the like.” Here,
to prove that CMS was a legitimate contractor, Classique Vinyl
presented the former’s Certificate of Registration with the
Department of Trade and Industry and, License as private
recruitment and placement agency from the Department of Labor
and Employment. Indeed, these documents are not conclusive
evidence of the status of CMS as a contractor. However, such fact
of registration of CMS prevented the legal presumption of it being
a mere labor-only contractor from arising.
Same; Same; Solidary Liability; In labor-only contracting, the
statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor
laws. The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees
of the labor-only contractor as if such employees had been
directly employed by the principal employer. The principal
employer therefore becomes solidarily liable with the labor-only
contractor for all the rightful claims of the employees.—In any
event, it must be stressed that “in labor-only contracting, the
statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor
laws. The contractor is considered merely an agent of the
principal employer and the latter is responsible to the employees
of the labor-only contractor as if such employees had been
directly employed by the principal employer. The principal
employer therefore becomes solidarily liable with the labor-only
contractor for all the rightful claims of the employees.” The facts
of this case, however, failed to establish that there is any
circumvention of labor laws as to call for the creation by the
statute of an employer-employee relationship between Classique
Vinyl and Valencia. In fact, even as against CMS, Valencia’s money
claims has been debunked by the labor tribunals and the CA.
Again, the Court is not inclined to disturb the same. Valencia vs.
Classique Vinyl Products Corporation, 816 SCRA 144, G.R. No.
206390 January 30, 2017

Remedial Law; Civil Procedure; Appeals; As a rule, the Supreme Court (SC) does not analyze and
weigh again the evidence presented before the tribunals below because it is not a trier of
facts.—At the outset, we note that the Petition essentially assails the factual findings of the CA.
As a rule, this Court does not analyze and weigh again the evidence presented before the
tribunals below because it is not a trier of facts. The only issues it can pass upon in a Petition for
Review on Certiorari are questions of law. In view, however, of the conflicting findings of the
labor tribunals and the CA, this Court finds it compelling to make its own independent findings
of facts.

Labor Law; Termination of Employment; Willful Disobedience; As a just cause for dismissal of an
employee under Article 282 of the Labor Code, willful disobedience of the employer’s lawful
orders

_______________

* SECOND DIVISION.

212212SUPREME COURT REPORTS ANNOTATEDSantos vs. Integrated Pharmaceutical, Inc.

requires the concurrence of two (2) elements: “(1) the employee’s assailed conduct must have
been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee, and must pertain to
the duties which she had been engaged to discharge.”—Petitioner also committed willful
disobedience of reasonable and lawful orders of her employer. As a just cause for dismissal of an
employee under Article 282 of the Labor Code, willful disobedience of the employer’s lawful
orders requires the concurrence of two (2) elements: “(1) the employee’s assailed conduct must
have been willful, that is, characterized by a wrongful and perverse attitude; and (2) the order
violated must have been reasonable, lawful, made known to the employee, and must pertain to
the duties which she had been engaged to discharge.”

Same; Same; Dishonesty; Serious Misconduct; Petitioner’s act of deliberately misdeclaring or

overstating her actual travelling expense constitutes dishonesty and serious misconduct, which
are lawful grounds for her dismissal under paragraphs (a) and (c) of Article 282 of the Labor
Code.—We are not also convinced with the labor tribunals’ ratiocination that petitioner should
be absolved for overcharging since there is no proof that she is not entitled to P10.00 travel
expense or that she pocketed the difference of P8.00. There is a difference between allotted
transportation allowance and actual transportation expense. Thus, to state an amount of actual
transportation expense other than the amount actually incurred for transportation is
dishonesty. Elsewise put, just because petitioner was allotted P10.00 transportation expense
does not mean that she can keep the remainder should she not exhaust the entire amount
thereof. Petitioner’s act of deliberately misdeclaring or overstating her actual travelling expense
constitutes dishonesty and serious misconduct, which are lawful grounds for her dismissal under
paragraphs (a) and (c) of Article 282 of the Labor Code.

Waiver of Rights; To be valid and effective, the waiver must be couched in clear and unequivocal
terms leaving no doubt as to the intention of a party to give up a right or benefit which legally
pertains to it.—The fact that petitioner had been declaring P10.00 as her actual travelling
expense for quite some time cannot be interpreted as condonation of the offense or waiver of
Integrated Pharma to enforce its rules. “A waiver is a voluntary and intentional relin-

213VOL. 796, JULY 11, 2016213Santos vs. Integrated Pharmaceutical, Inc.

quishment or abandonment of a known legal right or privilege.” To be valid and effective, the
waiver must be couched in clear and unequivocal terms leaving no doubt as to the intention of a
party to give up a right or benefit which legally pertains to it. Hence, the management
prerogative to discipline employees and impose punishment cannot, as a general rule, be
impliedly waived.

Labor Law; Termination of Employment; While the law provides for a just cause to dismiss an
employee, the employer still has the discretion whether it would exercise its right to terminate
the employment or not.—Petitioner is guilty of dishonesty and serious misconduct. Based on
Article 282 of the Labor Code, such offense may merit the termination of employment.
However, while the law provides for a just cause to dismiss an employee, the employer still has
the discretion whether it would exercise its right to terminate the employment or not. In other
words, the existence of any of the just or authorized causes enumerated in Articles 282 and 283
of the Labor Code does not automatically result in the dismissal of the employee. The employer
has to make a decision whether it would dismiss the employee, impose a lighter penalty, or
perhaps even condone the offense committed by an erring employee. In making a decision, the
employer may take into consideration the employee’s past offenses. In this case, petitioner had
been forewarned that her failure to correct her poor behavior would be visited with stiffer
penalty. However, she remained recalcitrant to her superiors’ directives and warnings. Thus,
respondents “have come to a forced conclusion to terminate [her] employment.”

Same; Same; The existence of a just cause to terminate an employment is one thing; the manner
and procedure by which such termination should be effected is another.—The existence of a
just cause to terminate an employment is one thing; the manner and procedure by which such
termination should be effected is another. If the dismissal is based on a just cause under Article
282 of the Labor Code, as in this case, the employer must give the employee two written notices
and conduct a hearing. The first written notice is intended to apprise the employee of the
particular acts or omissions for which the employer seeks her dismissal; while the second is
intended to inform the employee of the employer’s decision to terminate him.

214214SUPREME COURT REPORTS ANNOTATEDSantos vs. Integrated Pharmaceutical, Inc.

Same; Same; Due Process; Nominal Damages; In Agabon v. National Labor Relations
Commission, 442 SCRA 573 (2004), the Supreme Court (SC) held that if the dismissal was for
cause, the lack of statutory due process should not nullify the dismissal, or render it illegal or
ineffectual. However, respondents’ violation of petitioner’s right to statutory due process
warrants the payment of indemnity in the form of nominal damages.—In Agabon v. National
Labor Relations Commission, 442 SCRA 573 (2004), the Court held that if the dismissal was for
cause, the lack of statutory due process should not nullify the dismissal, or render it illegal or
ineffectual. However, respondents’ violation of petitioner’s right to statutory due process
warrants the payment of indemnity in the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the Court, taking into account the relevant
circumstances. Hence, the CA did not err in awarding the amount of P30,000.00 to petitioner as
and by way of nominal damages. Santos vs. Integrated Pharmaceutical, Inc., 796 SCRA 211, G.R.
No. 204620 July 11, 2016

Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; It is settled that a
review of the decision of the Court of Appeals (CA) in a labor case under Rule 45 of the Rules of
Court is limited only to a review of errors of law imputed to the CA.—It is settled that a review
of the decision of the CA in a labor case under Rule 45 of the Rules of Court is limited only to a
review of errors of law imputed to the CA. We reiterate what was elucidated in Bani Rural Bank,
Inc. v. De Guzman, 709 SCRA 330 (2013) that: In a Rule 45 review, we consider the correctness
of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake
under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against
the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the
same context that the petition for certiorari it ruled upon was presented to it; we have to
examine the CA decision from the prism of whether it correctly determined the presence or

_______________

* THIRD DIVISION.
615VOL. 734, SEPTEMBER 10, 2014615Abing vs. National Labor Relations Commissionabsence of
grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC
decision on the merits of the case was correct. In other words, we have to be keenly aware that
the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged
before it. This is the approach that should be basic in a Rule 45 review of a CA ruling in a labor
case. In question form, the question to ask is: Did the CA correctly determine whether the NLRC
committed grave abuse of discretion in ruling on the case?

Labor Law; Labor Contracting or Subcontracting; Words and Phrases; Section 4(a) of Department
Order No. 18-02 issued by the Department of Labor and Employment (DOLE), cited by the Court
of Appeals (CA), defines legitimate labor contracting or subcontracting as an arrangement
whereby a principal agrees to put out or farm out with a contractor or subcontractor the
performance or completion of a specific job, work or service within a definite or predetermined
period, regardless or whether such job, work or service is to be performed or completed within
or outside the premises of the principal.—Section 4(a) of Department Order No. 18-02 issued by
the DOLE, cited by the CA, defines legitimate labor contracting or subcontracting “as an
arrangement whereby a principal agrees to put out or farm out with a contractor or
subcontractor the performance or completion of a specific job, work or service within a definite
or predetermined period, regardless of whether such job, work or service is to be performed or
completed within or outside the premises of the principal. Under such an arrangement, no
employer-employee relationship is created between the principal and the contractual worker,
who is actually the employee of the contractor.”

Same; Same; Same; Labor-only contracting as defined by Article 106 of the Labor Code occurs
when any of the following circumstances occurs: first, the contractor does not have substantial
capital or investment which relates to the job, work or service to be performed and the
employees recruited, supplied or placed by the contractor are performing activities which are
directly related to the principal business of the employer; or second, the contractor does not
exercise the right to control the performance of the work of the employee.—Labor-only
contracting as defined by Article 106 of the Labor Code occurs when any of the following
circumstances occurs: first, the contractor does not have substantial capital or investment which
relates to the

616616SUPREME COURT REPORTS ANNOTATEDAbing vs. National Labor Relations

Commissionjob, work or service to be performed and the employees recruited, supplied or
placed by the contractor are performing activities which are directly related to the principal
business of the employer; or second, the contractor does not exercise the right to control the
performance of the work of the employee. Such an arrangement is prohibited and
consequently, the law deems the principal as the employer of the contractual employee. Abing
vs. National Labor Relations Commission, 734 SCRA 614, G.R. No. 185345 September 10, 2014

Civil Law; Labor Law; Termination of Employment; Prescription; When one is arbitrarily and
unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of
one’s dismissal from employment constitutes, in essence, an action predicated “upon an injury
to the rights of the plaintiff,” as contemplated under Art. 1146 of the New Civil Code, which
must be brought within four (4) years.—Article 1146 of the New Civil Code provides: Art. 1146.
The following actions must be instituted within four years: (1) Upon an injury to the rights of the
plaintiff; x x x x x x x x x As this Court stated in Callanta v. Carnation, 145 SCRA 268 (1986),
when one is arbitrarily and unjustly deprived of his job or means of livelihood, the action
instituted to contest the legality of one’s dismissal from employment constitutes, in essence, an
action predicated “upon an injury to the rights of the plaintiff,” as contemplated under Art. 1146
of the New Civil Code, which must be brought within four (4) years.Same; Same; Money Claims;
Prescription; With regard to the prescriptive period for money claims, Article 291 of the Labor
Code states… “shall be filed within three (3) years from the time the cause of action accrued;
otherwise they shall be barred forever.”—With regard to the prescriptive period for money
claims, Article 291 of the Labor Code states: Article 291. Money Claims.—All money claims
arising from employer-employee relations accruing during the effectivity of this Code shall be
filed within three (3) years from the time the cause of action accrued; otherwise they shall be
barred forever. The pivotal question in resolving the issues is the date when the cause of action
of respondent Pingol accrued.Remedial Law; Pleadings and Practice; Judicial Admissions; Judicial
admissions made by parties in the pleadings, or in the course of the trial or other proceedings in
the same case are conclusive and so does not require further evidence to prove them.—The
Court_______________* SECOND DIVISION.414414SUPREME COURT REPORTS
ANNOTATEDPhilippine Long Distance Telephone Company (PLDT) vs. Pingol agrees with
petitioner PLDT. Judicial admissions made by parties in the pleadings, or in the course of the trial
or other proceedings in the same case are conclusive and so does not require further evidence
to prove them. These admissions cannot be contradicted unless previously shown to have been
made through palpable mistake or that no such admission was made.Labor Law; Termination of
Employment; Illegal Dismissals; Money Claims; The Labor Code has no specific provision on
when a claim for illegal dismissal or a monetary claim accrues. Thus, the general law on
prescription applies. Article 1150 of the Civil Code states: …. “The time for prescription for all
kinds of actions, when there is no special provision which ordains otherwise, shall be counted
from the day they may be brought.”—The Labor Code has no specific provision on when a claim
for illegal dismissal or a monetary claim accrues. Thus, the general law on prescription applies.
Article 1150 of the Civil Code states: Article 1150. The time for prescription for all kinds of
actions, when there is no special provision which ordains otherwise, shall be counted from the
day they may be brought. (Emphasis supplied) The day the action may be brought is the day a
claim starts as a legal possibility. In the present case, January 1, 2000 was the date that
respondent Pingol was not allowed to perform his usual and regular job as a maintenance
technician. Respondent Pingol cited the same date of dismissal in his complaint before the LA.
As, thus, correctly ruled by the LA, the complaint filed had already prescribed.Same; Civil Law;
Monetary Claims; Like other causes of action, the prescriptive period for money claims is subject
to interruption, and in the absence of an equivalent Labor Code provision for determining
whether the said period may be interrupted, Article 1155 of the Civil Code may be applied.—The
rule in this regard is covered by Article 1155 of the Civil Code. Its applicability in labor cases was
upheld in the case of International Broadcasting Corporation v. Panganiban (514 SCRA 404
[2007]) where it was written: Like other causes of action, the prescriptive period for money
claims is subject to interruption, and in the absence of an equivalent Labor Code provision for
determining whether the said period may be interrupted, Article 1155 of the Civil Code may be
applied, to wit: ART. 1155. The prescription of actions is interrupted when they are filed before
the Court, when there is a written extrajudicial demand by 415VOL. 630, SEPTEMBER 8,
2010415Philippine Long Distance Telephone Company (PLDT) vs. Pingolthe creditors, and when
there is any written acknowledgment of the debt by the debtor. Thus, the prescription of an
action is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the
creditor, and (c) a written acknowledgment of the debt by the debtor. Philippine Long Distance
Telephone Company (PLDT) vs. Pingol, 630 SCRA 413, G.R. No. 182622 September 8, 2010

Labor Law; Termination of Employment; Disease; Article 284 of the Labor Code provides that an
employer may terminate the services of an employee who has been found to be suffering from
any disease and whose continued employment is prohibited by law or is prejudicial to his health,
as well as to the health of his co-employees.—With regard to disease as a ground for
termination, Article 284 of the Labor Code provides that an employer may terminate the
services of an employee who has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health, as well as to the health
of his co-employees. In order to validly terminate employment on this ground, Section 8, Rule I,
Book VI of the Omnibus Rules Implementing the Labor Code_______________* THIRD
DIVISION.152152SUPREME COURT REPORTS ANNOTATEDWuerth Philippines, Inc. vs. Ynson
requires that: Section 8. Disease as a ground for dismissal.—Where the employee suffers from a
disease and his continued employment is prohibited by law or prejudicial to his health or to the
health of his co-employees, the employer shall not terminate his employment unless there is a
certification by a competent public health authority that the disease is of such nature or at such
a stage that it cannot be cured within a period of six (6) months even with proper medical
treatment. If the disease or ailment can be cured within the period, the employer shall not
terminate the employee but shall ask the employee to take a leave. The employer shall reinstate
such employee to his former position immediately upon the restoration of his normal health.

Same; Same; Medical Certificates; The requirement for a medical certificate under Article 284 of
the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and
arbitrary determination by the employer of the gravity or extent of the employee’s illness and,
thus, defeat the public policy on the protection of labor.—In Triple Eight Integrated Services, Inc.
v. NLRC, 299 SCRA 608 (1998), the Court held that the requirement for a medical certificate
under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the
unilateral and arbitrary determination by the employer of the gravity or extent of the
employee’s illness and, thus, defeat the public policy on the protection of labor. In the present
case, there was no showing that prior to terminating respondent’s employment, petitioner
secured the required certification from a competent public health authority that the disease he
suffered was of such nature or at such a stage that it cannot be cured within six months despite
proper medical treatment, pursuant to Section 8, Rule I, Book VI of the Omnibus Rules
Implementing the Labor Code.Same; Same; Management Prerogative; The power to dismiss an
employee is a recognized prerogative inherent in the employer’s right to freely manage and
regulate his business; An employer cannot be compelled to continue with the employment of
workers when continued employment will prove inimical to the employer’s interest.—It bears
stressing that respondent was not an ordinary rank-and-file employee. With the nature of his
position, he was reposed with managerial duties to oversee petitioner’s business in his assigned
area. As a managerial employee, respondent was tasked to perform153VOL. 666, FEBRUARY 15,
2012153Wuerth Philippines, Inc. vs. Ynson important and crucial functions and, thus, bound by
more exacting work ethic. He should have realized that such sensitive position required the full
trust and confidence of his employer in every exercise of managerial discretion insofar as the
conduct of the latter’s business is concerned. The power to dismiss an employee is a recognized
prerogative inherent in the employer’s right to freely manage and regulate his business. The
law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction
of the employer. The worker’s right to security of tenure is not an absolute right, for the law
provides that he may be dismissed for cause. As a general rule, employers are allowed wide
latitude of discretion in terminating the employment of managerial personnel. The mere
existence of a basis for believing that such employee has breached the trust and confidence of
his employer would suffice for his dismissal. Needless to say, an irresponsible employee like
respondent does not deserve a place in the workplace, and it is petitioner’s management
prerogative to terminate his employment. To be sure, an employer cannot be compelled to
continue with the employment of workers when continued employment will prove inimical to
the employer’s interest.Same; Wages; If there is no work performed by the employee, there can
be no wage or pay—unless, of course, the laborer was able, willing and ready to work but was
illegally locked out, suspended or dismissed, or otherwise illegally prevented from working, a
situation which is not prevailing in the present case.—In Leonardo v. National Labor Relations
Commission, 333 SCRA 589 (2000), We held that where the employee’s failure to work was
occasioned neither by his abandonment nor by a termination, the burden of economic loss is
not rightfully shifted to the employer; each party must bear his own loss. In the same manner,
respondent’s inability to work from January 24 to June 4, 2003, was neither due to petitioner’s
fault nor due to his willful conduct, but because he suffered a stroke on January 24, 2003.
Hence, each must bear the loss accordingly. Beginning June 5, 2003, respondent should have
reported back to work, but he failed to do so. Consequently, he can only be entitled to
compensation for the actual number of work days. It would be unfair to allow respondent to
recover something he has not earned and count not have earned, since he could not discharge
his work as NSM. Petitioner should be exempted from the burden of paying backwages. The
age-old rule governing the relation between labor and capital, or154154SUPREME COURT
REPORTS ANNOTATEDWuerth Philippines, Inc. vs. Ynsonmanagement and employee, of “a fair
day’s wage for a fair day’s labor” remains as the basic factor in determining employee’s wages. If
there is no work performed by the employee, there can be no wage or pay—unless, of course,
the laborer was able, willing and ready to work but was illegally locked out, suspended or
dismissed, or otherwise illegally prevented from working, a situation which is not prevailing in
the present case.Same; Actual Damages; To justify a grant of actual or compensatory damages,
it is necessary to prove, with a reasonable degree of certainty, premised upon competent proof
and on the best evidence obtainable by the injured party, the actual amount of loss.—In order
to justify a grant of actual or compensatory damages, it is necessary to prove, with a reasonable
degree of certainty, premised upon competent proof and on the best evidence obtainable by
the injured party, the actual amount of loss. One is entitled to an adequate compensation only
for such pecuniary loss suffered by him as he has adequately proved. Damages, to be
recoverable, must not only be capable of proof, but must be actually proved with a reasonable
degree of certainty. The Court cannot simply rely on speculation, conjecture or guesswork in
determining the amount of damages. Actual proof of expenses incurred for the purchase of
medicines and other medical supplies necessary for his treatment and rehabilitation should
have been presented by respondent, in the form of official receipts, to show the exact cost of his
medication, and to prove that, indeed, he went through medication and rehabilitation. Aside
from the letter of Dr. De la Paz, respondent miserably failed to produce even a single receipt
showing his alleged medical and rehabilitation expenses. By reason thereof, petitioner should
not be held liable for the P94,000.00 medical expenses of respondent as actual or compensatory
damages, for lack of basis. Verily, in the absence of official receipts or other competent evidence
to prove the actual expenses incurred, the CA’s award of medical expenses in favor of
respondent should be negated.Same; Temperate Damages; Temperate or moderate damages
are more than nominal but less than compensatory, and may be recovered when the court finds
that some pecuniary loss has been suffered, but the amount cannot, from the nature of the
case, be proved with certainty.—Under Article 2224 of the Civil Code, temperate or moderate
damages are more than nominal but less than155VOL. 666, FEBRUARY 15, 2012155Wuerth
Philippines, Inc. vs. Ynson compensatory, and may be recovered when the court finds that some
pecuniary loss has been suffered, but the amount cannot, from the nature of the case, be
proved with certainty. The CA found that respondent paid for the doctor’s professional fees and
incurred other hospital expenses; however, the records failed to show that he presented proof
of the actual amount of expenses therein, which served as the basis for the CA to award
temperate damages in the amount of P100,000.00.Same; 13th Month Pay Law; The 13th Month
Pay Law, which provides the rules on the entitlement and computation of the 13th month pay,
cannot be applied to a managerial employee, it applies only to rank-and-file employees.—Anent
the CA’s ruling that respondent should be entitled to 13th month pay, We clarify that the 13th
Month Pay Law, which provides the rules on the entitlement and computation of the 13th
month pay, cannot be applied to him because he is a managerial employee, and the law applies
only to rank-and-file employees. Be that as it may, although he is not covered by the said law,
records showed that he is entitled to this benefit. However, the Court cannot make a proper
determination as to the exact amount—either full or pro-rated amount—of the 13th month pay,
if any, that he would be entitled to. Thus, reference should be made in consonance with the
existing company policy on the payment of the 13th month pay vis-à-vis the number of days
that he actually worked.Same; Attorney’s Fees; Attorney’s fees may be awarded only when the
employee is illegally dismissed in bad faith, and is compelled to litigate or incur expenses to
protect his rights by reason of the unjustified acts of his employer.—On the matter of attorney’s
fees, We have ruled that attorney’s fees may be awarded only when the employee is illegally
dismissed in bad faith, and is compelled to litigate or incur expenses to protect his rights by
reason of the unjustified acts of his employer. In view of Our findings that respondent was
validly dismissed for unauthorized absences, amounting to gross dereliction of duties under
Article 282 (e) of the Labor Code, reckoned from June 5, 2003 (i.e., the day after he was
declared fit to return to work, but failed to do so), and lack of evidence that his dismissal was
tainted with bad faith, the grant of 10% of the total monetary award as attorney’s fees cannot
be sustained. Wuerth Philippines, Inc. vs. Ynson, 666 SCRA 151, G.R. No. 175932 February 15,
2012

Same; Same; Same; For purposes of application of Article 110 of the Labor Code, termination
pay forms part of the remuneration or other money benefits accruing to employees or workers;
Separation pay considered as part of remuneration for services rendered or to be rendered.—
Furthermore, in Peralta, this Court held that for purposes of the application of Article 110,
“termination pay is reasonably regarded as forming part of the remuneration or other money
benefits accruing to employees or workers by reason of their having previously rendered
services x x x.” Hence, separation pay must be considered as part of remuneration for services
rendered or to be rendered. Same; Same; Same; Termination pay is an additional remuneration
for having rendered services to their employer for a certain period of time; Length of service of
employee considered in computing the amount to be given as termination pay.—The
respondent Commission was, therefore, not in error when it awarded the termination pay
claimed by the private respondents. As far as the latter are concerned,the termination pay
which they so rightfully claim is an additional remuneration for having rendered services to their
employer for a certain period of time. Noteworthy also is the relationship between termination
pay and services rendered by an employee, that in computing the amount to be given to an
employee as termination pay, the length of service of such employee is taken into consideration
such that the former must be considered as part and parcel of wages. Under these
circumstances then, this Court holds that the termination or severance pay awarded by the
respondent Commission to the private respondents is proper and should be sustained. Same;
Same; Same; Constitutional Law; Amount claimed for satisfaction of obligations of workers
relatively insubstantial; Reason for preferred lien; Measures to ensure that the constitutional
mandate on protection to labor is not rendered meaningless by erroneous interpreta-

209 VOL. 180, DECEMBER 18, 1989 209 Philippine National Bank vs. Cruz
tion of the applicable laws.—Lastly, it must be noted that the amount claimed by petitioner PNB
for the satisfaction of the obligations of AMEX is relatively insubstantial and is not significant
enough as to drain its coffers. By contrast, that same amount could mean subsistence or
starvation for the workingman. Quoting further from Philippine Commercial and Industrial Bank,
this Court supports the equitable principle that “it is but humane and partakes of the divine that
labor, as human beings, must be treated over and above chattels, machineries and other kinds
of properties and the interests of the employer who can afford and survive the hardships of life
better than their workers. Universal sense of human justice, not to speak of our specific social
justice and protection to labor constitutional injunctions dictate the preferential lien that the
above provision accord to labor.” In line with this policy, measures must be undertaken to
ensure that such constitutional mandate on protection to labor is not rendered meaningless by
an erroneous interpretation of the applicable laws. Philippine National Bank vs. Cruz, 180 SCRA
206, G.R. No. 80593 December 18, 1989

Same; Same; Same; For purposes of application of Article 110 of the Labor Code, termination
pay forms part of the remuneration or other money benefits accruing to employees or workers;
Separation pay considered as part of remuneration for services rendered or to be rendered.—
Furthermore, in Peralta, this Court held that for purposes of the application of Article 110,
“termination pay is reasonably regarded as forming part of the remuneration or other money
benefits accruing to employees or workers by reason of their having previously rendered
services x x x.” Hence, separation pay must be considered as part of remuneration for services
rendered or to be rendered. Same; Same; Same; Termination pay is an additional remuneration
for having rendered services to their employer for a certain period of time; Length of service of
employee considered in computing the amount to be given as termination pay.—The
respondent Commission was, therefore, not in error when it awarded the termination pay
claimed by the private respondents. As far as the latter are concerned,the termination pay
which they so rightfully claim is an additional remuneration for having rendered services to their
employer for a certain period of time. Noteworthy also is the relationship between termination
pay and services rendered by an employee, that in computing the amount to be given to an
employee as termination pay, the length of service of such employee is taken into consideration
such that the former must be considered as part and parcel of wages. Under these
circumstances then, this Court holds that the termination or severance pay awarded by the
respondent Commission to the private respondents is proper and should be sustained. Same;
Same; Same; Constitutional Law; Amount claimed for satisfaction of obligations of workers
relatively insubstantial; Reason for preferred lien; Measures to ensure that the constitutional
mandate on protection to labor is not rendered meaningless by erroneous interpreta-

209 VOL. 180, DECEMBER 18, 1989 209 Philippine National Bank vs. Cruz
tion of the applicable laws.—Lastly, it must be noted that the amount claimed by petitioner PNB
for the satisfaction of the obligations of AMEX is relatively insubstantial and is not significant
enough as to drain its coffers. By contrast, that same amount could mean subsistence or
starvation for the workingman. Quoting further from Philippine Commercial and Industrial Bank,
this Court supports the equitable principle that “it is but humane and partakes of the divine that
labor, as human beings, must be treated over and above chattels, machineries and other kinds
of properties and the interests of the employer who can afford and survive the hardships of life
better than their workers. Universal sense of human justice, not to speak of our specific social
justice and protection to labor constitutional injunctions dictate the preferential lien that the
above provision accord to labor.” In line with this policy, measures must be undertaken to
ensure that such constitutional mandate on protection to labor is not rendered meaningless by
an erroneous interpretation of the applicable laws. Philippine National Bank vs. Cruz, 180 SCRA
206, G.R. No. 80593 December 18, 1989

Labor Law; Labor Code; Employer-Employee Relationship; Existence of an employer-employee

relationship is a question of fact; Appellate courts accord the factual findings of the Labor
Arbiter and the NLRC not only respect but also finality when supported by substantial evidence;
Court does not substitute its own judgment for that of the tribunal in determining where the
weight of evidence lies or what evidence is credible.—The existence of an employer-employee
relationship is a question of fact. Appellate courts accord the factual findings of the Labor
Arbiter and the NLRC not _______________ * FIRST DIVISION.

584 584 SUPREME COURT REPORTS ANNOTATED Sonza vs. ABS-CBN

Broadcasting Corporation only respect but also finality when supported by substantial evidence.
Substantial evidence means such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion. A party cannot prove the absence of substantial evidence by
simply pointing out that there is contrary evidence on record, direct or circumstantial. The Court
does not substitute its own judgment for that of the tribunal in determining where the weight of
evidence lies or what evidence is credible. Same; Same; Same; Essential Elements of an
Employer-Employee Relationship; The so-called “control test” is the most important element.—
Case law has consistently held that the elements of an employer-employee relationship are: (a)
the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer’s power to control the employee on the means and methods by
which the work is accomplished. The last element, the so-called “control test,” is the most
important element. Same; Same; Same; Independent Contractor; The specific selection and
hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative but not conclusive of independent contractual
relationship; The method of selecting and engaging SONZA does not conclusively determine his
status.—Independent contractors often present themselves to possess unique skills, expertise
or talent to distinguish them from ordinary employees. The specific selection and hiring of
SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary
employees, is a circumstance indicative, but not conclusive, of an independent contractual
relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN
would not have entered into the Agreement with SONZA but would have hired him through its
personnel department just like any other employee. In any event, the method of selecting and
engaging SONZA does not conclusively determine his status. We must consider all the
circumstances of the relationship, with the control test being the most important element.
Same; Same; Same; Same; Whatever benefits SONZA enjoyed arose from contract and not
because of an employer-employee relationship.—All the talent fees and benefits paid to SONZA
were the result of negotiations that led to the Agreement. If SONZA were ABS-CBN’s employee,
there would be no need for the parties to stipulate on benefits such as “SSS, Medicare, x x x and
13th month pay” which the law automatically incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose from contract and not because of an
employer-employee relationship. 585 VOL. 431, JUNE 10, 2004 585 Sonza vs. ABS-CBN
Broadcasting Corporation Same; Same; Same; Same; The power to bargain talent fees way
above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of
an independent contractual relationship.—SONZA’s talent fees, amounting to P317,000 monthly
in the second and third year, are so huge and out of the ordinary that they indicate more an
independent contractual relationship rather than an employer-employee relationship. ABS-CBN
agreed to pay SONZA such huge talent fees precisely because of SONZA’s unique skills, talent
and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone
possessed enough bargaining power to demand and receive such huge talent fees for his
services. The power to bargain talent fees way above the salary scales of ordinary employees is
a circumstance indicative, but not conclusive, of an independent contractual relationship. Same;
Same; Same; Same; The greater the supervision and control the hirer exercises, the more likely
the worker is deemed an employee; The less control the hirer exercises, the more likely the
worker is considered an independent contractor; Applying the control test, SONZA is not an
employee but an independent contractor.—Applying the control test to the present case, we
find that SONZA is not an employee but an independent contractor. The control test is the most
important test our courts apply in distinguishing an employee from an independent contractor.
This test is based on the extent of control the hirer exercises over a worker. The greater the
supervision and control the hirer exercises, the more likely the worker is deemed an employee.
The converse holds true as well—the less control the hirer exercises, the more likely the worker
is considered an independent contractor. Same; Same; Same; Same; ABS-CBN did not exercise
control over the means and methods of performance of SONZA’s work.—We find that ABS-CBN
was not involved in the actual performance that produced the finished product of SONZA’s
work. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the
right to modify the program format and airtime schedule “for more effective programming.”
ABS-CBN’s sole concern was the quality of the shows and their standing in the ratings. Clearly,
ABS-CBN did not exercise control over the means and methods of performance of SONZA’s
work. Same; Same; Same; Same; A radio broadcast specialist who works under minimal
supervision is an independent contractor.—A radio broadcast specialist who works under
minimal supervision is an independent contractor. SONZA’s work as television and radio
program host required special skills and talent, which SONZA admittedly possesses. The records
do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his
skills and talent in his shows. 586 586 SUPREME COURT REPORTS ANNOTATED Sonza vs. ABS-
CBN Broadcasting Corporation Same; Same; Same; Same; In the broadcast industry, exclusivity
is not necessarily the same as control.—Being an exclusive talent does not by itself mean that
SONZA is an employee of ABS-CBN. Even an independent contractor can validly provide his
services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily
the same as control. Same; Same; Same; Same; Policy Instruction No. 40 is a mere issuance
which does not have the force and effect of law.—SONZA argues that Policy Instruction No. 40
issued by then Minister of Labor Blas Ople on 8 January 1979 finally settled the status of
workers in the broadcast industry. Under this policy, the types of employees in the broadcast
industry are the station and program employees. Policy Instruction No. 40 is a mere executive
issuance which does not have the force and effect of law. There is no legal presumption that
Policy Instruction No. 40 determines SONZA’s status. A mere executive issuance cannot exclude
independent contractors from the class of service providers to the broadcast industry. The
classification of workers in the broadcast industry into only two groups under Policy Instruction
No. 40 is not binding on this Court, especially when the classification has no basis either in law
or in fact. Same; Same; Same; Same; The right of labor to security of tenure as guaranteed in the
Constitution arises only if there is an employer-employee relationship under labor laws; Not
every performance of services for a fee creates an employer-employee relationship.—The right
of labor to security of tenure as guaranteed in the Constitution arises only if there is an
employer-employee relationship under labor laws. Not every performance of services for a fee
creates an employer-employee relationship. To hold that every person who renders services to
another for a fee is an employee—to give meaning to the security of tenure clause—will lead to
absurd results. Same; Same; Labor Arbiter; The Labor Arbiter can decide a case based solely on
the position papers and the supporting documents without a formal trial; The holding of a
formal hearing or trial is something that the parties cannot demand as a matter of right; Subject
to the requirements of due process, the technicalities of law and the rules obtaining in the
courts of law do not strictly apply in proceedings before a Labor Arbiter.—The Labor Arbiter can
decide a case based solely on the position papers and the supporting documents without a
formal trial. The holding of a formal hearing or trial is something that the parties cannot demand
as a matter of right. If the Labor Arbiter is confident that he can rely on the documents before
him, he cannot be faulted for not conducting a formal trial, unless under the particular
circumstances of the case, the documents alone are insufficient. The proceedings before a Labor
Arbiter are non-litigious in nature. Subject to the requirements of due process, the techni-

587 VOL. 431, JUNE 10, 2004 587 Sonza vs. ABS-CBN Broadcasting
Corporation calities of law and the rules obtaining in the courts of law do not strictly apply in
proceedings before a Labor Arbiter. Sonza vs. ABS-CBN Broadcasting Corporation, 431 SCRA 583,
G.R. No. 138051 June 10, 2004

Same; Same; Evidence; Administrative Law; The National Labor Relations Commission is not
precluded from receiving evidence on appeal as technical rules of evidence are not binding in
labor cases.—The NLRC is not precluded from receiving evidence on appeal as technical rules of
evidence are not binding in labor cases. There is, however, a caveat to this policy. The delay in
the submission of evidence should be clearly explained and should adequately prove the
employer’s allegation of the cause for termination. In the present case, Asiakonstrukt proffered
no explanation behind the belated submission. And the financial statements it submitted
covered the period 1998-2000. Further, note that the audited financial statement covering the
period 1998-2000 was prepared in April 2001, which begs the question of how the management
knew at such date of the company’s huge losses to justify petitioner’s retrenchment in
1999.Same; Money Claims; Prescription; Words and Phrases; The Labor Code has no specific
provision on when a monetary claim accrues; The day the action may be brought is the day a
claim started as a legal possibility.—The Labor Code has no specific provision on when a
monetary claim accrues. Thus, again the general law on prescription applies. Article 1150 of the
Civil Code provides that—“Article 1150. The time for prescription for all kinds of actions, when
there is no special provision which ordains otherwise, shall be counted from the day they may
be brought.” The day the action may be brought is the day a claim started as a legal possibility.
In the present case, the day came when petitioner learned of Asiakonstrukt’s deduction from his
salary of the amount of advances he had received but had, by his claim, been settled, the same
having been reflected in his payslips, hence, it is assumed that he learned of it at the time he
received his monthly paychecks. Anabe vs. Asian Construction (Asiakonstrukt), 609 SCRA 213,
G.R. No. 183233 December 23, 2009

Labor Law; Department of Labor and Employment (DOLE); Jurisdiction; Visitorial and
Enforcement Powers; Under Art. 129 of the Labor Code, the power of the Department of Labor
and Employment (DOLE) and its duly authorized hearing officers to hear and decide any matter
involving the recovery of wages and other monetary claims and benefits was qualified by the
proviso that the complaint not include a claim for reinstatement, or that the aggregate money
claims not exceed PhP 5,000; RA 7730 did away with the PhP 5,000 limitation, allowing the
Department of Labor and Employment (DOLE) Secretary to exercise its visitorial and
enforcement power for claims beyond PhP 5,000.—Under Art. 129 of the Labor Code, the power
of the DOLE and its duly authorized hearing officers to hear and decide any matter involving the
recovery of wages and other monetary claims and benefits was qualified by the proviso that the
complaint not include a claim for reinstatement, or that the aggregate money claims not exceed
PhP 5,000. RA 7730, or an Act Further Strengthening the Visitorial and Enforcement Powers of
the Secretary of Labor, did away with the PhP 5,000 limitation, allowing the_______________*
EN BANC.539VOL. 667, MARCH 6, 2012539People's Broadcasting Service (Bombo Radyo Phils.,
Inc.)vs. Secretary of the Department of Labor and Employment DOLE Secretary to exercise its
visitorial and enforcement power for claims beyond PhP 5,000. The only qualification to this
expanded power of the DOLE was only that there still be an existing employer-employee
relationship.Same; Same; Same; Same; If there is no employer-employee relationship, whether
it has been terminated or it has not existed from the start, the Department of Labor and
Employment (DOLE) has no jurisdiction; An employer-employee relationship must exist for the
exercise of the visitorial and enforcement power of the Department of Labor and Employment
(DOLE).—It is conceded that if there is no employer-employee relationship, whether it has been
terminated or it has not existed from the start, the DOLE has no jurisdiction. Under Art. 128(b)
of the Labor Code, as amended by RA 7730, the first sentence reads, “Notwithstanding the
provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the Secretary of Labor and Employment or his
duly authorized representatives shall have the power to issue compliance orders to give effect
to the labor standards provisions of this Code and other labor legislation based on the findings
of labor employment and enforcement officers or industrial safety engineers made in the course
of inspection.” It is clear and beyond debate that an employer-employee relationship must exist
for the exercise of the visitorial and enforcement power of the DOLE.Same; Employer-Employee
Relationship; Elements of Employer-Employee Relationship.—The DOLE, in determining the
existence of an employer-employee relationship, has a ready set of guidelines to follow, the
same guide the courts themselves use. The elements to determine the existence of an
employment relationship are: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; (4) the employer’s power to control the
employee’s conduct. The use of this test is not solely limited to the NLRC. The DOLE Secretary,
or his or her representatives, can utilize the same test, even in the course of inspection, making
use of the same evidence that would have been presented before the NLRC.Same; Department
of Labor and Employment (DOLE); National Labor Relations Commission (NLRC); Labor Arbiters;
Jurisdiction; If a complaint is brought before the Department of Labor and Employment (DOLE)
to give effect to the labor standards provisions of the Labor Code or other labor legislation, and
there is an existing 540540SUPREME COURT REPORTS ANNOTATEDPeople's Broadcasting
Service (Bombo Radyo Phils., Inc.)vs. Secretary of the Department of Labor and
Employmentemployer-employee relationship, the Department of Labor and Employment (DOLE)
exercises jurisdiction to the exclusion of the National Labor Relations Commission (NLRC); If
there is no employer-employee relationship, the jurisdiction is properly with the National Labor
Relations Commission (NLRC); If a complaint is filed with the Department of Labor and
Employment (DOLE), and it is accompanied by a claim for reinstatement, the jurisdiction is
properly with the Labor Arbiter, under Art. 217(3) of the Labor Code.—If a complaint is brought
before the DOLE to give effect to the labor standards provisions of the Labor Code or other labor
legislation, and there is a finding by the DOLE that there is an existing employer-employee
relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that
there is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the
jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code, which
provides that the Labor Arbiter has original and exclusive jurisdiction over those cases involving
wages, rates of pay, hours of work, and other terms and conditions of employment, if
accompanied by a claim for reinstatement. If a complaint is filed with the NLRC, and there is still
an existing employer-employee relationship, the jurisdiction is properly with the DOLE. The
findings of the DOLE, however, may still be questioned through a petition for certiorari under
Rule 65 of the Rules of Court.BRION, J., Concurring:Labor Law; Department of Labor and
Employment (DOLE); Jurisdiction; Visitorial and Enforcement Powers; View that the
determination of the existence of an employer-employee relationship by the Department of
Labor and Employment (DOLE), in the exercise of its visitorial and enforcement power under
Article 128(b) of the Labor Code, is entitled to full respect and must be fully supported.—In a
reversal of position, the present Resolution now recognizes that the determination of the
existence of an employer-employee relationship by the DOLE, in the exercise of its visitorial and
enforcement power under Article 128(b) of the Labor Code, is entitled to full respect and must
be fully supported. It categorically states: No limitation in the law was placed upon the power of
the DOLE to determine the existence of an employer-employee relationship. No procedure was
laid down where the DOLE would 541VOL. 667, MARCH 6, 2012541People's Broadcasting
Service (Bombo Radyo Phils., Inc.)vs. Secretary of the Department of Labor and Employmentonly
make a preliminary finding, that the power was primarily held by the NLRC. The law did not say
that the DOLE would first seek the NLRC’s determination of the existence of an employer-
employee relationship, or that should the existence of the employer-employee relationship be
disputed, the DOLE would refer the matter to the NLRC. The DOLE must have the power to
determine whether or not an employer-employee relationship exists, and from there to decide
whether or not to issue compliance orders in accordance with Art. 128(b) of the Labor Code, as
amended by RA 7730. The determination of the existence of an employer-employee relationship
by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE
granted by RA 7730 would be rendered nugatory if the alleged employer could, by the simple
expedient of disputing the employer-employee relationship, force the referral of the matter to
the NLRC. The Court issued the declaration that at least a prima facie showing of the absence of
an employer-employee relationship be made to oust the DOLE of jurisdiction. But it is precisely
the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the
same does successfully refute the existence of an employer-employee relationship. This is not to
say that the determination by the DOLE is beyond question or review. Suffice it to say, there are
judicial remedies such as a petition for certiorari under Rule 65 that may be availed of, should a
party wish to dispute the findings of the DOLE. (underscoring ours) In short, the Court now
recognizes that the DOLE has the full power to determine the existence of an employer-
employee relationship in cases brought to it under Article 128(b) of the Labor Code. This power
is parallel and not subordinate to that of the NLRC. People's Broadcasting Service (Bombo Radyo
Phils., Inc.)vs. Secretary of the Department of Labor and Employment, 667 SCRA 538, G.R. No.
179652 March 6, 2012’

Labor Law; Termination of Employment; Article 282 of the Labor Code enumerates the just
causes for the termination of employment of an employee by the employer.―Article 282 of the
Labor Code enumerates the just causes for the termination of employment of an employee by
the employer, to wit: Art. 282. Termination by employer.—An employee may terminate an
employment for any of the following causes: (a) Serious misconduct or willful disobedience by
the employee of the lawful orders of his employer or 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 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._______________* THIRD DIVISION.362362SUPREME COURT
REPORTS ANNOTATEDHormillosa vs. Coca-Cola Bottlers Phil., Inc.Same; Substantial Evidence; In
labor cases, substantial evidence or such relevant evidence as a reasonable mind might accept
as sufficient to support a conclusion is required.―The rule is that, in labor cases, substantial
evidence or such relevant evidence as a reasonable mind might accept as sufficient to support a
conclusion is required. The CA was correct when it ruled that Hormillosa’s employment was
validly terminated under paragraph (c) of the above provision. There was substantial evidence
to justify his dismissal.Same; Termination of Employment; Loss of Trust and Confidence; It is
clear that Article 282(c) of the Labor Code allows an employer to terminate the services of an
employee for loss of trust and confidence.―In Bristol Myers Squibb (Phils.), Inc. v. Baban, 574
SCRA 198 (2008), the Court discussed the requisites for a valid dismissal on the ground of loss of
trust and confidence as follows: It is clear that Article 282(c) of the Labor Code allows an
employer to terminate the services of an employee for loss of trust and confidence. The right of
employers to dismiss employees by reason of loss of trust and confidence is well established in
jurisprudence. The first requisite for dismissal on the ground of loss of trust and confidence is
that the employee concerned must be one holding a position of trust and confidence. Verily, We
must first determine if respondent holds such a position. There are two (2) classes of positions
of trust. The first class consists of managerial employees. They are defined as those vested with
the powers or prerogatives to lay down management policies and to hire, transfer suspend, lay-
off, recall, discharge, assign or discipline employees or effectively recommend such managerial
actions. The second class consists of cashiers, auditors, property custodians, etc. They are
defined as those who in the normal and routine exercise of their functions, regularly handle
significant amounts of money or property. x x x x The second requisite is that there must be an
act that would justify the loss of trust and confidence. Loss of trust and confidence to be a valid
cause for dismissal must be based on a willful breach of trust and founded on clearly established
facts. The basis for the dismissal must be clearly and convincingly established but proof beyond
reasonable doubt is not necessary.Same; Same; Same; Route Salesmen; There is a high degree
of trust and confidence reposed on route salesmen, and when confidence is breached, the
employer may take proper disciplinary action on 363VOL. 707, OCTOBER 9, 2013363Hormillosa
vs. Coca-Cola Bottlers Phil., Inc.them.―Hormillosa, being a route salesman, falls under the
second class. By selling soft drink products and collecting payments for the same, he was
considered an employee who regularly handled significant amounts of money and property in
the normal and routine exercise of his functions. The nature of the position of a route salesman
was described in Coca Cola Bottlers, Phils. v. Kapisanan ng Malayang Manggagawa sa Coca-Cola-
FFW and Florention Ramirez, 452 SCRA 480 (2005), where it was written: We agree that route
salesmen are likely individualistic personnel who roam around selling softdrinks, deal with
customers and are entrusted with large asset and funds and property of the employer. There is
a high degree of trust and confidence reposed on them, and when confidence is breached, the
employer may take proper disciplinary action on them. The work of a salesman exposes him to
voluminous financial transactions involving his employer’s goods. The life of the soft drinks
company depends not so much on the bottling or production of the product since this is
primarily done by automatic machines and personnel who are easily supervised but upon
mobile and far-ranging salesmen who go from store to store all over the country or region.
Salesmen are highly individualistic personnel who have to be trusted and left essentially on their
own. A high degree of confidence is reposed on them because they are entrusted with funds or
properties of their employer.Same; Same; Same; The language of Article 282(c) of the Labor
Code requires that the loss of trust and confidence must be based on willful breach of the trust
reposed in the employee by the employer.―In Tiu and/or Conti Pawnshop v. National Labor
Relations Commission, 215 SCRA 540 (1992), the Court ruled that the language of Article 282(c)
of the Labor Code requires that the loss of trust and confidence must be based on willful breach
of the trust reposed in the employee by the employer. Ordinary breach will not suffice; it must
be willful. Such breach is willful if it is done intentionally, knowingly, and purposely, without
justifiable excuse as distinguished from an act done carelessly, thoughtlessly, heedlessly, or
inadvertently. In the case at bench, Hormillosa’s act of issuing sales invoices to Arnold Store
could not have been performed without intent and knowledge on his part as such act could not
have been done without planning or merely through negligence. Hence, the breach was willful.
Hormillosa vs. Coca-Cola Bottlers Phil., Inc., 707 SCRA 361, G.R. No. 198699 October 9, 2013

Labor Law; Wages; Commissions fall within the definition of wages pursuant to prevailing law
and jurisprudence.—In this case, respondent’s monetary claims, such as commissions, tax
rebates for achieved monthly targets, and success share/profit sharing, are given to her as
incentives or forms of encouragement in order for her to put extra effort in performing her
duties as an ISE. Clearly, such claims fall within the ambit of the general term “commissions”
which in turn, fall within the definition of wages pursuant to prevailing law and jurisprudence.

_______________

* FIRST DIVISION.

121VOL. 807, NOVEMBER 7, 2016121Toyota Pasig, Inc. vs. De Peralta

Same; Burden of Proof; The allegation of nonpayment of monetary benefits places the burden
on the employer, to prove with a reasonable degree of certainty that it paid said benefits and
that the employee actually received such payment or that the employee was not entitled
thereto.—Respondent’s allegation of nonpayment of such monetary benefits places the burden
on the employer, i.e., petitioner, to prove with a reasonable degree of certainty that it paid said
benefits and that the employee, i.e., respondent, actually received such payment or that the
employee was not entitled thereto.

Same; Presumptions; It is well-settled that the failure of employers to submit the necessary
documents that are in their possession gives rise to the presumption that the presentation
thereof is prejudicial to its cause.—In fact, during the proceedings before the LA, petitioner was
even given the opportunity to submit pertinent company records to rebut respondent’s claims
but opted not to do so, thus, constraining the LA to direct respondent to submit her own
computations. It is well-settled that the failure of employers to submit the necessary documents
that are in their possession gives rise to the presumption that the presentation thereof is
prejudicial to its cause. Toyota Pasig, Inc. vs. De Peralta, 807 SCRA 120, G.R. No. 213488
November 7, 2016