Understanding Employer-Employee Relationship

GENERAL PRINCIPLES 1
SONZA, petitioner, vs . ABS-CBN, respondent.

G.R. No. 138051, June 10, 2004
FACTS:
ABS-CBN engaged SONZA’s services as manifested in an ‘Agreement’ between ABS-CBN and MJMDC (Mel
and Jay Management and Development Corporation) - referred to in the agreement as ‘Agent’, who agreed to pro-
vide Sonza’s services as talent for radio and television exclusively to ABS-CBN.
Sonza wrote a letter to ABS-CBN president for the recession of the agreement through his capacity as president
of the MJMDC.
Sonza filed a complaint against ABS-CBN before the DOLE. In his complaint, ABS-CBN did not pay his sala-
ries, separation pay, service incentive pay, 13th month pay, signing bonus travel allowance and other amounts due.
a) Petitioner’s Arguments (SONZA – Lost)

Sonza insists that there existed an employer-employee relationship between him and ABS-CBN because first,
abs-cbn exercised control over the means and methods of his work and second, abs-cbn subjected him to its rules
and standards of performance.
b) Respondent’s Argument’s (ABS-CBN - Win)

ABS-CBN grounded their defense that no employee-employer relationship existed. They engaged SONZA’s
services specifically because of his unique skills, talent and celebrity status not possessed by ordinary employees
which is a circumstance indicative of an independent contractual relationship.
ISSUE:
Whether or not there exists an employer-employee relationship between a television station and its talents.
RULING:
There is no employer-employee relationship.
Rule:
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.
There is no local precedent case law with regards to the EER between a TV station and its talents. The court in
this case cited a foreign case law. This is their findings:
Two factors that classify an independent contractor: First, a television talent is a skilled position requiring talent
and training not available on-the-job. Second, the talent provides the "tools and instrumentalities" necessary for
him/her to perform.
Application:
ABS-CBN was not involved in the actual performance that produced the finished product of Sonza’s work.
They did not instruct Sonza on how to perform his job. To perform his work, Sonza only needed his skills and talent.
Sonza had preference over the lines he delivered, how he appeared on television and sounded on the radio. He was
not even required to render 8-hours of work a day. The TV station merely reserved the right to modify program
format and airtime schedule for more effective programming for their sole concern was the ratings. The TV station
merely set guidelines towards the achievement of the mutually desired result without dictating the means or methods
to be employed in attaining it.
CONCLUSION:
Sonza is considered to be an independent contractor whose services were engaged by ABS-CBN by way of an
‘agreement’. His engagement as a talent was covered by a specific contract. Hence, whatever benefits Sonza enjoyed
arose from a specific agreement between the parties and not by reason of employee-employer relationship.
In relation to Sonza’s claim for unpaid benefits arising from the ‘agreement’, the right cause of action is breach
of contract which is a civil dispute.
LAZARO, petitioner vs. SOCIAL SECURITY COMMISION defendant.

G.R. No. 138254. July 30, 2004.
FACTS:
Private respondent Laudato filed a petition before the SSC for social security coverage and remittance of unpaid
monthly social security contributions against her three employers. Among the respondents was herein petitioner
Angelito L. Lazaro (“Lazaro”), proprietor of Royal Star Marketing (“Royal Star”), which is engaged in the business
of selling home appliances.
a) Petitioner’s Arguments
Petitioner states that 1) Laudato was not a sales supervisor of Royal Star, but was a mere sales agent whom he paid
purely on commission basis.2) Laudato was not subjected to definite hours and conditions of work. As such, Lauda-
to could not be deemed an employee of Royal Star.
b) Respondent’s Arguments
Respondents contended that despite her employment as sales supervisor of the sales agents for Royal Star from April
of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory cover-
age or remit Laudato’s social security contributions.
SOCIAL SECURITIES COMMISION Applying the "control test," it held that Laudato was an employee of Roy-
al Star, and ordered Royal Star to pay the unremitted social security contributions of Laudato. CA The appellate
court affirmed the finding that Laudato was an employee of Royal Star, and hence entitled to coverage under the
Social Security Law.
ISSUE:
Whether or not respondent is an employee of Royal Star, bringing her under the coverage of the Social Security Act.
RULING:
The Petition is DENIED and the assailed Decision of the Court of Appeals dated 20 November 1998 is AF-
FIRMED.
Laudato is an employee of Royal Star. It is an accepted doctrine that for the purposes of coverage under the Social
Security Act, the determination of employer-employee relationship warrants the application of the “CONTROL
TEST,” that is, whether the employer controls or 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 accomplished.The fact
that Laudato was paid by way of commission does not preclude the establishment of an employer-employee rela-
tionship. The relevant factor remains, as stated earlier, whether the"employer" controls or has reserved the right to
control the "employee" not only as to the result of the work to be done but also as to the means and methods by
which the same is to be accomplished. Neither does it follow that a person who does not observe normal hours
of work cannot be deemed an employee. A supervisor is exempt from the observance of normal hours of work for
his compensation is measured by the number of sales he makes.” Laudato oversaw and supervised the sales agents
of the company, and thus was subject to the control of management as to how she implements its policies and its end
results. Royal Star exercised control over its sales supervisors or agents such as Laudato as to the means and me-
thods through which these personnel performed their work.
Application:
Employer-Employee Relationship - Control Test
It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of em-
ployer-employee relationship warrants the application of the “control test,” that is, whether the employer controls or
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 accomplished.
PHIL. GLOBAL COMMUNICATION, petitioner VS. DE VERA, defendant

GR No. 157214, July 7, 2005
Facts:
Philippine Global Communications inc. is a corporation engaged in the business of communication services
and allied activities while Ricardo de Vera is a physician by profession whom petitioner enlisted to attend to the
medical needs of its employees. The controversy rose when petitioner terminated his engagement.
In 1981, Dr. de Vera offered his services to petitioner. The parties agreed and formalized the respondent’s pro-
posal in a document denominated as retainership contract which will be for a period of one year, subject to renewal
and clearly stated that respondent will cover the retainership the company previously with Dr. Eulau. The agreement
went until 1994, in the years 1995-1996, it was renewed verbally. The turning point of the parties’ relationship was
when petitioner, thru a letter bearing the subject TERMINATION – RETAINERSHIP CONTRACT, informed Dr.
de Vera of its decision to discontinue the latter’s retainer contract because the management has decided that it would
be more practical to provide medical services to its employees through accredited hospitals near the company pre-
mises.
On January 1997, de Vera filed a complaint for illegal dismissal before the NLRC, alleging that he had been ac-
tually employed by the company as its company physician since 1991. The commission rendered decision in favor
of Philcom and dismissed the complaint saying that de Vera was an independent contractor. On appeal to NLRC, it
reversed the decision of the Labor Arbiter stating that de Vera is a regular employee and directed the company to
reinstate him. Philcom appealed to the CA where it rendered decision deleting the award but reinstating de Vera.
Philcom filed this petition involving the difference of a job contracting agreements from employee-employer rela-
tionship.
Petitioner’s Contention:
He alleged that he had been actually employed by Philcom as its company physician since 1981 and was dis-
missed without due process. He averred that he was designated as a company physician on retainer basis for reasons
allegedly known only to Philcom. He likewise professed that since he was not conversant with labor laws, he did not
give much attention to the designation as anyway he worked on a full-time basis and was paid a basic monthly sala-
ry plus fringe benefits, like any other regular employees of Philcom.
Labor Arbiter:
The Labor Arbiter dismissed De Vera’s complaint for lack of merit, on the rationale that as a retained physician
under a valid contract mutually agreed upon by the parties, De Vera was an independent contractor and that he was
not dismissed but rather his contract with [PHILCOM] ended when said contract was not renewed after December
31, 1996.
NLRC:
The NLRC reversed that of the Labor Arbiter, on a finding that De Vera is Philcom’s regular employee and ac-
cordingly directed the company to reinstate him to his former position without loss of seniority rights and privileges
and with full backwages from the date of his dismissal until actual reinstatement.
CA’s Decision:
It modified that of the NLRC by deleting the award of traveling allowance, and ordering payment of separation
pay to De Vera in lieu of reinstatement.
Issue: Whether or not there exists an employee-employer relationship between the parties.
Supreme Court’s Ruling: SC ruled that there was no such employer-employee relationship existing between Dr. de
Vera and Phil. Com.
In a long line of decisions, the Court, in determining the existence of an employer-employee relationship,
has invariably adhered to the four-fold test, to wit:
1. the selection and engagement of the employee;
2. the payment of wages;
3. the power of dismissal;

4. the power to control the employees conduct, or the so-called control test, considered to be the most impor-
tant element
Upon reading the contract dated September 6, 1982, signed by the complainant himself , it clearly states that is
a retainership contract. The retainer fee is indicated thereon and the duration of the contract for one year is also
clearly indicated in paragraph 5 of the Retainership Contract. The complainant cannot claim that he was unaware
that the ‘contract’ was good only for one year, as he signed the same without any objections. The complainant also
accepted its renewal every year thereafter until 1994. As a literate person and educated person, the complainant
cannot claim that he does not know what contract he signed and that it was renewed on a year to year basis.
The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with peti-
tioner, he never was included in its payroll; was never deducted any contribution for remittance to the Social Securi-
ty System (SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his profession-
al fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an em-
ployer-employee relationship. The elements of an employer-employee relationship are wanting in this case. The
record are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees. It
simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his em-
ployer to receive his salary.
The power to terminate the parties’ relationship was mutually vested on both. Either may terminate the ar-
rangement at will, with or without cause. Remarkably absent is the element of control whereby 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.
Petitioner had no control over the means and methods by which respondent went about performing his work at
the company premises. In fine, the parties themselves practically agreed on every terms and conditions of the en-
gagement, which thereby negates the element of control in their relationship.
Principle of Law: Any agreement may provide that one party shall render services for and in behalf of another, no
matter how necessary for the latter’s business, even without being hired as an employee. There was no employee-
employer relationship in a case where element of control of the employer over the employee is absent.
ABS-CBN Broadcasting Corp.,petitioner vs. Nazareno, et al.,respondent.

G.R. No. 164156. September 26, 2006.
FACTS:
ABS-CBN employed respondents as production assistants (PA’s). They were assigned at the news public af-
fairs, for various radio programs in the Cebu Broadcasting Station, with monthly compensation of P4,000. They
were issued identification cards and were required a minimum of eight hours a day, including Sundays and holidays.
They were under the control and supervision of Assistant Station Manager and News Manager. On December 19,
1996, petitioner and the ABS-CBN Rank-and-File Employees executed aCollective Bargaining Agreement (CBA).
However, since petitioner refused to recognize PA’s aspart of the bargaining unit, respondents were not included to
the CBA.Respondents filed a Complaint for Recognition of Regular Employment Status and its respective benefits
against the petitioner before the NLRC.
a) Petitioner’s Arguments (ABS-CBN Broadcasting Network Corp. – Lost)
The respondents were PAs who basically assist in the conduct of a particular program ran by an anchor or talent.
Generally, they perform leg work for the anchors during a program or a particular production. They are considered
in the industry as "program employees." As distinguished from regular or station employees, they are basically en-
gaged by the station for a particular or specific program broadcasted by the radio station.
b) Respondent’s Arguments (Nazareno – Win)

Respondents were engaged by respondent ABS-CBN as regular and fulltime employees for a continuous period of
more than 5 years with amonthly salary rate of P4,000.00 pesos beginning 1995 up until the filing of this complaint.
ISSUE: Whether or not Nazareno, et al. are considered as regular employees of ABS-CBN Broadcasting Corp.?
RULING: Yes, Nazareno, et al. are considered as regular employees of ABS-CBN Broadcasting Corp.
Rule:
There are two kinds of employees:
a. Those engaged to perform activities which are necessary or desirable in the usual business or trade of the em-
ployer:
b. Those casual employees who have rendered at least one year of service, whether continuous or broken, with
respect to the activities in which they are employed.\
Where a person has rendered at least one year of service, regardless of the nature of the activity performed, or
where the work is continuous or intermittent, the employment is considered regular as long as the activity exists, the
reason being that a customary appointment is not indispensable before one may formally declared as having attained
regular status.
Project employees and seasonal employees are not considered regular employees. However, any employee who
has rendered at least on year of service, whether continuous or intermittent, is deemed regular with respect to the
activity performed and while such activity exists. Respondents cannot be considered “talents.” They are regular em-
ployees who performed several different duties under the control and direction of ABS-CBN executives and super-
visors.
Application:
In this case, it is undisputed that respondents had continuously performed the same activities for an average of
five years. Their assigned tasks are necessary or desirable in the usual business or trade of the petitioner. While
length of time may not be a sole controlling test for project employment, it can be a strong factor to determine
whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital,
necessary and indispensable to the usual trade or business of the employer. In the case at bar, however, the employ-
er-employee relationship between petitioner andrespondents have been proven.
Conclusion:
Thus, the respondents are entitled to the benefits provided for in the existing CBA between petitioner and its rank-
and-file employees. As regular employees, respondents are entitled to the benefits granted to all other regular em-
ployees of petitioner under the CBA. They were erroneously classified and treated as project employees by petition-
er.
ANGELINA FRANCISCO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, KASEI

CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTE-
ROS, TRINIDAD LIZA and RAMON ESCUETA, respondents.
G.R. No. 170087. August 31, 2006.
FACTS:
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Ac-
countant 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 li-
censes for the initial operation of the company.
Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents, never
prepared any legal documents, and never represented the company as its Corporate Secretary.
In 1996, petitioner was designated Acting Manager. As Acting Manager, petitioner was assigned to handle re-
cruitment of all employees and perform management administration functions; represent the company in all dealings
with government agencies; 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 as Manager. TimoteoAcedo, 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 compa-
ny.
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was in-
formed 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 thelabor arbiter.
a) Petitioner’s Arguments (Angelina Francisco – Win)

When the petitioner was replaced as Acting 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.
b) Private Respondent’s Argument’s (Kasei Corporation - Lost)

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 Secre-
tary. 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 compa-
ny 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 ser-
vices 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 profession-
als, and that she was not one of those reported to the BIR or SSS as one of the company's employees.
ISSUES:
Whether there was an employer-employee relationship between petitioner and private respondent Kasei Corporation.
RULING:
An employer-employee relationship existed between petitioner and private respondent Kasei Corporation.
Rule:
Courts have relied on the so-called right of control test where the person for whom the services are performed
reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. In
addition to the standard of right-of-control, the existing economic conditions prevailing between the parties, like the
inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relation-
ship.
There are instances when, aside from the employer's 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 employer's power
to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the
underlying economic realities of the activity or relationship.
This is especially appropriate in cases where there is no written agreement or terms of reference to base the rela-
tionship 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 latter's employment.
Under the control test, 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.
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 employ-
er's business; (2) the extent of the worker's investment in equipment and facilities; (3) the nature and degree of con-
trol exercised by the employer; (4) the worker's 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 dura-
tion 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.
Application:
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she
was under the direct control and supervision of Seiji Kamura, the corporation's Technical Consultant. 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 corpora-
tion 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 indi-
cating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Secu-
rity contributions from August 1, 1999 to December 18, 2000. Petitioner's 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 inclu-
sion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relation-
ship between petitioner and respondent corporation.
It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued
employment in the latter's line of business.
Conclusion:
Thus, petitioner is an employee of respondent Kasei Corporation as she was selected and engaged by the com-
pany for compensation, and is economically dependent upon respondent for her continued employment in that line
of business. 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.
NOGALEZ ET AL VS CAPITOL MEDICAL CENTER

G.R. No. 142625, December 19, 2006
Facts:
Pregnant Corazon Nogales ("Corazon") was under the exclusive prenatal care of Dr. Oscar Estrada ("Dr. Estra-
da"). Corazon was admitted at the CMC. Dr. Estrada ordered the injection of 10 grams of magnesium sulfate. How-
ever, Dr. Ely Villaflor ("Dr. Villaflor"), who was assisting Dr. Estrada, administered only 2.5 grams of magnesium
sulfate. Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's baby. In the process, piece of
cervical tissue was allegedly torn. The baby came out in an apneic, cyanotic, weak and injured condition. Corazon
began to manifest moderate vaginal bleeding which rapidly became profused. Dr. Noe Espinola ("Dr. Espinola"),
head of the Obstetrics-Gynecology Department of the CMC, was apprised of Corazon's condition by telephone.
Upon being informed that Corazon was bleeding profusely, Dr. Espinola ordered immediate hysterectomy. Despite
Dr. Espinola's efforts, Corazon died due to hemorrhage.
Petitioners filed a complaint for damages with the Regional Trial Court. Petitioners mainly contended that de-
fendant physicians and CMC personnel were negligent in the treatment and management of Corazon's condition.
Petitioners charged CMC with negligence in the selection and supervision of defendant physicians and hospital staff.
Petitioner claims thathe knew Dr. Estrada as an accredited physician of CMC, though he discovered later that
Dr. Estrada was not a salaried employee of the CMC. He further claims that he wasdealing with CMC, whose prima-
ry concern was the treatment and management of his wife's condition. Dr. Estrada just happened to be the specific
person he talked to representing CMC. Moreover, the fact that CMC made him sign a Consent on Admission and
Admission Agreement and a Consent to Operation printed on the letterhead of CMC indicates that CMC considered
Dr. Estrada as a member of its medical staff.
On the other hand, CMC disclaims liability by asserting that Dr. Estrada was a mere visiting physician and that
it admitted Corazon because her physical condition then was classified an emergency obstetrics case.CMC alleges
that Dr. Estrada is an independent-contractor "for whose actuations CMC would be a total stranger." CMC maintains
that it had no control or supervision over Dr. Estrada in the exercise of his medical profession.
Trial court rendered judgment finding Dr. Estrada solely liable for damages.
The Court of Appeals upheld the trial court's ruling, finding Dr. Estrada as an independent contractor-physician.
The Court of Appeals applied the "borrowed servant" doctrine considering that Dr. Estrada was an independent con-
tractor who was merely exercising hospital privileges. This doctrine provides that once the surgeon enters the operat-
ing room and takes charge of the proceedings, the acts or omissions of operating room personnel, and any negli-
gence associated with such acts or omissions, are imputable to the surgeon.
Issues:
1) Whether CMC is vicariously liable for the negligence of Dr. Estrada;

2) WON there is employer-employee relationship between Dr. Estrada and CMC
Held:
Dr. Estrada is not an employee of CMC, but an independent-contractor; however, CMC is still vicariously
liable.
The Court finds no single evidence pointing to CMC's exercise of control over Dr. Estrada's treatment and
management of Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she was under the ex-
clusive prenatal care of Dr. Estrada. At the time of Corazon's admission at CMC and during her delivery, it was Dr.
Estrada, assisted by Dr. Villaflor, who attended to Corazon. There was no showing that CMC had a part in diagnos-
ing Corazon's condition. While Dr. Estrada enjoyed staff privileges at CMC, such fact alone did not make him an
employee of CMC. CMC merely allowed Dr. Estrada to use its facilitieswhen Corazon was about to give birth,
which CMC considered an emergency.
Dr. Estrada is not an employee of CMC, but an independent-contractor.
In general, a hospital is not liable for the negligence of an independent-contractor physician. There is, howev-
er, an exception to this principle.The hospital may be liable if the physician is the "ostensible" agent of the
hospital.This exception is also known as the "doctrine of apparent authority."
The doctrine of apparent authority essentially involves two factors to determine the liability of an independent-
contractor physician. The first factor focuses on the hospital's manifestations and is sometimes described as “an
inquiry whether the hospital acted in a manner which would lead a reasonable person to conclude that the individual
who was alleged to be negligent was an employee or agent of the hospital.” In this regard, the hospital need not
make express representations to the patient that the treating physician is an employee of the hospital; rather a repre-
sentation may be general and implied. The doctrine of apparent authority is “a specie of the doctrine of estoppel.”
Article 1431 of the Civil Code provides that "through estoppel, an admission or representation is rendered conclu-
sive upon the person making it, and cannot be denied or disproved as against the person relying thereon." CMC im-
pliedly held out Dr. Estrada as a member of its medical staff.
Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby leading the Spouses Nogales to
believe that Dr. Estrada was an employee or agent of CMC. CMC cannot now repudiate such authority. First, CMC
granted staff privileges to Dr. Estrada. Second, CMC made petitioner sign consent forms printed on CMC letter-
head. Third, Dr. Estrada's referral of Corazon's profuse vaginal bleeding to Dr. Espinola, who was then the Head of
the Obstetrics and Gynecology Department of CMC, gave the impression that Dr. Estrada, as a member of CMC's
medical staff, was collaborating with other CMC-employed specialists in treating Corazon.
Without any indication in these consent forms that Dr. Estrada was an independent-contractor physician, the
Spouses Nogales could not have known that Dr. Estrada was an independent contractor. Significantly, no one from
CMC informed the Spouses Nogales that Dr. Estrada was an independent-contractor.
The second factor focuses on the patient's reliance. It is sometimes characterized as aninquiry on whether the
plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence.
The records show that the Spouses Nogales relied upon a perceived employmentrelationship with CMC in accepting
Dr. Estrada's services. Petitioner testified that he and hiswife specifically chose Dr. Estrada to handle Corazon's de-
livery not only because of theirfriend's recommendation, but more importantly because of Dr. Estrada's "connection
witha reputable hospital, the [CMC]."In other words, Dr. Estrada's relationship with CMCplayed a significant role in
the Spouses Nogales' decision in accepting Dr. Estrada'sservices as the obstetrician-gynecologist for Corazon's deli-
very. Moreover, as earlier stated, there is no showing that before and during Corazon's confinement at CMC, theS-
pouses Nogales knew or should have known that Dr. Estrada was not an employee ofCMC.
WHEREFORE, the Court PARTLY GRANTS the petition. The Court finds respondent Capitol Medical
Center vicariously liable for the negligence of Dr. Oscar Estrada.
Coca-Cola Bottlers Phils., Inc./Eric Montinola, Managerpetitionersvs.Dr. Dean N. Climacoet.a, respondent.

G.R. No. 146881. February 5, 2007.
FACTS:
Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca- Cola Bottlers Phils.,
Inc. by virtue of a Retainer Agreement.
The Comprehensive Medical Plan, which contains the duties and responsibilities of respondent, adverted to in
the Retainer Agreement.
The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expired on De-
cember 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to perform his func-
tions as company doctor to Coca-Cola until he received a letter dated March 9, 1995 from petitioner company con-
cluding their retainership agreement effective 30 days from receipt thereof.
Respondent inquired from the management of petitioner company whether it was agreeable to recognizing him
as a regular employee. The management refused to do so.
a) Petitioner’s Arguments (Coca-Cola Bottlers Phils., Inc. – Win)

It was averred by Coca-Cola in its comment that they exercised no control over petitioner for the reason that
the latter was not directed as to the procedure and manner of performing his assigned tasks. It went as far as saying
that "petitioner was not told how to immunize, inject, treat or diagnose the employees of the respondent. We believe
that if the "control test" would be interpreted this strictly, it would result in an absurd and ridiculous situation where-
in we could declare that an entity exercises control over another's activities only in instances where the latter is di-
rected by the former on each and every stage of performance of the particular activity. Anything less than that would
be tantamount to no control at all.
b) Respondent’s Argument’s (Dr. Dean N. Climaco - Lost)

It is noted that as early as September 1992, petitioner was already making inquiries regarding his status with
petitioner company. First, he wrote a letter addressed to Dr. Willie Sy, the Acting President and Chairperson of the
Committee on Membership, Philippine College of Occupational Medicine. In response, Dr. Sy wrote a letter to the
Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City, stating that respondent should be considered as a
regular part-time physician, having served the company continuously for four (4) years. He likewise stated that
respondent must receive all the benefits and privileges of an employee under Article 157 (b) of the Labor Code.
On February 24, 1994, respondent filed a Complaint before the NLRC, Bacolod City, seeking recognition as a
regular employee of petitioner company and prayed for the payment of all benefits of a regular employee,
including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive Leave Pay, and Christ-
mas Bonus. The case was docketed as RAB Case No. 06-02-10138-94.
While the complaint was pending before the Labor Arbiter, respondent received a letter dated March 9, 1995
from petitioner company concluding their retainership agreement effective thirty (30) days from receipt thereof. This
prompted respondent to file a complaint for illegal dismissal against petitioner company with the NLRC, Bacolod
City. The case was docketed as RAB Case No. 06-04-10177-95.
ISSUE:
Whether or not there exists an employer-employee relationship between the parties. The resolution of the main
issue will determine whether the termination of respondent's employment is illegal.
RULING:
The petition is granted.
The Labor Arbiter and the NLRC correctly found that petitioner company lacked the power of control over the
performance by respondent of his duties. The Labor Arbiter also correctly found that the provision in the Retainer
Agreement that respondent was on call during emergency cases did not make him a regular employee.
In addition, the Court finds that the schedule of work and the requirement to be on call for emergency cases do
not amount to such control, but are necessary incidents to the Retainership Agreement.
The Court also notes that the Retainership Agreement granted to both parties the power to terminate their rela-
tionship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or termi-
nation.
The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of
respondent as a retained physician of petitioner company and upholds the validity of the Retainership Agreement
which clearly stated that no employer-employee relationship existed between the parties. The Agreement also stated
that it was only for a period of 1 year beginning January 1, 1988 to December 31, 1998, but it was renewed on a
yearly basis.
Rule:
The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the
four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismis-
sal; and (4) the power to control the employee's conduct, or the so-called "control test," considered to be the most
important element.
Application:
In effect, the Labor Arbiter held that petitioner company, through the Comprehensive Medical Plan, provided
guidelines merely to ensure that the end result was achieved, but did not control the means and methods by which
respondent performed his assigned tasks.
Considering that there is no employer-employee relationship between the parties, the termination of the Retai-
nership Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismis-
sal of respondent. Consequently, there is no basis for the moral and exemplary damages granted by the Court of Ap-
peals to respondent due to his alleged illegal dismissal.
Conclusion:
Therefore, the four-fold test is an important tool to be used in identifying if there is an employer
employee relationship. This test will also help us to determine if such employee will be granted of
regular benefits provided by the company/employer. It is noteworthy that the power to control the
employee's conduct, or the so-called "control test," considered to be the most important element.
CALAMBA MEDICAL CENTER, INC. , petitioner vs. NLRC, ET AL, defendant.

G.R. No. 176484. November 25, 2008.
FACTS:
The respondents, doctors-spouses Dr. Ronaldo and Dr. MercedithaLanzanas are engaged as resident physicians
by the petitioner, Calamba Medical Center. They report to the hospital twice-a-week on twenty-four-hour shifts.
They were paid a monthly "retainer" of P4,800.00 each and were also given a percentage share out of fees charged
for out-patient treatments, operating room assistance and discharge billings.
The work schedules of the resident physicians were fixed by the petitioner's Medical Director Dr. Desipeda, and
they were issued ID, enrolled in the SSS and income taxes were withheld from them.
Dr. Trinidad, also a resident physician, overheard a phone conversation between Dr. Ronaldo and a fellow em-
ployee Diosdado Miscala. Apparently, Dr. Ronaldo and Miscala were discussing about the low "census" or admis-
sion of patients to the hospital. Because of which, the former was given a preventive suspension and his wife Dr.
Merceditha was not given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo filed a com-
plaint for illegal suspension and Dr. Merceditha for illegal dismissal.
a) Petitioner’s Arguments (Calamba Medical Center, Inc. – Lost)

The petitioner argues that there is no employer-employee relationship because the doctor-spouses were only en-
gaged twice-a-week, thus giving them freedom to practice their profession elsewhere the rest of the week. Further,
the petitioner contends that aside from their monthly retainers, the respondents were also entitled to one-half of all
suturing, admitting, consultation, medico-legal and operating room assistance fees. These circumstances, according
to them, are badges of the absence of an employment relationship.
b) Respondent’s Argument’s (Dr. Ronaldo and Dr. MercedithaLanzanas- Won)
The respondents maintained that the following factors constitute ‘control’, hence, the existence of employment
relationship: (1) the schedule of duties of the respondents is subject to approval by the petitioner’s Medical Di-
rector; (2) the Medical Director also issues instructions or orders to the respondents relating to the means
and methods of performing their duties, i.e. admission of patients, manner of characterizing cases, treatment
of cases, etc., and may even overrule, review or revise the decisions of the resident physicians . This was
not controverted by the petitioner.
ISSUE:
Whether or not an employer-employee relationship exists between petitioner and spouses respondents
RULING:
The petition for review was denied
Rule:
To determine the existence of employer-employee relationship, one can apply the four-fold test which has the
following elements: a) selection and engagement of the employee; b) payment of wages or salaries; c) exercise
of the power of dismissal; and d) exercise of the power to control the employee's conduct.
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 (Nogales v. Capitol Medical Center, G.R. No. 142625, December 19, 2006, 511 SCRA 204, 221 citing
Diggs v. Novant Health, Inc., 628 S.E.2d 851 (2006))
Further, in countering the contention of the respondent hospital of respondents' sharing in hospital fees, Su-
preme Court used Article 97 (f) of the Labor Code as the basis, which states that, “Wage paid to any employee
shall mean the remuneration or earning, however designated, capable of being expressed in terms of money,
whetherfixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the
same…”
Application:
The petitioner exercised control over respondents since it is undisputed that respondents' work is monitored
through its nursing supervisors, charge nurses and orderlies in the emergency room, the operating room, or
any department or ward for that matter. Without the approval or consent of petitioner or its Medical Direc-
tor, 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.
Respondents were in fact made subject to petitioner-hospital's Code of Ethics, the provisions of which
cover administrative and disciplinary measures on negligence of duties, personnel conduct and behavior, and
offenses against persons, property and the hospital's interest.
With respect to respondents' sharing in some hospital fees, this scheme does not sever the employment
tie between them and petitioner as this merely mirrors additional form or another form of compensation or
incentive similar to what commission-based employees receiveas contemplated in Article 97 (f) of the Labor
Code.
Conclusion:
Thus, employer-employee relationship exists between Calamba Medical Center and the doctors-spouses
Jeromie Escasinas and Evan Rigor Singco, petitioners, vs. Shangri-La’s Mactan Island Resort and Dr. Jessica
J.R. Pepito, respondents.
FACTS:
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged in 1999 and 1996,
respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to work in her clinic at respondent Shangri-la’s
Mactan Island Resort (Shangri-la) in Cebu of which she was a retained physician. In late 2002, petitioners filed with
the National Labor Relations Commission (NLRC) Regional Arbitration Branch No. VII (NLRC-RAB No. VII) a
complaint for regularization, underpayment of wages, non-payment of holiday pay, night shift differential and 13 th
month pay differential against respondents, claiming that thy are regular employees of Shangri-la. Shangri-la
claimed, however, that petitioners were not its employees but of respondent doctor whom it retained via MOA pur-
suant to Article 157 of the Labor Code, as amended.
Petitioner, et.al’s contention:

- Petitioners insist that under Article 157 of the Labor Code, Shangri-la is required to hire afull-time regis-
tered nurse, apart from a physician, hence, their engagement should bedeemed as regular employment
- MOA is contrary to public policy as it circumvents tenurial security and, therefore, should be struck down
as being void ab initio
- respondent doctor is a labor-only contractor for she has no license or business permit and no business name
registration, which is contrary to the requirements under Sec. 19 and 20 of the Implementing Rules and
Regulations of the Labor Code on sub-contracting.
- respondent doctor cannot be a legitimate independent contractor, lacking as she does in substantial capital,
the clinic having been set-up and already operational when she took over as retained physician
NLRC Ruling:
Labor Arbiter Ernesto Carreon declared petitioners to be regular employees of Shangri-la. The Arbiter thus or-
dered Shangri-la to grant them the wages and benefits due them as regular employees from the time their services
were engages.
In finding that petitioners to be regular employees of Shangrila, the Arbiter noted that ther ususally perform
work which is necessary and desirable to Shangri-la’s business; that they observe clinic hours and render services
only to Shangri-la’s guest and employees; that payment for their salaries were recommended to Shangri-la’s Human
Resource Department (HRD); that respondent doctor was Shangri-la’s “in-house” physician, hence, also an em-
ployee; and that the MOA between Shangri-la and respondent doctor was an “insidious mechanism in order to cir-
cumvent tenurial security and that of the employees under her”.
Respondents appealed to the NLRC, likewise dismissed petitioners’ complaint for lack of merit, it finding that
no employer-employee relationship exists between petitioner and Shangri-la. In so deciding, the NLRC held that the
Arbited erred in interpreting Artice 157 in relation to Article 280 of the Labor Code, as what is required under Ar-
ticle 157 is that the employer should provide the services of medical personnel to its employees, but nowhere in said
article is a provision that nurses are required to be employed; that contrary to the finding of the Arbiter, even if Ar-
ticle 280 states that if a worker performs work usually necessary or desirable in the business of the employer, he
cannot be automatically deemed a regular employee; and that the MOA amply shows that respondent doctor was in
fact engages by Shangri-la on a retainer basis, under which she could hire her own nurses and other clinic personnel.
On the issue of payment of wages, the NLRC held that the fact that, for some months, payment of petitioners'
wages were recommended by Shangri-la's HRD did not prove that it was Shangri-la which pays their wages. It thus
credited respondent doctor's explanation that the recommendations for payment were based on the billings she pre-
pared for salaries of additional nurses during Shangri-la's peak months of operation, in accordance with the retainer-
ship agreement, the guests' payments for medical services having been
paid directly to Shangri-la.
CA Ruling:
The CA affirmed the NLRC decision that no employer-employee relationship exist between Shangri-la and peti-
tioners. The appellate court concluded that all aspects of the employment of petitioners being under the supervision
and control of respondent doctor and since Shangri-la is not principally engages in the business of providing medical
or healthcare services, petitioners could not be regarded as regular employees of Shangri-la.
ISSUES:
What is the correct interpretation of Article 157 vis-à-vis Article 280 and the provisions on permissible job con-
tracting of the Labor Code, as amended.
RULING:
The Court holds that, contrary to petitioners' postulation, Art. 157 does not require the engagement of full-time
nurses as regular employees of a company employing not less than 50 workers. (Refer to Article 157 for more de-
tails)
Under the foregoing provision, Shangri-la, which employs more than 200 workers, is mandated to "furnish" its
employees with the services of a full-time registered nurse, a part-time physician and dentist, and an emergency clin-
ic which means that it should provide or make available such medical and allied services to its employees, not nec-
essarily to hire or employ a service provider.
Rule:
The term "full-time" in Art. 157 cannot be construed as referring to the type of employment of the person en-
gaged to provide the services, for Article 157 must not be read alongside Art. 280 9 in order to vest employer-
employee relationship on the employer and the person so engaged. The phrase "services of a full-time registered
nurse" should thus be taken to refer to the kind of services that the nurse will render in the company's premises and
to its employees, not the manner of his engagement.
As to whether respondent doctor can be considered a legitimate independent contractor, the pertinent sections of
DOLE Department Order No. 10, series of 1997 (Please refer to Sec 8 of the Department Order)
The existence of an independent and permissible contractor relationship is generally established by considering
the following determinants: whether the contractor is carrying on an independent business; the nature and extent of
the work; the skill required; the term and duration of the relationship; the right to assign the performance of a speci-
fied piece of work; the control and supervision of the work to another; the employer's power with respect to the hir-
ing, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises,
tools, appliances, materials and labor; and the mode, manner and terms of payment.
On the other hand, existence of an employer- employee relationship is established by the presence of the follow-
ing determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment of wages
by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the over-
all consideration
APPLICATION:
Court holds that respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic
premises and medical supplies for use of its employees and guests does not necessarily prove that respondent doctor
lacks substantial capital and investment. Besides, the maintenance of a clinic and provision of medical services to its
employees is required under Art. 157, which
are not directly related to Shangri-la's principal business — operation of hotels and restaurants.
As to payment of wages, respondent doctor is the one who underwrites the following: salaries, SSS contribu-
tions and other benefits of the staff; 13 group life, group personal accident insurance and life/death insurance 14 for
the staff with minimum benefit payable at 12 times the employee's last drawn salary, as well as value added taxes
and withholding taxes, sourced from her P60,000.00 monthly retainer fee and 70% share of the service charges from
Shangri-la's guests who avail of the clinic services. It is unlikely that respondent doctor would report petitioners as
workers, pay their SSS premium as well as their wages if they were not indeed her employees.
With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a document,
"Clinic Policies and Employee Manual" 16 claimed to have been prepared by respondent doctor exists, to which
petitioners gave their conformity 17 and in which they acknowledged their co-terminus employment status. It is thus
presumed that said document, and not the employee manual being followed by Shangri-la's regular workers, governs
how they perform their respective tasks and responsibilities.
CONCLUSION:
Contrary to petitioners' contention, the various office directives issued by Shangri-la's officers do not imply that
it is Shangri-la's management and not respondent doctor who exercises control over them or that Shangri-la has con-
trol over how the doctor and the nurses perform their work. The letter 18 addressed to respondent doctor dated Feb-
ruary 7, 2003 from a certain Tata L. Reyes giving instructions regarding the replenishment of emergency kits is, at
most, administrative in nature, related as it is to safety matters; while the letter 19 dated May 17, 2004 from Shangri-
la's Assistant Financial Controller, Lotlot Dagat, forbidding the clinic from receiving cash payments from the
resort's guests is a matter of financial policy in order to ensure proper sharing of the proceeds, considering that
Shangri-la and respondent doctor share in the guests' payments for medical services rendered. In fine, as Shangri-la
does not control how the work should be performed by petitioners, it is not petitioners’ employer.
GREGORIO V. TONGKO, petitioner,

vs.
THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS,
respondents.
G.R. No. 167622. June 29, 2010
FACTS:
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance
business. Renato A. Vergel De Dios was, during the period material, its President and Chief Executive Officer.
Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by virtue of a Career Agent's
Agreement (Agreement) he executed with Manulife.
In the Agreement, it is provided that:

It is understood and agreed that the Agent is an independent contractor and nothing contained herein
shall be construed or interpreted as creating an employer-employee relationship between the Company
and the Agent.
The Company may terminate this Agreement for any breach or violation of any of the provisions
hereof by the Agent by giving written notice to the Agent within fifteen (15) days from the time of the
discovery of the breach. No waiver, extinguishment, abandonment, withdrawal or cancellation of the
right to terminate this Agreement by the Company shall be construed for any previous failure to exercise
its right under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giv-
ing to the other party fifteen (15) days notice in writing.
In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became
a Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting of commis-
sions, persistency income, and management overrides. The problem started sometime in 2001, when Manulife insti-
tuted manpower development programs in the regional sales management level. Relative thereto, De Dios addressed
a letter dated November 6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers Meeting.
Stating that Tongko’s Region was the lowest performer (on a per Manager basis) in terms of recruiting in 2000 and,
as of today, continues to remain one of the laggards in this area. Other issues were:"Some Managers are unhappy
with their earnings and would want to revert to the position of agents." And "Sales Managers are doing what the
company asks them to do but, in the process, they earn less." Tongko was then terminated.
Therefrom, Tongko filed a Complaint dated November 25, 2002 with the NLRC against Manulife for illegal
dismissalIn the Complaint. In a Decision dated April 15, 2004, Labor Arbiter dismissed the complaint for lack of an
employer-employee relationship.
The NLRC's First Division, while finding an employer-employee relationship between Manulife and Tongko
applying the four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an appeal with the CA.
Thereafter, the CA issued the assailed Decision dated March 29, 2005, finding the absence of an employer-employee
relationship between the parties and deeming the NLRC with no jurisdiction over the case. Hence, Tongko filed this
petition.
ISSUE:
Wehther or not Tongko was an employee of Manulife and that he was illegally dismissed.
RULING:
Yes. In the instant case, Manulife had the power of control over Tongko that would make him its em-
ployee.Several factors contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko and Manulife, it is provided that:
The Agent hereby agrees to comply with all regulations and requirements of the Company as herein
provided as well as maintain a standard of knowledge and competency in the sale of the Company's
products which satisfies those set by the Company and sufficiently meets the volume of new business
required of Production Club membership.Under this provision, an agent of Manulife must comply with
three (3) requirements: (1) compliance with the regulations and requirements of the company; (2) main-
tenance of a level of knowledge of the company's products that is satisfactory to the company; and (3)
compliance with a quota of new businesses.
Among the company regulations of Manulife are the different codes of. The fact that Tongko was obliged to
obey and comply with the codes of conduct was not disowned by respondents.
Thus, with the company regulations and requirements alone, the fact that Tongko was an employee of Manulife
may already be established. Certainly, these requirements controlled the means and methods by which Tongko was
to achieve the company's goals.
More importantly, Manulife's evidence establishes the fact that Tongko was tasked to perform administrative
duties that establishes his employment with Manulife.
Additionally, it must be pointed out that the fact that Tongko was tasked with recruiting a certain number of
agents, in addition to his other administrative functions, leads to no other conclusion that he was an employee of
Manulife.
Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of proving the
validity of the termination of employment rests on the employer. Failure to discharge this evidential burden would
necessarily mean that the dismissal was not justified, and, therefore, illegal.
The Labor Code provides that an employer may terminate the services of an employee for just cause and this
must be supported by substantial evidence. The settled rule in administrative and quasi-judicial proceedings is that
proof beyond reasonable doubt is not required in determining the legality of an employer's dismissal of an employee,
and not even a preponderance of evidence is necessary as substantial evidence is considered sufficient. Substantial
evidence is more than a mere scintilla of evidence or relevant evidence as a reasonable mind might accept as ade-
quate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.
Here, Manulife failed to overcome such burden of proof. It must be reiterated that Manulife even failed to iden-
tify the specific acts by which Tongko's employment was terminated much less support the same with substantial
evidence. To repeat, mere conjectures cannot work to deprive employees of their means of livelihood. Thus, it must
be concluded that Tongko was illegally dismissed.
Moreover, as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko not being its em-
ployee is not entitled to such notices. Since we have ruled that Tongko is its employee, however, Manulife clearly
failed to afford Tongko said notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.
SEMBLANTE et al. vs. CA, et al.

G.R. No. 196426, August 15, 2011
Facts:
Petitioners Semblante and Pilar assert that they were hired by respondents-spouses Loot, the owners of Gallera
de Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of the cockpit.They work every
Tuesday, Wednesday, Saturday, and Sunday every week, excluding monthly derbies and cockfights held on special
holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours of the morning
depending on the needs of the cockpit. Petitioners had both been issued employees' identification cards that they
wear every time they report for duty.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon the instructions of res-
pondents, and were informed of the termination of their services effective that date. This prompted petitioners to file
a complaint for illegal dismissal against respondents.
Respondents denied that petitioners were their employees and alleged that they were associates of respondents'
independent contractor, Tomas Vega and have no regular working time or day. They 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 neces-
sary and indispensable to the usual trade or business of respondents for a number of years. The Labor Arbiter also
ruled that petitioners were illegally dismissed, and so ordered respondents to pay petitioners their back wages and
separation pay.
NLRCheld in its Resolution that there was no employer-employee relationship between petitioners and respon-
dents, 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 CA upheld the NLRC decision.
Issue: Whether or not there exists an employer/employee relationship between Semblante, et al. and the spouses
LOOT.
Ruling: Petition denied.
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 per-
form work. Petitioners only needed their unique skills and talents to perform their job as masiador and sentenciador.
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 employee's conduct, which is the most important element.
As found by both the NLRC and the CA, respondents had no part in petitioners' selection and management; pe-
titioners' compensation was paid out of the arriba (which is a percentage deducted from the total bets), not by peti-
tioners; and petitioners performed their functions asmasiador and sentenciador free from the direction and control of
respondents.
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.
JOSE MEL BERNARTE, petitioner, vs. PHILIPPINE BASKETBALL ASSOCIATION (PBA), JOSE EM-
MANUEL M. EALA, and PERRY MARTINEZ,respondents.
G.R. No. 192804. September 14, 2011
FACTS:
Complainants were invited to join the PBA as referees and were made to sign contracts on a year-to-year basis
but things changed regarding their terms of employment when Commissioner Ealatook over.
On January 15, 2004, Bernarte, a Referee of the Year awardee in 2003, received a letter stating that his contract
would no longer be renewed due to his unsatisfactory performance on and off the court.This led Bernarte to believe
that this as due to hid refusal to fix a game upon order of Ernie De Leon.
On the other hand, Guevarrawho has regularly signed a yearly contract was issued a memorandum expressing
dissatisfaction over his questioning on the assignment of referees officiating out-of-town games. And on February
2004, he was no longer made to sign a contract.
Petitioner’s Contentions:
Petitioner asserts that he is an employee since PBA exercise control over the performance of his work. He cites
the following stipulations in the retainer contract which evidence control:
(1) respondents classify or rate a referee;
(2) respondents require referees to attend all basketball games organized or authorized by the PBA, at least
one hour before the start of the first game of each day;
(3) respondents assign petitioner to officiate ballgames, or to act as alternate referee or substitute; (4) refe-
ree agrees to observe and comply with all the requirements of the PBA governing the conduct of the refe-
rees whether on or off the court;
(5) referee agrees (a) to keep himself in good physical, mental, and emotional condition during the life of
the contract; (b) to give always his best effort and service, and loyalty to the PBA, and not to officiate as re-
feree in any basketball game outside of the PBA, without written prior consent of the Commissioner; (c)
always to conduct himself on and off the court according to the highest standards of honesty or morality;
and
(6) imposition of various sanctions for violation of the terms and conditions of the contract.
Respondent’s Contentions:
Respondents contend that the petitioners were not illegally dismissed since the petitioners were not employees
of PBA but were simply made to sign a contract of retainer wherein upon the lapse of the time stated in the contract,
PBA had the prerogative of whether or not to renew their contracts.
PBA admits that they repeatedly engaged their services where PBA would pay a retainer fee and that they can
terminate the retainer contract or petitioner’s violation of its terms and conditions. However, they argue that the
element of control is lacking in this case making the petitioners independent contractors and not employees.
Ruling of Lower Courts:

Labor Arbiter declared the petitioners as employees whose dismissal was illegal. The LA ordered the reinstate-
ment of petitioner, payment of backwages, moral and exemplary damages and attorney’s fees.
NLRC affirmed the LA’s judgment but when respondents filed a petition for certiorari wth the CA, the court
annulled LA’s and NLRC’s decision.
The CA found petitioner an independent contractor since respondents did not exercise any form of control over
the means and methods by which petitioner performed is work as a basketball referee. They disagreed with LA’s
finding that the contract of retainer show that PBA had control over Bernarte and Guevarra. Moreover, the CA disa-
grees with LA and NLRC when they concluded that repeated hiring made them regular employees by operation of
law.
ISSUES:
Whether or not the petitioner is an employee of respondents, which in turn determines whether petitioner was il-
legally dismissed.
RULING:
NO. Petitioner is not an employee of PBA, but an independent contractor.
Rule:
Case law has consistently used the four-fold test to determine the existence of employee-employer relationship:
(a) selection and engagement of the employee;(b) the payment of wages;(c) the power of dismissal; (d) the employ-
er’s power to control the employee on the means and methods by which the work is accomplished.
SC found the stipulations cited by petitioner as to hardly demonstrate control over the
means and methods by which petitioner performs his work as a referee officiating a PBA basketball game. They
merely serve as rules of conduct or guidelines to maintain the integrity of the professional basketball league.
In Sonza vs ABSCBN, the Court held that not all rules imposed by the hiring party on the hired party indicate
that the latter is an employee of the former. They held further that not every form of control that a party reserves to
himself over the conduct of the other party in relation to the services being rendered ay be accorded the effect of
establishing an employer-employee relationship.
Once the petitioners are in the playing court, the referees are the only, absolute, and final authority therein. The
very nature of their job calls for freedom of control by respondents.
The following circumstances indicate that petitioner is an independent contractor: (1) the referees are required
to report for work only when PBA games are scheduled, which is three times a week spread over an average of only
105 playing days a year, and they officiate games at an average of two hours per game as compared to regular em-
ployees who work for eight hour a day for five days a week; and (2) the only deductions from the fees received by
the referees are withholding taxes as compared to regular employees whose salaries are deducted for contributions to
SSS, Philhealth or Pag-Ibig..
Foreign case law have held that a soccer referee and an umpire are independent contractors since the rules im-
posed upon them do not control the means and method by which they work.
In addition, the fact that PBA repeatedly hired them does not prove that they are employees of the association.
For a hired party to be considered an employee, the hiring party must have control over the means and methods by
which the hired party is to perform his work, which is absent in this case. The repeated hiringsimply signifies re-
newal of the contract between PBA ad Bernante.
APPLICATION:
For a hired party to be considered an employee, the hiring party must have control over the means and methods
by which the hired party is to perform his work, which is absent in this case. The repeated hiring simply signifies
renewal of the contract between PBA and Bernante and if PBA decides to discontinue petitioner's services at the end
of the term fixed in the contract, whether for unsatisfactory services, or violation of the terms and conditions of the
contract, or for whatever other reason, the same merely results in the non-renewal of the contract, as in the present
case. The non-renewal of the contract between the parties does not constitute illegal dismissal of petitioner by res-
pondents.
CONCLUSION:
Petitioner is not an employee of PBA due to the lack of the element of control and therefore, the non-renewal of
the contract did not constitute illegal dismissal.
CESAR C. LIRIO, petitioner vs. WILMER D. GENOVIA, respondent

G.R. No. 169757. November 23, 2011
FACTS:
Respondent Genovia was hired as a studio manager by petitioner Lirio, owner of Celkor Ad Sonicmix Record-
ing Studio (Celkor); He received a monthly salary of P7,000.00 and was entitled to an additional commission of
P100.00 per hour as recording technician whenever a client uses the studio. A few days after he started working,
petitioner approached him about a project to produce an album for his 15-year-old daughter, Celine Mei Lirio, a
former talent of ABS-CBN Star Records. Petitioner asked respondent to compose and arrange songs for Celine and
promised that he (Lirio) would draft a contract to assure respondent of his compensation. After the album was rec-
orded and released, respondent reminded petitioner about the contract on his compensation as composer and arran-
ger of the album. Petitioner told respondent that since he was practically a nobody and had proven nothing yet in the
music industry, respondent did not deserve such a high compensation – petitioner informed respondent that he was
entitled only to 20% net profit share, and not the gross sales of the album, and that the salaries he received and
would continue to receive as studio manager of Celkor would be deducted from the said 20% net profit share. Res-
pondent objected and insisted that he be properly compensated. On March 14, 2002, petitioner verbally terminated
respondent’s services, and was instructed not to report for work. On July 9, 2002, respondent filed a complaint
against petitioner for illegal dismissal, non-payment of commission and award of moral and exemplary damages.
On October 31, 2003, Labor Arbiter Ronaldo O. Hernandez rendered a decision in favor of Respondent Geno-
via. On appeal to the National Labor Relations Commission (NLRC), said decision was REVERSED and SET
ASIDE. Aggrieved, Respondent filed a petition for certiorari before the Court of Appeals – rendered a decision re-
versing and setting aside the resolution of the NLRC and reinstating the decision of the Labor Arbiter, with modifi-
cations
a) Petitioner’s Arguments (Cesar C. Lirio – Lost)

In defense, petitioner states that respondent was not hired as a studio manager, composer, technician or as an
employee in any other capacity of Celkor. Respondent could not have been hired as a studio manager, since the re-
cording studio has no other personnel except petitioner. Petitioner asserts that he entered into a verbal agreement
with respondent to co-produce the album on certain conditions, among others: (1) petitioner shall have 60% of net
profit, while respondent and Celine Mei Lirio were each entitled to 20% of the net profit; (2) respondent shall be
entitled to draw advances of P7,000 a month, which shall be deductible from his share of the net profits and only
until such time that the album has been produced. Petitioner further asserts that his relationship with respondent is
one of informal partnership under Article 1767 of the New Civil Code and that no employer-employee relationship
existed between them. Petitioner also contends that it was wrong for Respondent to have appealed the decision of
the NLRC to the CA via a petition for certiorari under Rule 65.
b) Respondent’s Arguments (Wilmer D. Genovia – Won)

Respondent asserts that he was illegally dismissed as he was terminated without any valid grounds, and no hear-
ing was conducted before he was terminated, in violation of his Constitutional right of due process. Having worked
for more than six (6) months, he was already a regular employee. Although he was a so called “studio manager,” he
had no managerial powers, but was merely an ordinary employee.
ISSUE/s:
I. Whether or not the Court of Appeals erred in reversing and setting aside the decision of the NLRC, and reinstating
the decision of the Labor Arbiter with modification.
II. Whether or not there existed an employer-employee relationship between Petitioner and Respondent.
RULING:
The petition is DENIED for lack of merit – the decision of the Court of Appeals is AFFIRMED.
Rule:
I. In petitions for review, only errors of law are generally reviewed by the Supreme Court. This rule, however is not
ironclad. Where the issue is shrouded by a conflict of factual perceptions by the lower court or the lower administra-
tive body, in this case, the NLRC, the Court is restrained to review the factual finding of the Court of Appeals
II. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the
employee’s conduct. The most important element is the employer’s control over the employee’s conduct, not only as
to the result of the work to be done, but also as to the means and methods to accomplish it. It is settled that no par-
ticular 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 termination cases, the burden is upon the employer to show substantial evidence that the termination was for law-
ful cause and validly made. For an employee’s dismissal to be valid, (a) the dismissal must be for a valid cause, and
(b) the employee must be afforded due process – which Petitioner failed to comply with these legal requirements.
APPLICATION:
In this case, evidence showed that petitioner hired respondent as an employee and was paid a monthly wage of
P7,000. Petitioner wielded the power to dismiss as respondent stated that he was verbally dismissed by petitioner.
The power of control refers merely to the existence of power. It is not essential for the employer to actually super-
vise the performance of duties of the employee, as it is sufficient that the former has a right to wield the power.
CONCLUSION:
Thus, the Court of Appeals correctly affirmed the Labor Arbiter’s finding that respondent was illegally dis-
missed, and entitled to payment of backwages, and separation pay in lieu of reinstatement.
Jao vs. BCC Products Sales Inc.

G.R. No. 163700, April 18, 2012
FACTS:
The main issue in this case is whether or not there existan employer-employee relationship. The issue arose that
on October 19, 1995, the security guards of BCC barred petitioner Jao from entering the premises of BCC upon in-
struction of Ty. that his attempts to report to work in November and December 12, 1995 were frustrated because he
continued to be barred from entering the premises of BCC; and that he filed a complaint dated December 28, 1995
for illegal dismissal, reinstatement with full backwages, non-payment of wages, damages and attorney's fees.
Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President, respondent Terrance Ty
(Ty), employed him as comptroller starting from September 1995 with a monthly salary of P20,000.00 to handle the
financial aspect of BCC's business;
b) Respondent’s Argument’s
Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation
(SFC), the major creditor and supplier of BCC; and that SFC had posted him as its comptroller in BCC to oversee
BCC's finances and business operations and to look after SFC's interests or investments in BCC.
Although Labor Arbiter Felipe Pati ruled in favor of petitioner on June 24, 1996, the NLRC vacated the ruling
and remanded the case for further proceedings. Thereafter, Labor Arbiter Jovencio Ll. Mayor rendered a new
decision on September 20, 2001, dismissing petitioner's complaint for want of an employer-employee relationship
between the parties. On July 31, 2002, the NLRC rendered a decision reversing Labor Arbiter Mayor's decision, and
declaring that petitioner had been illegally dismissed. It ordered the payment of unpaid salaries, backwages and 13th
month pay, separation pay and attorney's fees.
On February 27, 2004, the CA promulgated its assailed decision holdingthat no employer-employee relationship
existed between petitioner BCC and the private respondent. Hence, the instant petition.
ISSUE:
Whether or not an employer-employee relationship existed between petitioner and BCC which will automatically
warrant a finding of illegal dismissal
RULING:
There was no employer-employee relationship
Rule:
The petition lacks merit.
In determining the presence or absence of an employer-employee relationship, the Court has consistently looked
for the following incidents, to wit: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control the employee on the means and methods
by which the work is accomplished. The last element, the so-called control test, is the most important element.
Hereunder are some of the circumstances and incidents occurring while petitioner was supposedly employed by
BCC that debunked his claim against respondents. It can be deduced that respondents did not exercise the power of
control over him, because he acted for the benefit and in the interest of SFC more than of BCC. In addition,
petitioner presented no document setting forth the terms of his employment by BCC. The failure to present such
agreement on terms of employment may be understandable and expected if he was a common or ordinary laborer
who would not jeopardize his employment by demanding such document from the employer, but may not square
well with his actual status as a highly educated professional.
Petitioner's admission that he did not receive his salary for the three months of his employment by BCC, as his
complaint for illegal dismissal and non-payment of wages and the criminal case for estafa he later filed against the
respondents for non-payment of wages indicated, further raised grave doubts about his assertion of employment by
BCC. If the assertion was true, we are puzzled how he could have remained in BCC's employ in that period of time
despite not being paid the first salary of P20,000.00/month. Moreover, his name did not appear in the payroll of
BCC despite him having approved the payroll as comptroller.
With all the grave doubts thus raised against petitioner's claim, we need not dwell at length on the other proofs
he presented, like the affidavits of some of the employees of BCC, the ID, and the signed checks, bills and receipts.
Suffice it to be stated that such other proofs were easily explainable by respondents and by the aforestated
circumstances showing him to be the employee of SFC, not of BCC.
APPLICATION:
In order to determine if an employer-employee exist, you have to consider the four (4) standards in determining
the existence of an employer-employee relationship, namely, (a) the manner of selection and engagement of the put-
ative 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." Of these powers the power of control over the
employee's conduct is generally regarded as determinative of the existence of the relationship.
CONCLUSION:
Thus, Jao was not an employee in BCC company First, there is no proof that the services of the private respon-
dent were engaged to perform the duties of a comptroller in the petitioner company. There is no proof that the pri-
vate respondent has undergone a selection procedure as a standard requisite for employment, especially with such a
delicate position in the company. Neither is there any proof of his appointment nor is there any showing that the
parties entered into an employment contract, stipulating thereof that he will receive P20,000.00/month salary as
comptroller, before the private respondent commenced with his work as such. Second, as clearly established on
record, the private respondent was not included in the petitioner company's payroll during the time of his alleged
employment with the former.
LEGEND HOTEL, petitioner vs. REALUYO defendant.

G.R. No. 153511. July 18, 2012.
FACTS:
This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel. On Au-
gust 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor practice,
constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays, separation pay,
service incentive leave pay, and 13th month pay.
a) Respondent's Arguments
Respondent averred that he had worked as a pianist at the Legend Hotel's Tanglaw Restaurant from September
1992 with an initial rate of P400.00/night that was given to him after each night's performance; that his rate had in-
creased to P750.00/night; and that during his employment, he could not choose the time of performance, which had
been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that the Legend Hotel's restaurant man-
ager had required him to conform with the venue's motif; that he had been subjected to the rules on employees' re-
presentation checks and chits, a privilege granted to other employees; that on July 9, 1999, the management had
notified him that as a cost-cutting measure his services as a pianist would no longer be required effective July 30,
1999; that he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the filing of his
complaint; and that the loss of his employment made him bring his complaint.
b) Petitioner's Arguments
In its defense, petitioner denied the existence of an employer-employee relationship with respondent, insisting
that he had been only a talent engaged to provide live music at Legend Hotel's Madison Coffee Shop for three
hours/day on two days each week; and stated that the economic crisis that had hit the country constrained manage-
ment to dispense with his services.
LABOR ARBITER:
On December 29, 1999, dismissed the complaint for lack of merit upon finding that the parties had no employ-
er-employee relationship. CA, On February 11, 2002, set aside the decision of the NLRC.
ISSUE:
Whether there exists an employer-employee relationship.
RULING:
We DENY the petition for review on certiorari, and AFFIRM the decision of the Court of Appeals promulgat-
ed on February 11, 2002.
Employer-employee relationship existed between the parties. The issue of whether or not an employer-
employee relationship existed between petitioner and respondent is essentially a question of fact. The factors that
determine the issue include who has the power to select the employee, who pays the employee’s wages, who has
the power to dismiss the employee, and who exercises control of the methods and results by which the work of
the employee is accomplished. A finding that the relationship exists must nonetheless rest on substantial evidence,
which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion.
First of all, petitioner actually wielded the power of selection at the time it entered into the service contract
dated September 1, 1992 with respondent. This is true, notwithstanding petitioner’s insistence that respondent had
only offered his services to provide live music at petitioner’s Tanglaw Restaurant, and despite petitioner’s position
that what had really transpired was a negotiation of his rate and time of availability. The power of selection was
firmly evidenced by, among others, the express written recommendation dated January 12, 1998 by Christine Velaz-
co, petitioner’s restaurant manager, for the increase of his remuneration.
Secondly, There is no denying that the remuneration denominated as talent fees was fixed on the basis of his
talent and skill and the quality of the music he played during the hours of performance each night, taking into ac-
count the prevailing rate for similar talents in the entertainment industry. Respondent’s remuneration, albeit de-
nominated as talent fees, was still considered as included in the term wage in the sense and context of the La-
bor Code, regardless of how petitioner chose to designate the remuneration.
Thirdly, the power of the employer to control the work of the employee is considered the most significant
determinant of the existence of an employer-employee relationship. This is the so-called control test, and is
premised on whether the person for whom the services are performed reserves the right to control both the end
achieved and the manner and means used to achieve that end.
A review of the records, however, shows that respondent performed his work as a Pianist under petitioner’s su-
pervision and control. Specifically, petitioner’s control of both the end achieved and the manner and means used to
achieve that end was demonstrated by the following, to wit:
a) He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm,
three to six times a week;
b) He could not choose the place of his performance;
c) The restaurant’s manager required him at certain times to perform only Tagalog songs or music, or to wear
barong Tagalog to conform to the Filipiniana motif; and
d) He was subjected to the rules on employees’ representation check and chits, a privilege granted to other em-
ployees.
WHEREFORE, we DENY the petition for review on certiorari, and AFFIRM the decision of the Court of Ap-
peals promulgated on February 11, 2002, subject to the modification that should reinstatement be no longer
feasible, petitioner shall pay to respondent separation pay of one month for every year of service computed
from September 1992 until the finality of this decision, and full backwages from the time his compensation
was withheld until the finality of this decision.
The New Philippine Skylanders, Inc., petitioner vs. Dakila, respondent

G.R. No. 199547, Sept. 24, 2012
Facts:
November 1993 the Philippine Skylanders Employees Association (PSEA), a local labor union affiliated with
the Philippine Association of Free Labor Unions (PAFLU) September (PAFLU), won in the certification election
conducted among the rank and file employees of Philippine Skylanders, Inc. (PSI). Its rival union, Philippine Sky-
landers Employees Association-WATU (PSEA-WATU) immediately protested the result of the election before the
Secretary of Labor.
In settlement of the controversy, PSEA sent PAFLU a notice of disaffiliation citing as reason PAFLU’s sup-
posed deliberate and habitual dereliction of duty toward its members. Attached to the notice was a copy of the reso-
lution adopted and signed by the officers and members of PSEA authorizing their local union to disaffiliate from its
mother federation.
PSEA subsequently affiliated itself with the National Congress of Workers (NCW), changed its name to Philip-
pine Skylanders Employees Association -National Congress of Workers (PSEA-NCW), and to maintain continuity
within the organization, allowed the former officers of PSEA-PAFLU to continue occupying their positions as
elected officers in the newly-forged PSEA-NCW.
On 17 March, 1994, PSEA-NCW entered into a collective bargaining agreement with PSI which was imme-
diately registered with the Department of Labor and Employment.
PAFLU requested for the accounting. PSI through its personnel manager Francisco Dakila denied the request.
PAFLU through SerafinAyroso filed a complaint for unfair labor practice against PSI, its president Mariles
Romulo and personnel manager Francisco Dakila. PAFLU alleged that aside from PSI’s refusal to bargain collec-
tively with its workers, the company through its president and personnel manager, was also liable for interfering
with its employees’ union activities
Ayroso filed another complaint in behalf of PAFLU for unfair labor practice against Francisco Dakila. Through
Ayroso PAFLU claimed that Dakila was present in PSEA’s organizational meeting thereby confirming his illicit
participation in union activities. Ayroso added that the members of the local union had unwittingly fallen into the
manipulative machinations of PSI and were lured into endorsing a collective bargaining agreement which was de-
trimental to their interests.
PAFLU amended its complaint by including the elected officers of PSEA-PAFLU as additional party respon-
dents. PAFLU averred that the local officers of PSEA-PAFLU, namely MacarioCabanias, PepitoRodillas, Sharon
Castillo, DaniloCarbonel, Manuel Eda, Rolando Felix, Jocelyn Fronda, Ricardo Lumba, Joseph Mirasol, NerisaMor-
tel, TeofiloQuirong, Leonardo Reyes, Manuel Cadiente, and HerminiaRiosa, were equally guilty of unfair labor
practice since they brazenly allowed themselves to be manipulated and influenced by petitioner Francisco Dakila.
Dakila moved for the dismissal of the complaint on the ground that the issue of disaffiliation was an inter-union
conflict which lay beyond the jurisdiction of the Labor Arbiter. PSEA was no longer affiliated with PAFLU, Ayroso
or PAFLU for that matter had no personality to file the instant complaint.
Labor Arbiter declared PSEA’s disaffiliation from PAFLU invalid and held PSI, PSEA-PAFLU and their re-
spective officers guilty of unfair labor practice.
As PSEA-NCW’s personality was not accorded recognition, its collective bargaining agreement with PSI was
struck down for being invalid.
PSI, PSEA and their respective officers appealed to the National Labor Relations Commission (NLRC). But the
NLRC upheld the Decision ofthe Labor Arbiter.
Issue:
Whether or Not, PAFLU, has the right to self-organize
Ruling:
Local unions have a right to separate from their mother federation on the ground that as separate and voluntary
associations, local unions do not owe their creation and existence to the national federation to which they are affi-
liated but, instead, to the will of their members. The sole essence of affiliation is to increase, by collective action, the
common bargaining power of local unions for the effective enhancement and protection of their interests. Admitted-
ly, there are times when without succor and support local unions may find it hard, unaided by other support groups,
to secure justice for them. Yet the local unions remain the basic units of association, free to serve their own interests
subject to the restraints imposed by the constitution and by-laws of the national federation, and free also to renounce
the affiliation upon the terms laid down in the agreement which brought such affiliation into existence.
There is nothing shown in the records nor is it claimed by PAFLU that the local union was expressly forbidden
to disaffiliate from the federation nor were there any conditions imposed for a valid breakaway. As such, the pen-
dency of an election protest involving both the mother federation and the local union did not constitute a bar to a
valid disaffiliation. Neither was it disputed by PAFLU that 111 signatories out of the 120 members of the local un-
ion, or an equivalent of 92.5% of the total union membership supported the claim of disaffiliation and had in fact
disauthorized PAFLU from instituting any complaint in their behalf.
It was entirely reasonable then for PSI to enter into a collective bargaining agreement with PSEA-NCW. As
PSEA had validly severed itself from PAFLU, there would be no restrictions which could validly hinder it from sub-
sequently affiliating with NCW and entering into a collective bargaining agreement in behalf of its members.
The mere act of disaffiliation did not divest PSEA of its own personality; neither did it give PAFLU the license
to act independently of the local union.
Tesoro, et al., petitioner vs. Manila Retreaders, Inc., respondent.

G.R. No. 171482. March 12, 2014.
FACTS:
Peitioners used to work as salesmen for respondents Metro Manila Retreaders, Inc. (Bandag). Petitioners quit
their jobs as salesmen and entered into Service Franchise Agreements (SFA’s) with Bandagfor the operation of their
respective franchises. Under the SFA’s, Bandag would provide funding support to the petitioners’ subject to regular
or periodic liquidation of their revolving funds. The expenses out of these funds would be deducted from petitioners’
sales to determine their incomes. After a length of time, the petitioners began to default on their obligations to sub-
mit periodic liquidations of their operational expenses in relation to the revolving funds. Consequently, Bandag ter-
minated their respective SFA.Aggrieved, petitioners filed a complaint for constructive dismissal, non-payment of
wages, incentive pay, 13th month pay and damages against Bandag with the National Labor Relations Commission
(NLRC).
a) Petitioners’ Arguments (Tesoro, et al. – Lost)

Notwithstanding the execution of the SFA’s, they remained to be employees of Bandag. The SFA’s are being
circumvention of their status as regular employees.
b) Respondent’s Arguments (Metro Manila Retreaders, Inc. – Win)

Petitioners freely resigned from their employment and decided to avail themselves of the opportunity to be in-
dependent entrepreneurs under the franchise scheme. Thus, no employer-employee relationship existed.
ISSUE:
Whether or not the employer-employee relationship that existed between Tesoro, et al. and Bandagcontinued
during the franchise operation?
RULING:
No, there is no more employer-employee relationship that existed between Tesoro, et al. and Bandagduring the
franchise operation.
Rule:
The tests for determining 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 "control test," the most important element, the employer's power to control the employee with respect to
the means and methods by which the work is to be accomplished.
Application:
In this case, the franchisors may impose guidelines that somehow restrict the petitioners' conduct which do not
necessarily indicate "control." The important factor to consider is still the element of control over how the work it-
self is done, not just its end result. Petitioners cannot use the revolving funds feature of the SFAs as evidence of thei-
remployer-employee relationship with Bandag. These funds do not represent wages. Theyare more in the nature of
capital advances for operations that Bandag conceptualized toattract prospective franchisees. Petitioners' incomes
depended on the products they make,controlled by their individual abilities to increase sales and reduce operating
costs.
Conclusion:
The petitioners ceased to become employees of the respondent during the franchise operation. Thus, they are
not entitled to wages, incentive pay, and 13th month pay.
ROYALE HOMES MARKETING CORPORATION, petitioner, vs. FIDEL P. ALCANTARA [deceased],

substituted by his heirs, respondent.
G.R. No. 195190. July 28, 2014.
FACTS:
In 1994, Royale Homes, a corporation engaged in marketing real estates, appointed Alcantara as its Marketing
Director for a fixed period of one year. His work consisted mainly of marketing Royale Homes' real estate invento-
ries on an exclusive basis. Royale Homes reappointed him for several consecutive years, the last of which covered
the period January 1 to December 31, 2003 where he held the position of Division 5 Vice-President-Sales.
On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal against Royale Homes, alleging that
he is an employee of Royale Homes.
a) Petitioner’s Arguments (Royale Homes – Win)

Royale Homes contends that its contract with Alcantara is clear and unambiguous — it engaged his services as
an independent contractor. This can be readily seen from the contract stating that no employer-employee relation-
ship exists between the parties; that Alcantara was free to solicit sales at any time and by any manner he may deem
appropriate; that he may recruit sales personnel to assist him in marketing Royale Homes' inventories; and, that his
remunerations are dependent on his sales performance.
Royale Homes maintains that it is expected to exercise some degree of control over its independent contractors,
but that does not automatically result in the existence of employer-employee relationship. For control to be consi-
dered as a proof tending to establish employer-employee relationship, the same must pertain to the means and me-
thod of performing the work; not on the relationship of the independent contractors among themselves or their per-
sons or their source of living.
Royale Homes further asserts that it neither hired nor wielded the power to dismiss Alcantara.
b) Private Respondent’s Argument’s (Fidel Alcantara - Lost)

Alcantara alleged that he is a regular employee of Royale Homes since he is performing tasks that are necessary
and desirable to its business; that in 2003 the company gave him P1.2 million for the services he rendered to it; that
in the first week of November 2003, however, the executive officers of Royale Homes told him that they were won-
dering why he still had the gall to come to office and sit at his table; and that the acts of the executive officers of
Royale Homes amounted to his dismissal from work without any valid or just cause and in gross disregard of the
proper procedure for dismissing employees.
ISSUES:
Whether Alcantara was an independent contractor or an employee of Royale Homes.
RULING:
Alcantara was an independent contractor, not an employee, of Royale Homes.
Rule:
While the existence of employer-employee relationship is a matter of law, the characterization made by the par-
ties in their contract as to the nature of their juridical relationship cannot be simply ignored, particularly in cases
where the parties' written contract unequivocally states their intention at the time they entered into it.
In determining the existence of an employer-employee relationship, the Court has generally relied on the four-
fold test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dis-
missal; 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 employ-
er- employee relationship is the "right of control test". “It is deemed to be such an important factor that the other
requisites may even be disregarded." This holds true where the issues to be resolved is whether a person who per-
forms work for another is the latter's employee or is an independent contractor. For where 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, employer-employee relationship is deemed to exist.
However, not every form of control is indicative of employer-employee relationship. A person who performs
work for another and is subjected to its rules, regulations, and code of ethics does not necessarily become an em-
ployee. As long as the level of control does not interfere with the means and methods of accomplishing the assigned
tasks, the rules imposed by the hiring party on the hired party do not amount to the labor law concept of control that
is indicative of employer-employee relationship.
Application:
In this case, the contract, duly signed and not disputed by the parties, conspicuously provides that "no employ-
er-employee relationship exists between" Royale Homes and Alcantara, as well as his sales agents. It is clear that
they did not want to be bound by employer-employee relationship at the time of the signing of the contract.
Moreover, the Court agreed with Royale Homes that the rules, regulations, code of ethics, and periodic evalua-
tion alluded to by Alcantara do not involve control over the means and methods by which he was to perform his job.
Understandably, Royale Homes has to fix the price, impose requirements on prospective buyers, and lay down the
terms and conditions of the sale, including the mode of payment, which the independent contractors must follow. It
is also necessary for Royale Homes to allocate its inventories among its independent contractors, determine who has
priority in selling the same, grant commission or allowance based on predetermined criteria, and regularly monitor
the result of their marketing and sales efforts. But to the mind of the Court, these do not pertain to the means and
methods of how Alcantara was to perform and accomplish his task of soliciting sales. They do not dictate upon him
the details of how he would solicit sales or the manner as to how he would transact business with prospective clients.
In Tongko, this Court held that guidelines or rules and regulations that do not pertain to the means or methods to be
employed in attaining the result are not indicative of control as understood in labor law.
Alcantara had full control over the means and methods of accomplishing his tasks as he can "solicit sales at any
time and by any manner which [he may] deem appropriate and necessary." He performed his tasks on his own ac-
count free from the control and direction of Royale Homes in all matters connected therewith, except as to the re-
sults thereof.
Lastly, the element of payment of wages is also absent in this case.There is no proof that he received fixed
monthly salary. No payslip or payroll was ever presented and there is no proof that Royale Homes deducted from his
supposed salary withholding tax or that it registered him with the Social Security System, Philippine Health Insur-
ance Corporation, or Pag-Ibig Fund.All of these indicate an independent contractual relationship.
Conclusion:
Thus, since the clear intention of the parties on their relationship that no employer-employee relationship should
exist between them was clearly indicated in their contract, Royale Homes having no control over the means and me-
thods over which Alcantara should perform his work, and the element of wages being absent, Alcantara is not an
employee, but only an independent contractor of Royale Homes. Being an independent contractor, as such is within
the jurisdiction of regular courts, the complaint was dismissed.
FUJI TELEVISION NETWORK, INC., petitioner, vs. ARLENE S. ESPIRITU, respondent.

G.R. Nos. 204944-45. December 3, 2014
FACTS:
In 2005, Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network, Inc. ("Fuji") as a news corres-
pondent/producer "tasked to report Philippine news to Fuji through its Manila Bureau field office." Arlene's em-
ployment contract initially provided for a term of one (1) year but was successively renewed on a yearly basis with
salary adjustment upon every renewal.
Sometime in January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her condition. In
turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene "that the company will have a problem re-
newing her contract" since it would be difficult for her to perform her job. She "insisted that she was still fit to work
as certified by her attending physician."
After several verbal and written communications, Arlene and Fuji signed a non-renewal contract on May 5,
2009 where it was stipulated that her contract would no longer be renewed after its expiration on May 31, 2009. The
contract also provided that the parties release each other from liabilities and responsibilities under the employment
contract.In consideration of the non-renewal contract, Arlene "acknowledged receipt of the total amount of
US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-end bonus, mid-year bonus, and
separation pay." However, Arlene affixed her signature on the non-renewal contract with the initials "U.P." for "un-
der protest."
On May 6, 2009, the day after Arlene signed the non-renewal contract, she filed a complaint for illegal dismis-
sal and attorney's fees with the National Capital Region Arbitration Branch of the National Labor Relations Com-
mission. She alleged that she was forced to sign the non-renewal contract when Fuji came to know of her illness and
that Fuji withheld her salaries and other benefits for March and April 2009 when she refused to sign. Arlene claimed
that she was left with no other recourse but to sign the non-renewal contract, and it was only upon signing that she
was given her salaries and bonuses, in addition to separation pay equivalent to four (4) years.
a) Arlene’s Arguments:
She was a regular employee because Fuji had control and supervision over her work. The news events that she
covered were all based on the instructions of Fuji. She maintains that the successive renewal of her employment
contracts for four (4) years indicates that her work was necessary and desirable. In addition, Fuji's payment of sepa-
ration pay equivalent to one (1) month's pay per year of service indicates that she was a regular employee. To further
support her argument that she was not an independent contractor, she states that Fuji owns the laptop computer and
mini-camera that she used for work. On her illness, Arlene points out that it was not a ground for her dismissal be-
cause her attending physician certified that she was fit to work.
Arlene admits that she signed the non-renewal agreement with quitclaim, not because she agreed to its terms,
but because she was not in a position to reject the non-renewal agreement.Further, she badly needed the salary with-
held for her sustenance and medication. She posits that her acceptance of separation pay does not bar filing of a
complaint for illegal dismissal.
b) Fuji’s Arguments:
Arlene was hired as a stringer, and was informed that she would remain one. She was hired as an indepen-
dent contractor. Fuji had no control over her work. The employment contracts were executed and renewed annually
upon Arlene's insistence to which Fuji relented because she had skills that distinguished her from ordinary em-
ployees. Arlene and Fuji dealt on equal terms when they negotiated and entered into the employment con-
tracts. There was no illegal dismissal because she freely agreed not to renew her fixed-term contract as evidenced
by her e-mail correspondences with Yoshiki Aoki. In fact, the signing of the non-renewal contract was not necessary
to terminate her employment since "such employment terminated upon expiration of her contract." Finally, Fuji had
dealt with Arlene in good faith, thus, she should not have been awarded damages.
Fuji do not need a permanent reporter since the news reported by Arlene could easily be secured from other
entities or from the internet. Fuji "never controlled the manner by which she performed her functions." It was Ar-
lene who insisted that Fuji execute yearly fixed-term contracts so that she could negotiate for annual increases in her
pay.
Arlene reported for work for only five (5) days in February 2009, three (3) days in March 2009, and one (1)
day in April 2009. Despite the provision in her employment contract that sick leaves in excess of 30 days shall not
be paid, Fuji paid Arlene her entire salary for the months of March, April, and May; four (4) months of separation
pay; and a bonus for two and a half months for a total of US$18,050.00. Despite having received the amount of
US$18,050.00, Arlene still filed a case for illegal dismissal.
Circumstances would show that Arlene was not illegally dismissed. The decision to not renew her contract
was mutually agreed upon by the parties as indicated in Arlene's e-mail dated March 11, 2009 where she consented
to the non-renewal of her contract but refused to sign anything. Aoki informed Arlene in an e-mail dated March 12,
2009 that she did not need to sign a resignation letter and that Fuji would pay Arlene's salary and bonus until May
2009 as well as separation pay. Arlene sent an e-mail dated March 18, 2009 with her version of the non-renewal
agreement that she agreed to sign this time. This attached version contained a provision that Fuji shall re-hire her if
she was still interested to work for Fuji. For Fuji, Arlene's e-mail showed that she had the power to bargain.
ISSUE:
Whether or notArlene is a regular employee.
RULING:
The petition for review filed by Fuji is dismissed.
Rule:
The test for determining regular employment is whether there is a reasonable connection between the em-
ployee's activities and the usual business of the employer. Article 280 provides that the nature of work must be "ne-
cessary or desirable in the usual business or trade of the employer" as the test for determining regular employment.
Article 280 of the Labor Code provides that:

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 employ-
ment shall be deemed to be regular where the employee has been engaged to perform ac-
tivities which are usually necessary or desirable in the usual business or trade of the em-
ployer, except where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of the engagement
of the employee or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding para-

graph; Provided, That, any employee who has rendered at least one year of service, wheth-
er such service is continuous or broken, shall be considered a regular employee with re-
spect to the activity in which he is employed and his employment shall continue while such
activity exist.
This provision classifies employees into regular, project, seasonal, and casual. It further classifies regular
employees into two kinds: (1) those "engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer"; and (2) casual employees who have "rendered at least one year of service,
whether such service is continuous or broken."
Another classification of employees, i.e., employees with fixed-term contracts, was recognized in Brent
School, Inc. v. Zamora where this court discussed that:
Logically, the decisive determinant in the term employment should not be
the activities that the employee is called upon to perform, but the day cer-
tain agreed upon by the parties for the commencement and termination of
their employment relationship, a day certain being understood to be "that

which must necessarily come, although it may not be known when."
This court further discussed that there are employment contracts where "a fixed term is an essential and
natural appurtenance" such as overseas employment contracts and officers in educational institutions.
Under the four-fold test, the "control test" is the most important. As to how the elements in the four-fold test
are proven, this court has discussed that: there is no hard and fast rule designed to establish the aforesaid elements.
Any competent and relevant evidence to prove the relationship may be admitted. Identification cards, cash vouchers,
social security registration, appointment letters or employment contracts, payrolls, organization charts, and person-
nel lists, serve as evidence of employee status.
Application:
Arlene's contract indicating a fixed term did not automatically mean that she could never be a regular employee.
This is precisely what Article 280 seeks to avoid. The ruling in Brent remains as the exception rather than the gener-
al rule.
Fuji's argument that Arlene was an independent contractor under a fixed-term contract is contradictory. Em-
ployees under fixed-term contracts cannot be independent contractors because in fixed-term contracts, an employer-
employee relationship exists. The test in this kind of contract is not the necessity grid desirability of the employee's
activities, "but the day certain agreed upon by the parties for the commencement and termination of the employment
relationship." For regular employees, the necessity and desirability of their work in the usual course of the employ-
er's business are the determining factors. On the other hand, independent contractors do not have employer-
employee relationships with their principals.
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her professional employment con-
tract. Her contract also indicated that Fuji had control over her work because she was required to work for eight (8)
hours from Monday to Friday, although on flexible time. Sonza was not required to work for eight (8) hours, while
Dumpit-Murillo had to be in ABC to do both on-air and off-air tasks
A news producer "plans and supervises newscast . . . and works with reporters in the field planning and gather-
ing information. . . ." Arlene's tasks included "monitoring and getting news stories, reporting interviewing subjects
in front of a video camera," "the timely submission of news and current events reports pertaining to the Philippines,
and traveling to Fuji's regional office in Thailand." She also had to report for work in Fuji's office in Manila from
Mondays to Fridays, eight (8) hours per day. She had no equipment and had to use the facilities of Fuji to accom-
plish her tasks. Further, the pieces of equipment Arlene used were all owned by Fuji, showing that she was a regular
employee and not an independent contractor.
Conclusion:
Further, an employee can be a regular employee with a fixed-term contract. The law does not preclude the pos-
sibility that a regular employee may opt to have a fixed-term contract for valid reasons. This was recognized
in Brent: For as long as it was the employee who requested, or bargained, that the contract have a "definite date of
termination," or that the fixed-term contract be freely entered into by the employer and the employee, then the valid-
ity of the fixed-term contract will be upheld. The existence of a fixed-term contract should not mean that there can
be no illegal dismissal. Due process must still be observed in the pre-termination of fixed-term contracts of em-
ployment.
Cabaobas et al., petitionersvs.Pepsi Cola et.al, respondent.

G.R. No. 176908. March 25, 2015.
FACTS:
Respondent Pepsi-Cola Products Philippines, Inc. (PCPPI) is a domestic corporation engaged in the manufac-
turing, bottling and distribution of soft drink products, which operates plants all over the country, one of which is the
Tanauan Plant in Tanauan, Leyte.
In 1999, PCPPI's Tanauan Plant allegedly incurred business losses in the total amount of Twenty-Nine Million
One Hundred Sixty-Seven Thousand and Three Hundred Ninety (P29,167,390.00) Pesos. To avert further losses,
PCPPI implemented a company-w ide retrenchment program denominated as Corporate-wide Rightsizing Program
(CRP) from 1999 to 2000, and retrenched forty-seven (47) employees of its Tanauan Plant on July 31, 1999.
On September 24, 1999, twenty-seven (27) of said employees,led by AnecitoMolon(Molon, et al.), filed com-
plaints for illegal dismissal before the NLRC which were docketed as NLRC RAB Cases Nos. VIII-9-0432-99 to 9-
0458-99, entitled "Molon, et al. v. Pepsi-Cola Products, Philippines, Inc."
On January 15, 2000, petitioners, who are permanent and regular employees of the Tanauan Plant, received
their respective letters, informing them of the cessation of their employment on February 15, 2000, pursuant to
PCPPI's CRP.
Petitioners then filed their respective complaints for illegal dismissal before the National Labor Relations
Commission Regional Arbitration Branch No. VIII in Tacloban City. Said complaints were docketed as NLRC RAB
VIII-03-0246-00 to 03-0259-00, entitled "Kempis, et al. v. Pepsi-Cola Products, Philippines, Inc."
a) Petitioner’s Arguments (Leyte Pepsi-Cola Employees Union-Associated Labor Union LEPCEU-ALU: Lost)
In their Consolidated Position Paper, petitioners alleged that PCPPI was not facing serious financial losses be-
cause after their termination, it regularized four (4) employees and hired replacements for the forty-seven (47) pre-
viously dismissed employees. They also alleged that PCPPI's CRP was just designed to prevent their union, Leyte
Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-ALU), from becoming the certified bargaining
agent of PCPPI's rank-and- file employees.
b) Respondent’s Argument’s (Pepsi-Cola Products Philippines, Inc. - Win)

PCPPI countered that petitioners were dismissed pursuant to its CRP to save the company from total bankrupt-
cy and collapse; thus, it sent notices of termination to them and to the Department of Labor and Employment. In
support of its argument that its CRP is a valid exercise of management prerogative, PCPPI submitted audited finan-
cial statements showing that it suffered financial reverses in 1998 in the total amount of SEVEN HUNDRED MIL-
LION (P700,000,000.00) PESOS, TWENTY-SEVEN MILLION (P27,000,000.00) PESOS of which was allegedly
incurred in the Tanauan Plant in 1999.
In view of the Court's ruling in Pepsi-Cola Products Philippines, Inc. v. Molon, PCPPI contends that the peti-
tion for review on certiorari should be denied and the CA decision should be affirmed under the principle of stare
decisis.
ISSUE:
The three issues raised by petitioners boil down to the legality of their dismissal pursuant to PCPPI's retrench-
ment program.
RULING:
The petition has no merit.
The Court observes that Pepsi had validly implemented its retrenchment program
First, Records disclose that both the CA and the NLRC had already determined that Pepsi complied with the
requirements of substantial loss and due notice to both the DOLE and the workers to be retrenched. The pertinent
portion of the CA's March 31, 2006 Decision reads:
In the present action, the NLRC held that PEPSI-COLA's financial statements are substantial evidence
which carry great credibility and reliability viewed in light of the financial crisis that hit the country which
saw multinational corporations closing shops and walking away, or adapting [sic] their own corporate
rightsizing program. Since these findings are supported by evidence submitted before the NLRC, we re-
solve to respect the same. . . . . The notice requirement was also complied with by PEPSI-COLA when it
served notice of the corporate rightsizing program to the DOLE and to the fourteen (14) employees who
will be affected thereby at least one (1) month prior to the date of retrenchment. (Citations omitted)
It is axiomatic that absent any clear showing of abuse, arbitrariness or capriciousness, the findings of fact
by the NLRC, especially when affirmed by the CA — as in this case — are binding and conclusive upon
the Court. Thus, given that there lies no discretionary abuse with respect to the foregoing findings, the
Court sees no reason to deviate from the same.
Second, Records also show that the respondents had already been paid the requisite separation pay as evi-
denced by the September 1999 quitclaims signed by them. Effectively, the said quitclaims serve inter alia the pur-
pose of acknowledging receipt of their respective separation pays. Appositely, respondents never questioned that
separation pay arising from their retrenchment was indeed paid by Pepsi to them. As such, the foregoing fact is now
deemed conclusive.
Third, Contrary to the CA's observation that Pepsi had singled out members of the LEPCEU-ALU in imple-
menting its retrenchment program, records reveal that the members of the company union (i.e., LEPCEU-UOEF#49)
were likewise among those retrenched.
All the requisites for a valid retrenchment are extant, the Court finds Pepsi's rightsizing program and the con-
sequent dismissal of respondents in accord with law.
The Court rules in the affirmative: Principle of Stare Decisis
There is no dispute that the issues, subject matters and causes of action between the parties in Pepsi-Cola
Products Philippines, Inc. v. Molonand the present case are identical, namely, the validity of PCPPI's retrenchment
program, and the legality of its employees' termination.
The respondents in Pepsi-Cola Products Philippines, Inc. v. Molonare petitioners' former co-employees and
co-union members of LEPCEU-ALU who were also terminated pursuant to the PCPPI's retrenchment program. The
only difference between the two cases is the date of the employees' termination, i.e., Molon, et al. belong to the first
batch of employees retrenched on July 31, 1999, while petitioners belong to the second batch retrenched on Febru-
ary 15, 2000.
At any rate, the Court finds that the September 11, 2002 NLRC Decision has exhaustively discussed PCPPI's
compliance with the requirement that for a retrenchment to be valid, such must be reasonably necessary and likely to
prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and
real.
The letter of SGV & Co. was accompanied by a consolidat[ed] statement of Income and Deficit (supplementary
schedule) showing a net loss of P29,167,000, in the company's Tanauan Operations as of June 30, 1999, and
P22,328,000 as of June 2000. This illustrates that the income statements and the balance sheets pertaining to the
Tanauan Plant Operations as prepared by Rodante F. Ramos were audited by SGV & Co. This situation would have
been avoided had the persistent requests for ample opportunity to present evidence made by the respondent were not
persistently denied by the Executive Labor Arbiter.
Rule:
Management’s Prerogative or Employer’s Prerogative to retrench its employees.
Essentially, the prerogative of an employer to retrench its employees must be exercised only as a last resort,
considering that it will lead to the loss of the employees' livelihood. It is justified only when all other less drastic
means have been tried and found insufficient or inadequate. Corollary thereto, the employer must prove the re-
quirements for a valid retrenchment by clear and convincing evidence; otherwise, said ground for termination would
be susceptible to abuse by scheming employers who might be merely feigning losses or reverses in their business
ventures in order to ease out employees. These requirements are:
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred,
are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as
perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and Em-
ployment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its
interest and not to defeat or circumvent the employees' right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would
be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship
for certain workers.
Application:
Also, as aptly pointed out by the NLRC, Pepsi's Corporate Rightsizing Program was a company-wide program
which had already been implemented in its other plants in Bacolod, Iloilo, Davao, General Santos and Zamboanga.
Consequently, given the general applicability of its retrenchment program, Pepsi could not have intended to deci-
mate LEPCEU-ALU's membership, much less impinge upon its right to self- organization, when it employed the
same.
Records indicate that Pepsi had initiated sit-downs with its employees to review the criteria on which the selec-
tion of who to be retrenched would be based. This is evidenced by the report of NCMB Region VIII Director Juani-
toGeonzon which states that "Pepsi's] [m]anagement conceded on the proposal to review the criteria and to sit down
for more positive steps to resolve the issue."
On the final requirement of fair and reasonable criteria for determining who would or would not be dismissed,
records indicate that Pepsi did proceed to implement its rightsizing program based on fair and reasonable criteria
recommended by the company supervisors.
Conclusion:
Thus, PCPPI’s retrenchment program created and implemented by them was in accordance with the
law. They followed all the procedures and all of the requisites of a valid retrenchment are present. The Court finds
Pepsi’s rightsizing program and the consequent dismissal of respondents in accord with law.
NELSON V. BEGINO, GENER DEL VALLE, MONINA AVILA-LLORIN AND MA. CRISTINA SU-
MAYAO, petitioners, vs. ABS-CBN CORPORATION (FORMERLY, ABS-CBN BROADCASTING COR-
PORATION) AND AMALIA VILLAFUERTE, respondents.
G.R. No. 199166. April 20, 2015.
FACTS:
Respondent ABS-CBN Corporation (formerly ABS-CBN Broadcasting Corporation) is a television and radio
broadcasting corporation which, for its Regional Network Group in Naga City, employed respondent Amalia Villa-
fuerte (Villafuerte) as Manager. There is no dispute regarding the fact that, thru Villafuerte, ABS-CBN engaged the
services of petitioners Nelson Begino (Begino) and Gener Del Valle (Del Valle) sometime in 1996 as Camera-
men/Editors for TV Broadcasting. Petitioners Ma. Cristina Sumayao (Sumayao) and Monina Avila-Llorin (Llorin)
were likewise similarly engaged as reporters sometime in 1996 and 2002, respectively. With their services engaged
by respondents thru Talent Contracts which, though regularly renewed over the years, provided terms ranging from
three (3) months to one (1) year, petitioners were given Project Assignment Forms which detailed, among other mat-
ters, the duration of a particular project as well as the budget and the daily technical requirements thereof. In the
aforesaid capacities, petitioners were tasked with coverage of news items for subsequent daily airings in respon-
dents' TV Patrol Bicol Program.
While specifically providing that nothing therein shall be deemed or construed to establish an employer-
employee relationship between the parties, petitioners filed against respondents the complaint 5 docketed as Sub-
RAB 05-04-00041-07 before the National Labor Relations Commission's (NLRC) Sub-Regional Arbitration Branch
No. 5, Naga City, claiming that they were regular employees of ABS-CBN.
a.) Petitioners’ Argument ( Begino, Del Valle, Avilla-Llorin and Sumayao – Win )
Petitioners averred that they worked under the direct control and supervision of Villafuerte and, at the end of
each day, were informed about the news to be covered the following day, the routes they were to take and, whenever
the subject of their news coverage is quite distant, even the start of their workday. Due to the importance of the news
items they covered and the necessity of their completion for the success of the program, petitioners claimed that,
under pain of immediate termination, they were bound by the company's policy on, among others, attendance and
punctuality.
Aside from the constant evaluation of their actions, petitioners were reportedly subjected to an annual compe-
tency assessment alongside other ABS-CBN employees, as condition for their continued employment. Although
their work involved dealing with emergency situations at any time of the day or night, petitioners claimed that they
were not paid the labor standard benefits the law extends to regular employees.
Considering their repeated re-hiring by respondents for ostensible fixed periods, this situation had gone on for
years since TV Patrol Bicol has continuously aired from 1996 onwards.
b.) Respondent’s Aruguments ( ABS-CBN Corporation and Amalia Villafuerte – Lost )
ABS-CBN is primarily engaged in the business of broadcasting television and radio content. Not having the full
manpower complement to produce its own program, the company had allegedly resorted to engaging independent
contractors like actors, directors, artists, anchormen, reporters, scriptwriters and various production and technical
staff, who offered their services in relation to a particular program. Known in the industry as talents, such indepen-
dent contractors inform ABS-CBN of their availability and were required to accomplish Talent Information Forms
to facilitate their engagement for and appearance on designated project days. Given the unpredictability of viewer
preferences, respondents argued that the company cannot afford to provide regular work for talents with whom it
negotiates specific or determinable professional fees on a per project, weekly or daily basis, usually depending on
the budget allocation for a project.
Respondents insisted that, pursuant to their Talent Contracts and/or Project Assignment Forms, petitioners were
hired as talents, to act as reporters and/or cameramen for TV Patrol Bicol for designated periods and rates. Fully
aware that they were not considered or to consider themselves as employees of a particular production or film outfit,
petitioners were supposedly engaged on the basis of the skills, knowledge or expertise they already possessed and,
for said reason, required no further training from ABS-CBN. Although petitioners were inevitably subjected to some
degree of control, the same was allegedly limited to the imposition of general guidelines on conduct and perfor-
mance, simply for the purpose of upholding the standards of the company and the strictures of the industry. Never
subjected to any control or restrictions over the means and methods by which they performed or discharged the tasks
for which their services were engaged, petitioners were, at most, briefed whenever necessary regarding the general
requirements of the project to be executed.
ISSUE:
Whether or not there is an employer-employee relationship between the parties.
RULING:
Labor Arbiter Jesus Orlando Quiñones
Quiñonesresolved Sub-RAB 05-04-00041-07 in favor of petitioners who, having rendered services necessary
and related to ABS-CBN's business for more than a year, were determined to be its regular employees. With said
conclusion found to be buttressed by, among others, the exclusivity clause and prohibitions under petitioners' Tal-
ent Contracts and/or Project Assignment Forms which evinced respondents' control over them, Labor Arbiter
Quiñones disposed of the case in the following wise:
WHEREFORE, finding merit in the causes of action set forth by the complainants, judgment is
hereby rendered declaring complainants MONINA AVILA-LLORIN, GENER L. DEL VALLE, NEL-
SON V. BEGINO and MA. CRISTINA V. SUMAYAO, as regular employees of respondent company,
ABS-CBN BROADCASTING CORPORATION.
Accordingly, respondent ABS-CBN Broadcasting Corporation is hereby ORDERED to pay
complainants, subject to the prescriptive period provided under Article 291 of the Labor Code, however
applicable, the total amount of Php2,440,908.36, representing salaries/wage differentials, holiday pay,
service incentive leave pay and 13th month pay, to include 10% of the judgment award as attorney's fees
of the judgment award (computation of the monetary awards are attached hereto as integral part of this
decision).
Moreover, respondents are directed to admit back complainants to work under the same terms
and conditions prevailing prior to their separation or, at respondents' option, merely reinstated in the pay-
roll.
Other than the above, all other claims and charges are ordered DISMISSED for lack of merit.
NLRC
NLRC rendered a Decision dated 31 March 2010, affirming said Labor Arbiter's appealed decision.
Court of Appeals
CA rendered decision, reversing the findings of the Labor Arbiter and the NLRC.
Supreme Court
Principles:
To determine the existence of said relation, case law has consistently applied the four-fold test, to wit: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the em-
ployer's power to control the employee on the means and methods by which the work is accomplished. 23 Of these
criteria, the so-called "control test" is generally regarded as the most crucial and determinative indicator of the pres-
ence or absence of an employer-employee relationship. Under this test, an employer-employee relationship is said to
exist where the person for whom the services are performed reserves the right to control not only the end result but
also the manner and means utilized to achieve the same.
Insofar as the nature of one's employment is concerned, Article 280 of the Labor Code of the Philippines also
provides as follows:
ART. 280. Regular and Casual Employment. — The provisions of written agreement to the con-
trary 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 con-
tinuous or broken, shall be considered a regular employee with respect to the activity in which he is em-
ployed and his employment shall continue while such actually exists.
It has been ruled that the foregoing provision contemplates four kinds of employees, namely: (a) regular em-
ployees or those who have been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; (b) project employees or those whose employment has been fixed for a specific
project or undertaking, the completion or termination of which has been determined at the time of the engagement of
the employee; (c) seasonal employees or those who work or perform services which are seasonal in nature, and the
employment is for the duration of the season; and (d) casual employees or those who are not regular, project, or sea-
sonal employees. To the foregoing classification of employee, jurisprudence has added that of contractual or fixed
term employee which, if not for the fixed term, would fall under the category of regular employment in view of the
nature of the employee's engagement, which is to perform activity usually necessary or desirable in the employer's
business.
The Court finds that, notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment
Forms and the terms and condition embodied therein, petitioners are regular employees of ABS-CBN. Time and
again, it has been ruled that the test to determine whether employment is regular or not is the reasonable connection
between the activity performed by the employee in relation to the business or trade of the employer.
As cameramen/editors and reporters, petitioners were undoubtedly performing functions necessary and essential
to ABS-CBN's business of broadcasting television and radio content. Aside from the fact that said program is a
regular weekday fare of the ABS-CBN's Regional Network Group in Naga City, the record shows that, from their
initial engagement in the aforesaid capacities, petitioners were continuously re-hired by respondents over the years.
To the mind of the Court, respondents' repeated hiring of petitioners for its long-running news program positively
indicates that the latter were ABS-CBN's regular employees.
As cameramen/editors and reporters, it also appears that petitioners were subject to the control and supervision
of respondents which, first and foremost, provided them with the equipments essential for the discharge of their
functions. Prepared at the instance of respondents, petitioners' Talent Contracts tellingly provided that ABS-CBN
retained "all creative, administrative, financial and legal control" of the program to which they were assigned. Aside
from having the right to require petitioners "to attend and participate in all promotional or merchandising cam-
paigns, activities or events for the Program," ABS-CBN required the former to perform their functions "at such loca-
tions and Performance/Exhibition Schedules" it provided or, subject to prior notice, as it chose determine, modify or
change. Even if they were unable to comply with said schedule, petitioners were required to give advance notice,
subject to respondents' approval. However obliquely worded, the Court finds the foregoing terms and conditions
demonstrative of the control respondents exercised not only over the results of petitioners' work but also the means
employed to achieve the same.
Application:
In this case, as cameramen/editors and reporters, it appears that petitioners were subject to the control and su-
pervision of respondents which, first and foremost, provided them with the equipments essential for the discharge of
their functions. Prepared at the instance of respondents, petitioners' Talent Contracts tellingly provided that ABS-
CBN retained "all creative, administrative, financial and legal control" of the program to which they were assigned.
Aside from having the right to require petitioners "to attend and participate in all promotional or merchandising
campaigns, activities or events for the Program," ABS-CBN required the former to perform their functions "at such
locations and Performance/Exhibition Schedules" it provided or, subject to prior notice, as it chose determine, modi-
fy or change. Even if they were unable to comply with said schedule, petitioners were required to give advance no-
tice, subject to respondents' approval. However obliquely worded, the Court finds the foregoing terms and condi-
tions demonstrative of the control respondents exercised not only over the results of petitioners' work but also the
means employed to achieve the same.
Conclusion:
Rather than the project and/or independent contractors respondents claim them to be, it is evident from the fore-
going disquisition that petitioners are regular employees of ABS-CBN. Indeed, there is an employer-employee rela-
tion between the parties.
SOCIAL SECURITY SYSTEM, petitioner, vs. DEBBIE UBAÑA,respondent
(NOTE: Pursuant to the provision of Article 217 of the Labor Code of the Philippines as amended, in governing
arbitration proceedings in the Labor Arbiter and Comission, the NLRC Rules and Procedure 2011 are hereby
adopted and promulgated)
FACTS:
On December 26, 2002, respondent Debbie Ubaña filed a civil case for damages against the DBP Service Cor-
poration, petitioner Social Security System (SSS), and the SSS Retirees Association before the RTC of Daet, Cama-
rines Norte.
In her Complaint, respondent alleged that in July 1995, she applied for employment with the petitioner. After
passing the examinations and accomplishing all the requirements for employment, she was instead referred to DBP
Service Corporation for "transitory employment." She took the pre-employment examination given by DBP Service
Corporation and passed the same. A year later, she was told to report for training to SSS, Naga City branch, for im-
mediate deployment to SSS Daet branch. One month after, she was made to sign a six-month Service Contract
Agreement by DBP Service Corporation, appointing her as clerk for assignment with SSS Daet branch, with a daily
wage of only P171.00. She was also assigned as "Frontliner" of the SSS Members Assistance Section. On December
16, 2001, she was transferred to the SSS Retirees Association as Processor, she was paid only P229.00 daily or
P5,038.00 monthly, while a regular SSS Processor receives a monthly salary of P18,622.00 or P846.45 daily wage.
Her May 28,1996 Service Contract Agreement with DBP Service Corporation was never renewed, but she was re-
quired to work for SSS continuously under different assignments with a maximum daily salary of only P229.00.
Because of the oppressive and prejudicial treatment by SSS, she was forced to resign on August 26, 2002 as she
could no longer stand being exploited, the agony of dissatisfaction, anxiety, demoralization, and injustice.
Respondent prayed for an award of P572,682.67 actual damages representing the difference between the legal
and proper salary she should have received and the actual salary she received during her six-year stint with petition-
er.
Petitioner and its co-defendants SSS Retirees Association and DBP Service Corporation filed their respective
motions to dismiss.
Respondent opposed the motions to dismiss.
Petitioner's argument:
 That the subject matter of the case and respondent's claims arose out of employer-employee relations,
which are beyond the RTC's jurisdiction and properly cognizable by the National Labor Relations
Commission (NLRC).
Respondent's argument:
 That pursuant to civil service rules and regulations, service contracts such as her Service Contract
Agreement with DBP Service Corporation should cover only: a) lump sum work or services such as
janitorial, security or consultancy services, and b) piece work or intermittent jobs of short duration not
exceeding six months on a daily basis.
RTC Ruling:
The RTC issued an Order (October 1,2003) dismissing respondent's complaint for lack of jurisdiction, stating
that her claim for damages "has a reasonable causal connection with her employer-employee relations with the de-
fendants" and "is grounded on the alleged fraudulent and malevolent manner by which the defendants conspired
with each other in exploiting her, which is a clear case of unfair labor practice," falling under the jurisdiction of the
Labor Arbiter of the NLRC.
Respondent filed a motion for reconsideration.
RTC granted the motion for reconsideration reasoning that “SSS having been created under an original charter,
RA No. 1161 as amended by R.A. 8282, otherwise known as the Social Security Act of 1997, it is governed by the
provisions of the Civil Service Commission. However, since the SSS denied the existence of an employer-employee
relationship, and the case is one for Damages, it is not the Civil Service Commission that has jurisdiction to try the
case, but the regular courts.
Petitioner filed a motion for reconsideration but the same was denied by RTC. He filed a petition for certiorari
on the CA insisting that the trial court did not have jurisdiction over respondent's claims for "unrealized salary in-
come" and other damages, which constitute a labor dispute cognizable only by the labor tribunals.
CA Ruling:
CA denied the petition, it held that in determining which body has jurisdiction over a case, the better policy is to
consider not only the status or relationship of the parties but also the nature of the action that is the subject of their
controversy. In this case, Ubanawas claiming damages based on the alleged exploitation by the defendants depriving
her of her rightful income. In asserting that she is entitled to the damages claimed, she invoked not the provisions of
the Labor Code or any other labor laws but the provisions on human relations under the New Civil Code. Evidently,
the determination of the respective rights of the parties herein, and the ascertainment whether there were abuses of
such rights, do not call for the application of the labor laws but of the New Civil Code which the RTC has jurisdic-
tion to hear and decide this case.
Petitioner filed a petition for review in certiorari to SC.
ISSUES:
 Whether or not the CA's dispositions are contrary to law and jurisprudence.
RULING:
The Petition is denied. And the assailed Decision and Resolution of the Court of Appeals is hereby af-
firmed.
RULE:
It is well settled in law and jurisprudence that where no employer-employee relationship exists between the par-
ties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any col-
lective bargaining agreement, it is the Regional Trial Court that has jurisdiction. The action is within the realm of
civil law hence jurisdiction over the case belongs to the regular courts. While the resolution of the issue involves the
application of labor laws, reference to the labor code was only for the determination of the solidary liability of the
petitioner to the respondent where no employeremployee relation exists.
Article 217 of the Labor Code as amended vests upon the labor arbiters exclusive original jurisdiction only over
the following:
1. Unfair labor practices;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of
pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving legality of strikes
and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims, arising from employeremployee relations, including those of persons in domestic or household ser-
vice, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
Petitioner being responsible to respondent only for the proper payment of wages, thus, she was justified in filing
a case against petitioner, based on Civil Code, to recover the proper salary due her as SSS Processor.
APPLICATION:
In the case at bar, respondent never became an SSS employee, as she remained an employee of DBP Service
Corporation and SSS Retirees Association, the two being independent contractors with legitimate service contracts
with SSS. In legitimate job contracting, no employer-employee relationship exists. And the fact that respondent did
not seek refuge to the Labor Code but to the Civil Code in claiming for damages againts abused of her rights for the
payment of wages, the proper court that has jurisdiction in this case is the regular courts for it does not involved la-
bor disputes.
CONCLUSION:
Thus, petitioner SSS will pay for the payment of the wages that respondent is asking for in this case. And the
proper court that has jurisdiction over the case that does not involve labor disputes is the regular courts.
CENTURY PROPERTIES, INC., petitioner, v. EDWIN J. BABIANO AND EMMA B. CONCEPCION, re-
spondents
G.R. No. 220978. July 5, 2016
FACTS:
Edwin Babiano was hired by Century Properties, Inc. (CPI) as its Director of Sales but was eventually ap-
pointed as the Vice President of Sales. In view of this, he was granted a commission for completed sales along side
his monthly salary and allowance. In his employment contract which contained a "Confidentiality of Documents and
Non-Compete Clause", he was barred from disclosing confidential information, and from working in any business
enterprise that is in direct competition with CPI "while [he is] employed and for a period of one year from date of
resignation or termination from [CPI]." Should Babiano breach any of the terms thereof, his "forms of compensa-
tion, including commissions and incentives will be forfeited."
Around the same time, Emma Concepcion was hired as a Sales Agent but was eventually promoted as Project
Director. Her employment agreement was titled "Contract of Agency for Project Director" that provided for her
monthly subsidy, commission, other cash incentives, and that she would report directly to Babiano. It is important to
not that in that contract, it was stipulated that no employer-employee relationship exists between Concepcion and
CPI.
It was eventually found out that Babiano was providing a competitor of CPI information regarding its market-
ing strategies. This led to his resignation where he admitted that he had been accepted as Vice President of First
Global BYO Development Corporation (First Global), a competitor of CPI. On her part, Concepcion also resigned
as the Project Director.
The respondents then filed a complaint for the non-payment of commissions and damages against CPI. CPI
claimed that it validly withheld Babiano’s commissions since he violated the Confidentiality of Documents and
Non-compete Clause that they are deemed forfeited.
On Concepcion's money claims, CPI asserted that the NLRC had no jurisdiction to hear the same because there
was no employer-employee relations between them, and thus, she should have litigated the same in an ordinary civil
action.
ISSUE:
Whether or not CPI is liable for the unpaid commissions of the respondents
RULING:
The Confidentiality of Documents and Non-Compete Clause is clear and unambiguous in providing the prohi-
bition on Babiano to work for a competitor of CPI while he is employed and also for a period of one year from the
date of his resignation.
It was also clear in stating that a breach of the contract would entail the forfeiture of his commissions and in-
centives.
In the present case, the clause was reasonable as it would prejudice CPI to allow Babiano to freely move to di-
rect competitors during and soon after his employment with CPI would make the latter's trade secrets vulnerable to
exposure, especially in a highly competitive marketing environment.
In his resignation letter, he even revealed that he sought employment with a competitor and was accepted. This
is a glaring violation of the "Confidentiality of Documents and Non-Compete Clause" in his employment contract
with CPI, thus, justifying the forfeiture of his unpaid commissions.
The presence of the following elements evince the existence of an employer-employee relationship: (a) the
power to hire, i.e., the selection and engagement of the employee; (b) the payment of wages; (c) the power of dis-
missal; and (d) the employer's power to control the employee's conduct, or the so called "control test."
Concepcion was an employee of CPI considering that a) they continuously hired her until her resignation, b)
she was given a monthly subsidy and cash incentives in the concept of wages in return for work performed, c) CPI
had the power to discipline and even dismiss her as was stipulated in her engagement contract, and d) CPI had pos-
sessed control over her in the performance of her duties, she did not exercise independent discretion and was even
under the supervision of Babiano.
In view of this, there exists an employer-employee relationship between Concepcion and CPI.
LU vs. ENOPIA
G.R. No. 197899, March 6, 2017
Facts:
Petitioners (now herein respondents) were hired from January 20, 1994 to March 20, 1996 as crew members of
the fishing mother boat owned by respondent Joaquin "Jake" Lu.
Petitioners and Lu had an income-sharing arrangement wherein 55% goes to Lu, 45% to the crew members,
with an additional 4% as "backing incentive." They also equally share the expenses for the maintenance and repair
of the mother boat, and for the purchase of nets, ropes and payaos.
Sometime in August 1997, Lu proposed the signing of a Joint Venture Fishing Agreement between them, but
petitioners refused to sign the same as they opposed the one-year term provided in the agreement. According to peti-
tioners, during their dialogue on August 18, 1997, Lu terminated their services right there and then because of their
refusal to sign the agreement.
On August 25, 1997, petitioners filed their complaint for illegal dismissal. On the other hand, Lu denied having
dismissed petitioners, claiming that their relationship was one of joint venture where he provided the vessel and oth-
er fishing paraphernalia, while petitioners, as industrial partners, provided labor by fishing in the high seas.
Lu alleged that there was no employer-employee relationship as its elements were not present, it was the piado
who hired petitioners; they were not paid wages but shares in the catch, which they themselves determine; they were
not subject to his discipline; and respondent had no control over the day-to-day fishing operations, although they
stayed in contact through respondent's radio operator or checker.
LA rendered a Decision dismissing the case for lack of merit
Respondents appealed to the National Labor Relations Commission (NLRC), which affirmed the LA Decision
in its Resolution.
CA rendered its assailed Decision reversing the NLRC.
The CA found that petitioner exercised control over respondents based on the following:
1. respondents were the fishermen crew members of petitioner's fishing vessel, thus, their services to the latter
were so indispensable and necessary that without them, petitioner's deep-sea fishing industry would not have
come to existence much less fruition;
2. he had control over the entire fishing operations undertaken by the respondents through the master fisherman
(piado) and the assistant master fisherman (assistant piado) employed by him;
3. respondents were paid based on a percentage share of the fish catch did not in any way affect their regular
employment status; and
4. petitioner had already invested millions of pesos in its deep-sea fishing industry, hence, it is highly improba-
ble that he had no control over respondents' fishing operations
Issue: Whether or not an employer-employee relationship existed between petitioner and respondents
Ruling:
In determining the existence of an employer-employee relationship, the following elements are considered:
1. the selection and engagement of the workers;
2. the power to control the worker's conduct;
3. the payment of wages by whatever means; and
4. the power of dismissal.
It is settled that no particular form of evidence is required to prove the existence of an employer-employee rela-
tionship. Any competent and relevant evidence to prove the relationship may be admitted.
Petitioner contends that it was the piado who hired respondents, however, it was shown by the latter's evidence
that the employer stated in their Social Security System (SSS) online inquiry system printouts was MGTR, which is
owned by petitioner. Petitioner failed to rebut such evidence. The coverage of the Social Security Law is predicated
on the existence of an employer-employee relationship.
Moreover, the records show that the 4% backing incentive fee which was divided among the fishermen engaged
in the fishing operations approved by petitioner was paid to respondents after deducting the latter's respective vale or
cash advance. If indeed a joint venture was agreed upon between petitioner and respondents, why would these fi-
shermen obtain vale or cash advance from petitioner and not from the piado who allegedly hired and had control
over them.
It was established that petitioner exercised control over respondents. It should be remembered that the control
test merely calls for the existence of the right to control, and not necessarily the exercise thereof. It is not essential
that the employer actually supervises the performance of duties by the employee. It is enough that the former has a
right to wield the power.
Petitioner admitted in his pleadings that he had contact with respondents at sea via the former's radio operator
and their checker. The radio was only for the purpose of receiving requisitions for the needs of the fishermen in the
high seas and to receive reports of fish catch. Such communication would establish that he was constantly monitor-
ing or checking the progress of respondents’ fishing operations throughout the duration thereof, which showed their
control and supervision over respondents' activities.
CA found out that the private respondent (petitioner) controls the entire fishing operations. For each mother
fishing boat, private respondent assigned a master fisherman (piado) and assistant master fisherman (assistant pia-
do), who every now and then supervise the fishing operations. Private respondent also assigned a checker and assis-
tant checker based on the office to monitor and contact every now and then the crew at sea through radio. The
checker and assistant checker advised then the private respondent of the condition. Based on the report of the check-
er, the private respondent, through radio, will then instruct the "piado" how to conduct the fishing operations.
The payment of respondents' wages based on the percentage share of the fish catch would not be sufficient to
negate the employer-employee relationship existing between them.
In Ruga v. NLRC: 22 x x x [I]t must be noted that petitioners received compensation on a percentage commis-
sion based on the gross sale of the fish-catch, i.e., 13% of the proceeds of the sale if the total proceeds exceeded the
cost of the crude oil consumedduring the fishing trip, otherwise, only 10% of the proceeds of the sale. Such compen-
sation falls within the scope and meaning of the term "wage" as defined under Article 97(f) of the Labor Code
The primary standard for determining regular employment is the reasonable connection between the particular
activity performed by the employee in relation to the usual trade or business of the employer. Respondents' jobs as
fishermen-crew members of F/B MG-28 were directly related and necessary to petitioner's deep-sea fishing business
and they had been performing their job for more than one year.
As respondents were petitioner's regular employees, they are entitled to security of tenure under Section 3, 27
Article XIII of the 1987 Constitution. It is also provided under Article 279 of the Labor Code, that the right to
security of tenure guarantees the right of employees to continue in their employment absent a just or authorized
cause for termination.
 Considering that respondents were petitioner's regular employees, the latter's act of asking them to sign the joint
fishing venture agreement which provides that the venture shall be for a period of one year from the date of the
agreement, subject to renewal upon mutual agreement of the parties, and may be pre-terminated by any of the
parties before the expiration of the one-year period, is violative of the former's security of tenure.
 And respondents' termination based on their refusal to sign the same, not being shown to be one of those just
causes for termination under Article 282, is, therefore, illegal.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstate-
ment. The petition for review on certiorari is DENIED.
HIRING OF EMPLOYEE 47
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, petitioner, vs. NATIONAL LABOR RELA-
TIONS COMMISSION and GRACE DE GUZMAN, respondents.
G.R. No. 118978. May 23, 1997
FACTS:
Private respondent, Grace de Guzman has been repeatedly hired by PT&T as a reliever, specifically as a “Supernu-
merary Project Worker” in replacement of employees who go on leave.
On Sept. 2, 1991, private respondent was asked to join the company as a probationary employee wherein the proba-
tionary period was to cover 150 days. In her job application form, she indicated that she was single although she
has contracted marriage a few months earlier, that is on May 26, 1991.
It was found that she has made the same representation in two reliever agreements she signed on June 10, 1991 and
July 8, 1991. Upon learning, PT&T sent a memo requiring her to explain the discrepancy and was reminded
about the company’s policy of not accepting married women for employment.
De Guzman stated that she was not aware of the company policy regarding married women at that time, and that all
along she had not deliberately hidden her true civil status however PT&T remained unconvinced. Eventually,
private respondent was dismissed from the company. She contested to it and initiated a complaint for illegal
dismissal, coupled with a claim for non-payment of cost of living allowances before RAB of NLRC Baguio.
At the preliminary conference, private respondent volunteered information that she had failed to remit the amount of
P2,380.75 of her collections. She executed a promissory note for that amount in favor of PT&T. All of which
took place in a formal proceeding and with the agreement of the parties and their counsel.
Petitioner avers that private respondent was dismissed not because she concealed the fact of her marriage. PT&T
asserts that it had nothing against against marriage but takes umbrage over the concealment of that
fact.Moreover it averred that if an employee confesses such fact of marriage, there will be no sanction; but if
such employee conceals the same instead of proceeding to the confessional, she will be dismissed.
Petitioner also insisted that private respondent misappropriated company funds as an additional ground to dismiss
her from employment.
Respondent’s Contention:
NLRC ruled that De Guzman had been indeed the subject of an unjust and unlawful discrimination by her employ-
er.As for private respondent, she simply contended that she was not aware of such company policy.
Ruling of the Lower Courts:

In the Labor Arbiter’s decision, he declared that private respondent was illegally dismissed because she has already
gained a regular employee status. He also expressed the view that the ground relied upon petitioner in dismiss-
ing private respondent was insufficient, and that it was apparent that she had been discriminated against on ac-
count of her having contracted marriage in violation of company rules.
On appeal to NLRC, it upheld the decision of the Labor Arbiter and ruled that private respondent had indeed been
the subject of an unjust and unlawful discrimination by her employer, PT&T. However, NLRC also found that
Grace De Guzman be suspended for three months in view of the dishonest nature of her acts which should not
be condoned.
ISSUES:
Whether or not PT&T’s policy of not accepting married women for employment was discriminatory.
RULING:
Yes. The policy is discriminatory in nature.
Rule:
Acknowledged as paramount in the due process scheme is the constitutional guarantee of protection to labor and
security of tenure. Thus, an employer is required, as a condition sine qua non prior to severance of the employ-
ment ties of an individual under his employ, to convincingly establish, through substantial evidence, the exis-
tence of a valid and just cause in dispensing with the services of such employee, one' s labor being regarded as
constitutionally protected property.
On the other hand, it is recognized that an employer is free to regulate, according to his discretion and best business
judgement, all aspects of employment, from hiring to firing, except in cases of unlawful discrimination or those
which may be provided for by law.
In the case at bar, petitioner's policy of not accepting or considering as disqualified from work any woman worker
who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women work-
ers by our labor laws and by no less than the Constitution.
Article 135 of the Labor Code which recognizes a woman’s right against discrimination with respect to term and
conditions of employment on account simply of sex states that:
Additionally, Article 136 explicitly prohibits discrimination merely by reason of the marriage, to wit:
"ART. 136. Stipulation against marriage. — It shall be unlawful for an employer to require as a condition
of employment or continuation of employment that a woman shall not get married, or to stipulate expressly
or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actual-
ly dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of mar-
riage."
This provision can be traced to begin since 1923. In one case, the Court held that a policy of Philippine Air Lines
requiring that prospective flight attendants must be single and that they will be automatically separated from the
service once they marry was declared void, it being violative of the clear mandate in Article 136 of the Labor
Code with regard to discrimination against married women.
Application:
In this case, applying the petitioner’s contentions would be violative of the rule against the stipulation against mar-
riage. The stipulation requires that a woman should not get married in order to obtain or preserve employment
in their company. From the provisions of the law, this is a case of unlawful discrimination where management
prerogative do not apply.
CONCLUSION:
De Guzman was unjustly and unlawfully discriminated by her employer, PT&T and that she be reinstated plus pay-
ment of the back wages and COLA. However, de Guzman deserves the three-month suspension as she had
committed an act of dishonesty in concealing her status, regardless of such act being done due to the very policy
of the employer.
DUNCAN ASSOCIATION and PEDRO A. TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES,
INC., respondent.
G.R. No. 162994. September 17, 2004
FACTS:
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as medical
representative on October 24, 1995, after Tecson had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and ab-
ide by existing company rules; to disclose to management any existing or future relationship by consanguinity
or affinity with co-employees or employees of competing drug companies and should management find that
such relationship poses a possible conflict of interest, to resign from the company.
The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of
any existing or future relationship. If management perceives a conflict of interest or a potential conflict between
such relationship and the employee’s employment with the company, the management and the employee will
explore the possibility of a “transfer to another department in a non-counterchecking position” or preparation
for employment outside the company after six months.
Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte sales
area. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceut-
icals (Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in Albay. She supervised the dis-
trict managers and medical representatives of her company and prepared marketing strategies for Astra in that
area.
Even before they got married, Tecson received several reminders from his District Manager regarding the conflict of
interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson married Bettsy in
September 1998.
In January 1999, Tecson’s superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tec-
son’s superiors reminded him that he and Bettsy should decide which one of them would resign from their jobs,
although they told him that they wanted to retain him as much as possible because he was performing his job
well.
Tecson requested for time to comply with the company policy against entering into a relationship with an employee
of a competitor company.
In August 1999, Tecson again requested for more time resolve the problem.
In September 1999, Tecson applied for a transfer in Glaxo’s milk division, thinking that since Astra did not have a
milk division, the potential conflict of interest would be eliminated. His application was denied in view of
Glaxo’s “least-movement-possible” policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson
asked Glaxo to reconsider its decision, but his request was denied.
Thereafter, he bought the matter to Grievance Committee but the parties failed to resolve such issue, Glaxo offered
Tecson a separation pay of one-half (½) month pay for every year of service, or a total of P50,000.00 but he de-
clined the offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB) rendered its
Decision declaring as valid Glaxo’s policy on relationships between its employees and persons employed with
competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.
Tecson filed for a petition for review on the CA and the CA promulgated that the NCMB did not err in rendering its
decision. A recon was filed in appellate court but it was denied, hence this petition for certiorari. Petitioners
contention it was violative of constitutional law which is the equal protection clause and he was constructively
dismissed while the respondents contention that it is a valid exercise of it s management prerogatives.
a) Petitioner’s Arguments ( Tecson – Lost)
Petitioners contend that Glaxo’s policy against employees marrying employees of competitor companies violates the
equal protection clause of the Constitution because it creates invalid distinctions among employees on account
only of marriage. They claim that the policy restricts the employees’ right to marry.
They also argue that Tecson was constructively dismissed as shown by the following circumstances:
(1) he was transferred from the Camarines Sur-Camarines Norte sales area to the Butuan-Surigao-Agusan sales
area,
(2) he suffered a diminution in pay,
(3) he was excluded from attending seminars and training sessions for medical representatives, and
(4) he was prohibited from promoting respondent’s products which were competing with Astra’s products.
b) Respondent’s Argument’s (Glaxo – Win )
Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, it has a genuine in-
terest in ensuring that its employees avoid any activity, relationship or interest that may conflict with their re-
sponsibilities to the company. Thus, it expects its employees to avoid having personal or family interests in any
competitor company which may influence their actions and decisions and consequently deprive Glaxo of legi-
timate profits. The policy is also aimed at preventing a competitor company from gaining access to its secrets,
procedures and policies.
It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing or future relation-
ships with employees of competitor companies, and is therefore not violative of the equal protection clause. It
maintains that considering the nature of its business, the prohibition is based on valid grounds.
Tecson’s marriage to Bettsy, an employee of Astra, posed a real and potential conflict of interest. In any case, Tec-
son was given several months to remedy the situation, and was even encouraged not to resign but to ask his wife
to resign from Astra instead.
Glaxo also points out that Tecson can no longer question the assailed company policy because when he signed his
contract of employment, he was aware that such policy was stipulated therein. In said contract, he also agreed to
resign from respondent if the management finds that his relationship with an employee of a competitor company
would be detrimental to the interests of Glaxo.
Glaxo likewise insists that Tecson’s reassignment and his exclusion from seminars did not amount to constructive
dismissal.
It claims that in view of Tecson’s refusal to resign, he was relocated. Glaxo asserts that in effecting the reassign-
ment, it also considered the welfare of Tecson’s family. Since Tecson’s hometown was in Agusan del Sur and
his wife traces her roots to Butuan City, Glaxo assumed that his transfer from the Bicol region to the Butuan
City sales area would be favorable to him and his family as he would be relocating to a familiar territory and
minimizing his travel expenses. Glaxo avers that Tecson’s exclusion from the seminar concerning the new anti-
asthma drug was due to the fact that said product was in direct competition with a drug which was soon to be
sold by Astra. Lastly, the delay in Tecson’s receipt of his sales paraphernalia was due to the mix-up created by
his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his new sales area instead
of Naga City because the supplier thought he already transferred to Butuan).
ISSUE:
Whether or not the Glaxo’s policy regarding the prohibition of its employees from marrying employees of another
pharmaceutical company is valid?
RULING:
This petition was denied.
Rule:
Prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of
management prerogative.
Application:
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential pro-
grams and information from competitors, especially so that it and Astra are rival companies in the highly com-
petitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s
employees is reasonable under the circumstances because relationships of that nature might compromise the in-
terests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests
against the possibility that a competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution re-
cognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on
investments and to expansion and growth.
The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erro-
neously suggest. It is a settled principle that the commands of the equal protection clause are addressed only to
the state or those acting under color of its authority.
In any event, from the wordings of the contractual provision and the policy in its employee handbook, it is clear that
Glaxo does not impose an absolute prohibition against relationships between its employees and those of com-
petitor companies. Its employees are free to cultivate relationships with and marry persons of their own choos-
ing. What the company merely seeks to avoid is a conflict of interest between the employee and the company
that may arise out of such relationships.
The Court finds no merit in petitioners’ contention that Tecson was constructively dismissed when he was trans-
ferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur
sales area, and when he was excluded from attending the company’s seminar on new products which were di-
rectly competing with similar products manufactured by Astra. Constructive dismissal is defined as a quitting,
an involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or un-
likely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to the employee. The record does not show that Tecson was de-
moted or unduly discriminated upon by reason of such transfer.
Conclusion:
The challenged policy has been implemented by Glaxo impartially and disinterestedly for a long period of time.
The record shows that Glaxo gave Tecson several chances to eliminate the conflict of interest brought about by
his relationship with Bettsy. Glaxo even expressed its desire to retain Tecson in its employ because of his satis-
factory performance and suggested that he ask Bettsy to resign from her company instead. Glaxo likewise ac-
ceded to his repeated requests for more time to resolve the conflict of interest. When the problem could not be
resolved after several years of waiting, Glaxo was constrained to reassign Tecson to a sales area different from
that handled by his wife for Astra. Notably, In Tecson’s transfer, Glaxo even considered the welfare of Tecson’s
family. Clearly, the foregoing dispels any suspicion of unfairness and bad faith on the part of Glaxo
STAR PAPER CORPORATION vs. SIMBOL

G.R. No. 164774, April 12, 2006.
FACTS:
Star Paper Corporation is a corporation engaged in trading of paper products. Simbol, Comia and Estrella were all
regular employees of the company.
Simbol and Comia were both employed by the company prior to their respective marriages with fellow co-
employees. Prior the marriage, they were both advised by the managing director that should they decide to get
married one of them should resign pursuant to a company policy against marriages between employees. Both
complied with the advisory.
Estrella was an employee of the company. She had a relationship with a co-worker which led to getting pregnant but
her co-worker was a married man. The company terminated her due to immorality but she opted to resign to be
able to claim her 13th month pay.
Simbol, Comia and Estrella filed a complaint for unfair labor practice, constructive dismissal, separation pay and
attorney’s fees.
a) Petitioner’s Arguments (Star Paper– Lost)

Star Paper’s sole contention that "the company did not just want to have two (2) or more of its employees related
between the third degree by affinity and/or consanguinity.” In order to conform with the existing company poli-
cy against nepotism and no-spouse employment policy.
Respondents submit that their dismissal violates the above provision. Petitioners allege that its policy "may appear
to be contrary to Article 136 of the Labor Code”. The rule does not require the woman employee to resign. The
employee spouses have the right to choose who between them should resign. Further, they are free to marry per-
sons other than co-employees. Hence, it is not the marital status of the employee, per se, that is being discrimi-
nated. It is only intended to carry out its no-employment-for-relatives- within-the-third-degree-policy which is
within the ambit of the prerogatives of management.
b) Respondent’s Argument’s (Simbol, Comia and Estrella- Win)

Respondents offer a different version of their dismissal. Simbol and Comia allege that they did not resign voluntari-
ly; they were compelled to resign in view of an illegal company policy.
As to respondent Estrella, she alleges that she had a relationship with co-worker Zuñiga who misrepresented himself
as a married but separated man. She had ceased the relationship between her and Zuniga. After the events of the
affair, she met an accident and was advised by the doctor to recuperate - when she returned to work she found
out that her name was on-hold at the gate. She was denied entry. She was directed to proceed to the personnel
office where one of the staff handed her a memorandum. The management asked her to write an explanation
(pertaining to the relationship she had with a co-worker.) However, after submission of the explanation, she was
nonetheless dismissed. She unwillingly handed her resignation in exchange for her 13th month pay.
ISSUE:
First: Whether or not the company policy is violative of Article 134 - stipulation against marriage.
Second: Whether or not estrella’s resignation was purely voluntary.
RULING:
Company policy is violative of the labor code.
Rule:
Article 134. Stipulation against marriage. It shall be unlawful for an employer to require as a condition of employ-
ment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or
tacitly that upon getting married a woman employee shall be deemed resigned or separated or to actually dis-
miss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.
Case law holds that voluntary resignation must be compelled by personal reason of the employee to dissociate him-
self from employment.
Application
A company policy against-nepotism (banning immediate family including spouses from working int he same com-
pany) and no-spouse employment policy (banning spouses only from working in the same company) can be va-
lid if the company can prove its reasonableness and business necessity.
However in this case, there was no reasonable business necessity. Respondents were hired because they were fit for
the job and were asked to resign when they got married. Hence the relevant inquiry here is if one is married,
would it prove to be detrimental to the business operations of the company? The premise on the fear that “em-
ployees married to each other will be less efficient and would be unable to properly perform their duties.” - is
not a valid justification. (Please see Duncan Assoc. v Glaxo case - the company policy against marriage with
employees of any competitor company was upheld because it proved to be prejudicial/detrimental against the
employer-company.)
With regards to Estrella, it cannot be adjudged that her resignation was purely voluntary. She never intended to re-
sign but was forced to tender her resignation in exchange for her 13th month pay.
Conclusion
Thus, failure of petitioners to prove a legitimate business concern in imposing a company policy against marriage
cannot be sustained as valid for it will prejudice employee’s right to be free from arbitrary discrimination with
regards to his/her civil status.
DEL MONTE PHILIPPINES Inc., petitioner vs. LOLITA VELASCO, defendant.

G.R. No. 153477. March 6, 2007.
FACTS:
Lolita M. Velasco (respondent) started working with Del Monte Philippines (petitioner) as a seasonal employee and
was regularized. In view of the said alleged absences without permission, notice of hearing was sent to respon-
dent notifying her of the charges filed against her for violating the Absence Without Official Leave rule. The
petitioner terminated the services of respondent. Feeling aggrieved, respondent filed a case for illegal dismissal
against petitioner asserting that her dismissal was illegal because she was on the family way suffering from uri-
nary tract infection, a pregnancy-borne, at the time she committed the alleged absences.
The Labor Arbiter held that the respondent was an incorrigible absentee; NLRC declared the dismissal of complai-
nant as ILLEGAL. The CA AFFIRMED in toto the decision of the NLRC.
a) Petitioner’s Arguments(Del Monte Phils. Inc. – Lost)

The evidence proffered by the respondent, respondent was absent without permission on several other days which
were not supported by any other proof of illness, specifically, on August 15, 16, 17, 18, 31, 1994 and September
1, 2, 3, 9, and 10, 1994, and, hence, she is guilty of ten unjustified absences.
Petitioner cited Per Filflex Industrial and Manufacturing Co. v. National Labor Relations Commission, if the medi-
cal certificate fails to refer to the specific period of the employee’s absence, then such absences, attributable to
chronic asthmatic bronchitis, are not supported by competent proof and, hence, they are unjustified. By parity of
reasoning, in the absence of evidence indicating any pregnancy-borne illness outside the period stated in res-
pondent’s medical certificate, such illness ought not to be considered as an acceptable excuse for respondent’s
excessive absences without leave.
Respondent’s latest string of absences, taken together with her long history of absenteeism without permission, es-
tablished her gross and habitual neglect of duties, as established by jurisprudence
The respondent was dismissed not by reason of her pregnancy but on account of her gross and habitual neglect of
duties. In other words, her pregnancy had no bearing on the decision to terminate her employment. Her state of
pregnancy per se could not excuse her from filing prior notice for her absence.
b) Respondent’s Argument’s (Lolita Velasco - Won)

Respondent contends there was illegal dismissal against petitioner asserting that her dismissal was illegal because
she was on the family way suffering from urinary tract infection, a pregnancy-borne, at the time she committed
the alleged absences.
ISSUE:
Whether the employment of respondent had been validly terminated on the ground of excessive absences without
permission. Corollary to this is the question of whether the petitioner discharged the respondent on account of
pregnancy, a prohibited act.
RULING:
the petition is DENIED Court of Appeals are AFFIRMED.
Rule:
In this jurisdiction of tardiness and absenteeism, like abandonment, are recognized forms of neglect of duties, the
existence of which justify the dismissal of the erring employee. Respondent’s rule penalizing with discharge
any employee who has incurred six (6) or more absences without permission or subsequent justification is ad-
mittedly within the purview of the foregoing standard.
Petitioner’s contention that the cause for the dismissal was gross and habitual neglect unrelated to her state of preg-
nancy is unpersuasive. The Court agrees with the CA in concluding that respondent’s sickness was pregnancy-
related and, therefore, the petitioner cannot terminate respondent’s services because in doing so, petitioner will,
in effect, be violating the Labor Code which prohibits an employer to discharge an employee on account of the
latter’s pregnancy.
The Court finds no cogent reason to disturb the findings of the NLRC and the CA that the respondent was able to
subsequently justify her absences in accordance with company rules and policy; that the respondent was preg-
nant at the time she incurred the absences; that this fact of pregnancy and its related illnesses had been duly
proven through substantial evidence; that the respondent attempted to file leaves of absence but the petitioner’s
supervisor refused to receive them; that she could not have filed prior leaves due to her continuing condition;
and that the petitioner, in the last analysis, dismissed the respondent on account of her pregnancy, a prohibited
act. The Court is convinced that the petitioner terminated the services of respondent on account of her pregnan-
cy which justified her absences and, thus, committed a prohibited act rendering the dismissal illegal. wherefore,
the petition is denied, Decision of the Court of Appeals is affirmed.
Application:
In this case, if we were to allow an employer to dimiss an employee on account of pregnancy then such is a violation
of Art. 137 of the It shall be unlawful for any employer Section (2) To discharge such woman on account of
her pregnancy, while on leave or in confinement due to her pregnancy. It must be stressed that respondent’s
discharge by reason of absences caused by her pregnancy is covered by the prohibition under the Labor Code.
Since her last string of absences is justifiable and had been subsequently explained, the petitioner had no legal
basis in considering these absences together with her prior infractions as gross and habitual neglect.
Conclusion:
Thus, petitioner terminated the services of respondent on account of her pregnancy which justified her absences and,
thus, committed a prohibited act rendering the dismissal illegal.
ARMANDO G. YRASUEGUI,petitioner vs. PHILIPPINE AIRLINES, INC.,respondent

G.R. No. 168081, October 17, 2008
FACTS:
Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL). He
stands five feet and eight inches (5’8") with a large body frame. The proper weight for a man of his height and
body structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin and
Crew Administration Manual of PAL.
In 1984, the weight problem started, which prompted PAL to send him to an extended vacation until November
1985. He was allowed to return to work once he lost all the excess weight. But the problem recurred. He again
went on leave without pay from October 17, 1988 to February 1989.
Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner remained overweight. On
January 3, 1990, he was informed of the PAL decision for him to remain grounded until such time that he satis-
factorily complies with the weight standards. Again, he was directed to report every two weeks for weight
checks, which he failed to comply with.
On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight check would be dealt
with accordingly. He was given another set of weight check dates, which he did not report to. Thus on Novem-
ber 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company stan-
dards on weight requirements.
Petitioner’s Contention (Yrasegui):

He did not deny being overweight. What he claimed, instead, is that his violation, if any, had already been condoned
by PAL since no action has been taken by the company regarding his case since 1988. He also claimed that
PAL discriminated against him because the company has not been fair in treating the cabin crew members who
are similarly situated.On December 8, 1992, a clarificatory hearing was held where petitioner manifested that he
was undergoing a weight reduction program to lose at least two (2) pounds per week so as to attain his ideal
weight. Petitioner also advanced that obesity is a "physical abnormality and/or illness thus, should not be a
ground for dismissal.
Respondent’s Contention (Philippine Airlines, Inc.):

Due to his inability to attain his ideal weight as a continuing cabin crew requirementand considering the “utmost
leniency” extended to the petitioner “which spanned a period covering a total of almost five (5) years,” his ser-
vices were considered terminated “effective immediately.”
LABOR ARBITER:Petitioner was illegally dismissed. The weight standards of PAL are reasonable in view of the
nature of the job of petitioner.However, the weight standards need not be complied with under pain of dismissal
since his weight did not hamper the performance of his duties.Assuming it did, petitioner could be transferred to
other positions where his weight would not be a negative factor.
NLRC: Affirmed illegal dismissal. Obesity, or the tendency to gain weight uncontrollably regardless of the amount
of food intake, is a disease in itself. As a consequence, there can be no intentional defiance or serious miscon-
duct by petitioner to the lawful order of PAL for him to lose weight.
CA: Reversed NLRC ruling. Weight standards of PAL are meant to be a continuing qualification for an employee’s
position. Failure to adhere is an analogous causefor the dismissal of an employee under Article 282(e) [now
297(e)] of the Labor Code in relation to Article 282(a) [now 297(a)].It is a bona fide occupational qualifica-
tionwhich, in case of violation, "justifies an employee’s separation from the service."Thus, petitioner was legal-
ly dismissed because he repeatedly failed to meet the prescribed weight standards. It is obvious that the issue of
discrimination was only invoked by petitioner for purposes of escaping the result of his dismissal for being
overweight.
ISSUE:
Whether or not petitioner was validly dismissed?
RULING:
Court of Appealsis AFFIRMED but MODIFIED in that petitioner Armando G. Yrasuegui is entitled to separation
pay in an amount equivalent to one-half (1/2) month’s pay for every year of service, which should include his regu-
lar allowances.
Rule/s: SC upheld the legality of dismissal.

 Obesity of petitioner is a ground for dismissal under Article 282(e)[now 297e] of the Labor Code.(Article
297. (282) Termination by Employer - An employer may terminate an employee under the following cases: (e)
Other causes analogous to the foregoing.)
The standards violated in this case were not mere “orders” of the employer but were the "prescribed weights"
that a cabin crew must maintain in order to qualify for and keep his or her position in the company. They were stan-
dards that establish continuing qualificationsfor an employee’s position. In this sense, the failure to maintain these
standards does not fall under Article 282(a) whose express terms require the element of willfulness in order to be a
ground for dismissal. The failure to meet the employer’s qualifying standardsis in fact a ground that does not
squarely fall under grounds (a) to (d) and is therefore one that falls under Article 282(e) – the "other causes analog-
ous to the foregoing."
By its nature, these "qualifying standards" are norms that apply prior to and afteran employee is hired. They
applyprior to employmentbecause these are the standards a job applicant must initially meet in order to be hired.
They apply after hiringbecause an employee must continue to meet these standards while on the job in order to keep
his job.
Application: The obesity of petitioner, when placed in the context of his work as flight attendant, becomes an
analogous cause under Article 282(e) of the Labor Code.
His obesitywas not a disease. He was able to reduce his weight from 1984 to 1992 clearly showing that it is
possible for him to lose weight given the proper attitude, determination, and self-discipline. Thus, his fluctuating
weight indicates absence of willpower rather than an illness.His obesity may not be unintended, but is nonetheless
voluntary. “Voluntariness” basically means that the just cause is solely attributable to the employee without any
external force influencing or controlling his actions. This element runs through all just causes under Article 282
9now Article 297), whether they be in the nature of a wrongful action or omission. Gross and habitual neglect, a
recognized just cause, is considered voluntary although it lacks the element of intent found in Article 282(a), (c), and
(d) (now Artcile 297(a-d).”
 Dismissal of petitioner can be predicated on thebona fide occupational qualification defense.

Employment in particular jobs may not be limited to persons of a particular sex, religion, or national origin un-
less the employer can show that sex, religion, or national origin is an actual qualification for performing the job. The
qualification is called a bona fide occupational qualification (BFOQ). In the United States, there are a few federal
and many state job discrimination laws that contain an exception allowing an employer to engage in an otherwise
unlawful form of prohibited discrimination when the action is based on a BFOQ necessary to the normal operation
of a business or enterprise.
As petitioner contends that BFOQ is a statutory defense, that does not exist if there is no statute providing for it
and that there is no existing BFOQ statute that could justify his dismissal , SC held that the Constitution,the Labor
Code, and RA No. 7277or the Magna Carta for Disabled Persons contain provisions similar to BFOQ.
TheMeiorin Test (US jurisprudence) in determining whether an employment policy is justified.
(1) the employer must show that it adopted the standard for a purpose rationally connected to the performance of the
job;
(2) the employer must establish that the standard is reasonably necessary to the accomplishment of that work-related
purpose; and
(3) the employer must establish that the standard is reasonably necessary in order to accomplish the legitimate work-
related purpose.
In Star Paper Corporation v. Simbol, the Court held that in order to justify a BFOQ, the employer must prove:
(1) the employment qualification is reasonably related to the essential operation of the job involved; and
(2) that there is factual basis for believing that all or substantially all persons meeting the qualification would be
unable to properly perform the duties of the job.
In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ. BFOQ is valid
“provided it reflects an inherent quality reasonably necessary for satisfactory job performance.”
Application: The weight standards of PAL are reasonable under the BFOQ.
A common carrier, from the nature of its business and for reasons of public policy, is bound to observe extraor-
dinary diligence for the safety of the passengers it transports. It is bound to carry its passengers safely as far as hu-
man care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the
circumstances. In order to achieve this, it must necessarily rely on its employees, most particularly the cabin flight
deck crew who are on board the aircraft. The law leaves no room for mistake or oversight on the part of a common
carrier. Thus, it is only logical to hold that the weight standards of PAL show its effort to comply with the exacting
obligations imposed upon it by law by virtue of being a common carrier.
The primary objective of PAL in the imposition of the weight standards for cabin crew is flight safety. The big-
gest problem with an overweight cabin attendant is the possibility of impeding passengers from evacuating the air-
craft, should the occasion call for it. The job of a cabin attendant during emergencies is to speedily get the passen-
gers out of the aircraft safely.Being overweight necessarily impedes mobility. Three lost seconds can translate into
three lost lives. Evacuation might slow down just because a wide-bodied cabin attendant is blocking the narrow
aisles. These possibilities are not remote.
Petitioner is also in estoppel. He does not dispute that the weight standards of PAL were made known to him
prior to his employment. He is presumed to know the weight limit that he must maintain at all times. Never did he
question the authority of PAL when he was repeatedly asked to trim down his weight. Good faith demands that what
is agreed upon shall be done.The weight standards of PAL provide for separate weight limitations based on height
and body frame for both male and female cabin attendants. A progressive discipline is imposed to allow non-
compliant cabin attendants sufficient opportunity to meet the weight standards. Thus, the clear-cut rules obviate any
possibility for the commission of abuse or arbitrary action on the part of PAL.
 Petitioner failed to substantiate his claim that he was discriminated against by PAL.
Burden of proof lies on the party alleging discrimination.
Application: Petitioner cannot establish discrimination by simply naming the supposed cabin attendants who are
allegedly similarly situated with him. Substantial proof must be shown as to how and why they are similarly situated
and the differential treatment petitioner got from PAL despite the similarity of his situation with other em-
ployees.Petitioner failed to indicate their respective ideal weights; weights over their ideal weights; the periods they
were allowed to fly despite their being overweight; the particular flights assigned to them; the discriminating treat-
ment they got from PAL; and other relevant data that could have adequately established a case of discriminatory
treatment by PAL. In the words of the CA, "PAL really had no substantial case of discrimination to meet."
Agreeing with CA, the element of discrimination came into play in this case only as a secondary position for the
private respondent in order to escape the consequence of dismissal that being overweight entailed. It is a confession-
and-avoidance position that impliedly admitted the cause of dismissal, including the reasonableness of the applicable
standard and the private respondent’s failure to comply.
 Entitled to separation pay, even if terminated for just cause

Normally, a legally dismissed employee is not entitled to separation pay. This may be deduced from the lan-
guage of Article 279 [now Article 294] of the Labor Code that "an employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, in-
clusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensa-
tion was withheld from him up to the time of his actual reinstatement."
Exceptionally, separation pay is granted to a legally dismissed employee as an act “social justice,” or based on
“equity.” Provided the dismissal: (1) was not for serious misconduct; and (2) does not reflect on the moral character
of the employee.
Application: Supreme Court granted petitioner separation pay equivalent to one-half (1/2) month’s pay for
every year of service including regular allowances which he might have been receiving.We are not blind to the fact
that he was not dismissed for any serious misconduct or to any act which would reflect on his moral character. We
also recognize that his employment with PAL lasted for more or less a decade
Conclusion:
Therefore, the weight standard of PAL for its cabin crew is reasonable under the bona fide occupational qualifi-
cation and constitutes a continuing qualification for them to keep their job. Petitioner’s dismissal was held to be of
just cause and valid falling under Article 282(e) now Article 297(e) of the Labor Code of the Philippines and as an
exception he is entitled to a separation pay in this case.
A VIOLATION OF WAGE ORDER 59
S.I.P. Food House, petitioner et al., vs. Batolina, defendant

GR No. 192473, Oct 11, 2010
Facts:
The GSIS Multi-purpose Cooperative (GMPC) , an organized group by employees of wanted to operate in the
canteen of the new GSIS Building however recognizing the lack of capabilities and expertise, the organization
tapped the services of S.I.P Food house through concessionaire. Batolina is a worker in the canteen as a waiter.
GMPC, on 2004, terminated its contract of concessionaire with S.I.P. The same termination ended the employment
of Batolina which prompted him together with his colleagues a complaint for illegal dismissal.
Batolina, argued that they were illegally dismissed and that the S.I.P did not implement the Wage Orders No. 5
until 11 from years 1997 to 2004 as they were deprived from receiving overtime pay although they were asked to
work from 6:30 in the morning until 5:30 and other special benefits.
The labor arbiter ruled that Batolina and his company are not employees of S.I.P rather that of GMPC. The S.I.P
is not liable for money claims for it extended benefits of free board and lodging seven days a week apart from daily
wage amounting from Php 160.00 to Php 220.00.
NLRC affirmed the decision of the Labor Arbiter and that ordered that the employees are not entitled to their
money claims as they have failed to establish that they deserved the overtime pay by substantial evidence.
CA sustained the decision of both NLRC and Labor arbiter that S.I.P. is the employer of the petitioners. It how-
ever ordered the case to be remanded for the computation of their payments as they found out that there were no
evidence to establish the money claim of the Batolina.
a) Petitioner’s Argument:
S.I.P erred in sustaining the decision of both NLRC and Labor Arbiter. It said that they cannot be liable for any
money claims as the fact of employer-employee relationship cannot be established. Furthermore, it argued that
the wage deduction was necessary so as cover the employee’s facilities such as its board and lodging.
b) Respondent’s Argument:
Respondent said there is an employer-employee relationship existing during the time of their employment. In
this premise, their employer deprived them their right to receive reasonable wage for 11 years because of not
paying their overtime dues.
Issue Whether the employees are illegally dismissed in this situation? Whether the Wage Orders violated upon its
non-implementation?
Ruling: There exists an employer-employee relationship as between S.I.P and Batolina as it was established that
S.I.P has exercised essential elements for employment relationship such as hiring, payment of wages and power of
control. Hence it cannot be stated that the S.I.P is mere agent from GMPC.
Anent the second issue, the court found out that there was indeed violation of the Wage Orders as the free board and
lodging cannot be considered to set-off the underpayment of wages. The court further cited the case of Mabeza vs.
NLRC 271 SCRA 670 wherein it stated the wages cannot be simply deducted with the amount of board and lodging
without satisfying the requirements of (1) proof that facilities are customarily furnished, (2) voluntary acceptance by
employees on the deduction, (3) proof of reasonability and fairness of the amount of deduction. The court found that
S.I.P failed to satisfy these requirements.
Application:
The rule involving this case is about the deduction of facilities necessary for the employee’s sustenance from
their daily wage. Labor Code provides that the employer cannot deduct the facilities such as that of board and lodg-
ing from his employee’s daily wage rate. However, the law seems to provide some qualification to the provision in
such a way that the interpretation of the law to the word “deduction” would mean “arbitrary deduction”. This means
to say that any deduction of facilities from main wage is now allowed provided that the employer complies with
certain requirements. This jurisprudence cited the case of Mabeza vs. NLRC wherein it has stated that the require-
ment of wage deduction would be (1) proof that facilities are customarily furnished, (2) voluntary acceptance by
employees on the deduction, (3) proof of reasonability and fairness of the amount of deduction. These requirements
if complied would pass upon the test of arbitrariness; hence it is to be considered now that the deduction could be
legally allowed.
Conclusion: Thus, it is sufficient to state that the law protects the employees from arbitrary deduction of their daily
wage in an amount equivalent to the facilities. Without the satisfaction of the requirements provided, any deduction
made shall be considered violation of the law.
SLL INTERNATIONAL CABLES SPECIALIST AND SONNY L. LAGON, petitioner v. NLRCet. al, defen-
dant.
G.R. No. L-172161. March 2, 2011.
FACTS:
Sometime in 1996, and January 1997, private respondents Roldan Lopez, Danilo Cañete, and Edgardo Zuñiga
respectively, were hired by petitioner Lagon as apprentice or trainee cable/lineman. They were paid the full mini-
mum wage and the other benefits but since they were trainees, they did not report for regular work. They came as
substitutes to the regular workers or in undertaking that needed extra workers to expedite completion of work. After
their training, private respondents were involved as project employees by the petitioners in their Iscalom project in
Bohol. They started on March 15, 1997 until December 1997. Their employment was terminated upon the comple-
tion of their project. They received the amount of ₱145.00, the minimum prescribed daily wage for Region VII. In
July 1997, the amount of ₱145 was increased to ₱150.00 by the Regional Wage Board (RWB) and in October 1997,
it was again increased to ₱155.00. Sometime in March 1998, Zuñiga and Cañete were employed again by Lagon as
project employees for its PLDT Antipolo, Rizal project, which ended in late September 1998, along with their e m-
ployment. For this project, Zuñiga and Cañete received the daily wage of ₱145.00. The minimum prescribed wage
for Rizal at that time was ₱160.00.
Sometime in late November 1998, private respondents re-applied in the Racitelcom project of Lagon in Bula-
can. Theywerere-hired for the said specific project. For this, they received the wage of ₱145.00. Again, upon com-
pletion of their project in March 1999, private respondents went home to Cebu City.
On May 21, 1999, private respondents worked, for the 4th time, with Lagon’s project in Camarin, Caloocan
City with Furukawa Corporation as the general contractor. Their contract would expire on February 28, 2000, the
period of completion of the project. From May 21, 1997-December 1999, private respondents received the wage of
₱145.00. At this time, the minimum prescribed rate for Manila was ₱198.00. In January to February 28, the three
received the wage of ₱165.00. The existing rate at that time was ₱213.00.
For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project
was not completed on the scheduled date of completion. Faced with economic problems, Lagon was constrained to
cut down the overtime work of its workers, including private respondents. Thus, when requested by private respon-
dents on February 28, 2000 to work overtime, Lagon refused and told private respondents that if they insist, they
would have to go home at their own expense and that they would not be given anymore time nor allowed to stay in
the quarters. This prompted private respondents to leave their work and went home to Cebu. On March 3, 2000, pri-
vate respondents filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for
1997 and 1998 and service incentive leave pay as well as damages and attorney’s fees.
a.) Petitioner’s arguments:(SLL International Cables Specialist, Sonny L. Lagon – Lost)

Petitioners admit employment of private respondents but claimed that the latter were only project employees,
for their services were merely engaged for a specific project or undertaking and the same were covered by contracts
duly signed by private respondents.
Petitioners further alleged that the food allowance of ₱63.00 per day as well as the value of private respondents
allowance for lodging house, transportation, electricity, water and snacks allowance should be added to their basic
pay. They further said that the lack of written acceptance of the employees of the facilities enjoyed by them should
not mean that the value of the facilities could not be included in the computation of the private respondents’ "wag-
es."With these, petitioners claimed that private respondents received higher wage rate than that prescribed in Rizal
and Manila.
b.) Private respondent’s arguments: (NLRC – Win)

The NLRC upheld the LA’s finding that private respondents were regular employees because they were repeat-
edly hired by petitioners and they performed activities which were usual, necessary and desirable in the business or
trade of the employer.
With regards to the underpayment of wages, they have found that private respondents were underpaid. It ruled
that the free board and lodging, electricity, water, and food enjoyed by them could not be included in the computa-
tion of their wages because these were given without their written consent.
ISSUES:
1. Whether or not the respondents should be allowed to recover the differential due to the failure of the petitioner
to pay the minimum wage
2. Whether or not the value of facilities that the private respondents enjoyed should be included in the computation
of the “wages” received by them
RULING:
Private respondents should be allowed to recover the differential due to failure of petitioner to pay the minimum
wage and the benefits private respondents enjoyed should not be included in the computation of the “wages” re-
ceived by them.
Rule:
As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of proving
it.With respect to labor cases, the burden of proving payment of monetary claims rests on the employer, the rationale
being that the pertinent personnel files, payrolls, records, remittances and other similar documents — which will
show claims of workers have been paid — are not in the possession of the worker but in the custody and absolute
control of the employer.
Section 3, Rule VII of the Rules to Implement the Labor Code specifically enumerates those who are not cov-
ered by the payment of minimum wage. Project employees are not among them. On whether the value of the facili-
ties should be included in the computation of the "wages" received by private respondents, Section 1 of DOLE Me-
morandum Circular No. 2 provides that an employer may provide subsidized meals and snacks to his employees
provided that the subsidy shall not be less than 30% of the fair and reasonable value of such facilities. In such cases,
the employer may deduct from the wages of the employees not more than 70% of the value of the meals and snacks
enjoyed by the latter, provided that such deduction is with the written authorization of the employees concerned.
Before the value of facilities can be deducted from the employees’ wages, the following requisites must all be
attendant: first, proof must be shown that such facilities are customarily furnished by the trade; second, the provision
of deductible facilities must be voluntarily accepted in writing by the employee; and finally, facilities must be
charged at reasonable value. Mere availment is not sufficient to allow deductions from employees’ wages.
Application:
In this case, petitioners, aside from bare allegations that private respondents received wages higher than the pre-
scribed minimum, failed to present any evidence, such as payroll or pay slips, to support their defense of payment.
Thus, petitioners utterly failed to discharge the onus probandi.
In the issue of the deduction of facilities from the employees’ wages, the requirements, however, have not been
met in this case. SLL failed to present any company policy or guideline showing that provisions for meals and lodg-
ing were part of the employee’s salaries. It also failed to provide proof of the employees’ written authorization,
much less show how they arrived at their valuations. At any rate, it is not even clear whether private respondents
actually enjoyed said facilities.
Conclusion:
Thus, private respondents are allowed to recover the differential due to petitioner’s failure to pay the minimum
wage,as the former are entitled to the minimum wage, whether they are regular or non-regular employees. Further,
the value of the items provided by SLL should not be deducted from their wages, as they were given freelyfor the
purpose of maintaining the efficiency and health of its workers while they were working at their respective projects.
VERGARA, JR. vs. COCA-COLA BOTTLERS PHILS INC.

G.R. No. 176985, April 1, 2013
Facts:
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from
May 1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Piñas City, Metro
Manila.
As stipulated in respondent's existing Retirement Plan Rules and Regulations at the time, the Annual Perfor-
mance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of retirement benefits, as
follows: Basic Monthly Salary + Monthly Average Performance Incentive (which is the total performance
incentive earned during the year immediately preceding 12 months) No. of Years in Service.
Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives (SMI) and to
the amount of PhP496,016.67which respondent allegedly deducted illegally, representing the unpaid accounts of
two dealers within his jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the payment
of his "FullRetirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moraland Ex-
emplary Damages, and Attorney's Fees."
(Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless of whether or not they
qualify to the same had ripened into company practice. The only two pieces of evidence that he stubbornly presented
throughout the entirety of this case are the sworn statements of Renato C. Hidalgo (Hidalgo) and Ramon V. Velaz-
quez (Velasquez), former DSSs of respondent who retired in 2000 and 1998, respectively. They claimed that the
SMI was included in their retirement package even if they did not meet the sales and collection qualifiers. Therefore,
the failure of employer to grant him his SMI is a violation on the principle of non-diminution of benefits.)
Issue:
Whether the granting of SMI to all retired DSSs regardless of whether or not they qualify to the same had ripened
into company practice
Ruling:
No.
Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer.
Thus, any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is actually founded on the Constitutional
mandate to protect the rights of workers, to promote their welfare, and to afford them full protection. In turn, said
mandate is the basis of Article 4 of the Labor Code which states that "all doubts in the implementation and interpre-
tation of this Code, including its implementing rules and regulations, shall be rendered in favor of labor."
There is diminution of benefits when the following requisites are present:
1. the grant or benefit is founded on a policy or has ripened into a practice over a long period of time;
2. the practice is consistent and deliberate;
3. the practice is not due to error in the construction or application of a doubtful or difficult question
of law; and
4. The diminution or discontinuance is done unilaterally by the employer.
To be considered as a regular company practice, the employee must prove by substantial evidence that the giv-
ing of the benefit is done over a long period of time, and that it has been made consistently and deliberately. Juri-
sprudence has not laid down any hard-and fast rule as to the length of time that company practice should have been
exercised in order to constitute voluntary employer practice. The common denominator in previously decided cases
appears to be the regularity and deliberateness of the grant of benefits over a significant period of time. It requires an
indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees
are not covered by any provision of the law or agreement requiring payment thereof. In sum, the benefit must be
characterized by regularity, voluntary, and deliberate intent of the employer to grant the benefit over a considerable
period of time.
Upon review of the entire case records, there is no substantial evidence to prove that the grant of SMI to
all retired DSSs regardless of whether or not they qualify to the same had ripened into company practice.
Petitioner utterly failed to adduce proof to establish his allegation that SMI has been consistently, deliberately
and voluntarily granted to all retired DSSs without any qualification or conditions whatsoever. The only two pieces
of evidence that he stubbornly presented throughout the entirety of this case are the sworn statements of Hidalgo and
Velasquez, former DSSs of respondent who retired in 2000 and 1998, respectively. They claimed that the SMI was
included in their retirement package even if they did not meet the sales and collection qualifiers.However, juxtapos-
ing these with the evidence presented by respondent would reveal the frailty of their statements.
The declarations of Hidalgo and Velazquez were sufficiently countered by respondent through the affidavits
executed by Biola, Escasura, and Balles. Balles confirmed that petitioner failed to meet the trade receivable qualifi-
ers of the SMI. She also cited the cases of Valencia and Gutierrez, both DSSs of respondent who retired on January
31, 2002 and December 30, 2002, respectively. She noted that, unlike Valencia, Gutierrez also did not receive the
SMI as part of his retirement pay, since he failed to qualify under the policy guidelines. The verity of all these
statements and representations stands and holds true, considering that petitioner did not present any iota of proof to
debunk the same.
The granting of the SMI in the retirement package of Velazquez was an isolated incident and could hardly be
classified as a company practice that may be considered an enforceable obligation. To repeat, the principle against
diminution of benefits is applicable only if the grant or benefit is founded on an express policy or has ripened
into a practice over a long period of time which is consistent and deliberate; it presupposes that a company
practice, policy and tradition favorable to the employees has been clearly established; and that the payments
made by the company pursuant to it have ripened into benefits enjoyed by them. Certainly, a practice or cus-
tom is, as a general rule, not a source of a legally demandable or enforceable right. Company practice, just like any
other fact, habits, customs, usage or patterns of conduct, must be proven by the offering party who must allege and
establish specific, repetitive conduct that might constitute evidence of habit or company practice.
Royal Plant Workers Union, petitioner vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant, respondentG.R. No.
198783, April 15, 2013
FACTS:
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic corporation engaged in the manufacture,
sale and distribution of softdrink products. It has several bottling plants all over the country, one of which is located
in Cebu City. Under the employ of each bottling plant are bottling operators. In the case of the plant in Cebu City,
there are 20 bottling operators who work for its Bottling Line 1 while there are 12-14 bottling operators who man its
Bottling Line 2. All of them are male and they are members of herein respondent Royal Plant Workers Union
(ROPWU).
In 1974, the bottling operators of then Bottling Line 2 were provided with chairs upon their request. In 1988,
the bottling operators of then Bottling Line 1 followed suit and asked to be provided also with chairs. Their request
was likewise granted. Sometime in September 2008, the chairs provided for the operators were removed pursuant to
a national directive of petitioner. This directive is in line with the "I Operate, I Maintain, I Clean" program of peti-
tioner for bottling operators, wherein every bottling operator is given the responsibility to keep the machinery and
equipment assigned to him clean and safe. The program reinforces the task of bottling operators to constantly move
about in the performance of their duties and responsibilities.
The bottling operators took issue with the removal of the chairs. Through the representation of herein respon-
dent, they initiated the grievance machinery of the Collective Bargaining Agreement (CBA) in November 2008.
Even after exhausting the remedies contained in the grievance machinery, the parties were still at a deadlock with
petitioner still insisting on the removal of the chairs and respondent still against such measure. As such, respondent
sent a Notice to Arbitrate, dated 16 July 2009
On June 11, 2010, the Arbitration Committee rendered a decision in favor of the Royal Plant Workers Union
(the Union) and against CCBPI, the dispositive portion of which reads, as follows:
Not contented with the Arbitration Committee’s decision, CCBPI filed a petition for review under
Rule 43 before the CA.
Ruling of the CA
On May 24, 2011, the CA rendered a contrasting decision which nullified and set aside the decision of the Ar-
bitration Committee.
a) Petitioner’s Arguments (Bisigmanggagawasatryco– LOST)

Union argues that the proper remedy in challenging the decision of the Arbitration Committee before the CA is
a petition for certiorari under Rule 65. The petition for review under Rule 43 resorted to by CCBPI should have been
dismissed for being an improper remedy. The Union points out that the parties agreed to submit the unresolved
grievance involving the removal of chairs to voluntary arbitration pursuant to the provisions of Article V of the ex-
isting CBA. Hence, the assailed decision of the Arbitration Committee is a judgment or final order issued under the
Labor Code of the Philippines. Section 2, Rule 43 of the 1997 Rules of Civil Procedure, expressly states that the said
rule does not cover cases under the Labor Code of the Philippines. The judgments or final orders of the Voluntary
Arbitrator or Panel of Voluntary Arbitrators are governed by the provisions of Articles 260, 261, 262, 262-A, and
262-B of the Labor Code of the Philippines.
On the substantive aspect, the Union argues that there is no connection between CCBPI’s "I Operate, I Main-
tain, I Clean" program and the removal of the chairs because the implementation of the program was in 2006 and the
removal of the chairs was done in 2008. The 30-minute break is part of an operator’s working hours and does not
make any difference.
b) Respondent’s Argument’s (Tryco Pharma Corp - WON)

CCBPI reiterates the ruling of the CA that a petition for review under Rule 43 of the Rules of Court was the
proper remedy to question the decision of the Arbitration Committee. It likewise echoes the ruling of the CA that the
removal of the chairs was a legitimate exercise of management prerogative; that it was done not to harm the bottling
operators but for the purpose of optimizing their efficiency and CCBPI’s machineries and equipment; and that the
exercise of its management prerogative was done in good faith and not for the purpose of circumventing the rights of
the employees under the special laws, the CBA or the general principles of justice and fair play.
ISSUE:
Whether or not the proper remedy of challenging before said court the decision of the voluntary arbitrator or
panel of voluntary arbitrators.
Whether or not there was valid removal of the chairs.
RULING:
The Court sustains the ruling of the CA on both issues.
Rule:
CCBPI is correct. This procedural issue being debated upon is not novel. The Court has already ruled in a num-
ber of cases that a decision or award of a voluntary arbitrator is appealable to the CA via a petition for review under
Rule 43. The recent case of Samahan Ng MgaManggagawa Sa Hyatt (SAMASAH-NUWHRAIN) v. Hon. Voluntary
Arbitrator Buenaventura C. Magsalin and Hotel Enterprises of the Philippines reiterated the well-settled doctrine on
this issue,Samahan ng mgaManggagawasa Hyatt-NUWHRAIN-APL v. Bacungan,7 we repeated the well-settled
rule that a decision or award of a voluntary arbitrator is appealable to the CA via petition for review under Rule 43.
We held that:
"The question on the proper recourse to assail a decision of a voluntary arbitrator has already been settled
in Luzon Development Bank v. Association of Luzon Development Bank Employees, where the Court held
that the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be appealable
to the COURT OF APPEALS, in line with the procedure outlined in Revised Administrative Circular No.
1-95 (now embodied in Rule 43 of the 1997 Rules of Civil Procedure), just like those of the quasi-judicial
agencies, boards and commissions enumerated therein, and consistent with the original purpose to provide
a uniform procedure for the appellate review of adjudications of all quasi-judicial entities.
On the second issue

A Valid Exercise of
Management Prerogative
The Court has held that management is free to regulate, according to its own discretion and judgment, all as-
pects of employment, including hiring, work assignments, working methods, time, place, and manner of work,
processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-
off of workers, and discipline, dismissal and recall of workers. The exercise of management prerogative, however, is
not absolute as it must be exercised in good faith and with due regard to the rights of labor.
Application:
In the present controversy, it cannot be denied that CCBPI removed the operators’ chairs pursuant to a national
directive and in line with its "I Operate, I Maintain, I Clean" program, launched to enable the Union to perform their
duties and responsibilities more efficiently. The chairs were not removed indiscriminately. They were carefully stu-
died with due regard to the welfare of the members of the Union. The removal of the chairs was compensated by: a)
a reduction of the operating hours of the bottling operators from a two-and-one-half (2 ½)-hour rotation period to a
one-and-a-half (1 ½) hour rotation period; and b) an increase of the break period from 15 to 30 minutes between
rotations.
No Violation of Article 100 of the Labor Code

The operators’ chairs cannot be considered as one of the employee benefits covered in Article 10016 of the
Labor Code. In the Court’s view, the term "benefits" mentioned in the non-diminution rule refers to monetary bene-
fits or privileges given to the employee with monetary equivalents.
Such benefits or privileges form part of the employees’ wage, salary or compensation making them enforceable ob-
ligations.
In this regard, the Court agrees with the CA when it resolved the matter and wrote:
Let it be stressed that the aforequoted article speaks of non-diminution of supplements and other employee ben-
efits. Supplements are privileges given to an employee which constitute as extra remuneration besides his or her
basic ordinary earnings and wages. From this definition, We can only deduce that the other employee benefits
spoken of by Article 100 pertain only to those which are susceptible of monetary considerations. Indeed, this
could only be the most plausible conclusion because the cases tackling Article 100 involve mainly with mone-
tary considerations or privileges converted to their monetary equivalents.
Conclusion:
Jurisprudence recognizes the exercise of management prerogatives. Labor Laws also discourage interference
with an employer's judgment in the conduct of its business. For this reason, the Court often declines to interfere in
legitimate business decisions of employers. The law must protect not only the welfare of the employees, but also the
right of the employers.
WHEREFORE, the petition is DENIED.

THE NATIONAL WAGES AND PRODUCTIVITY COMMISSION (NWPC) and THE REGIONAL TRI-
PARTITE WAGES AND PRODUCTIVITY BOARD (RTWPB)-NCR, petitioners, vs. THE ALLIANCE OF
PROGRESSIVE LABOR (APL) and THE TUNAY NA NAGKAKAISANG MANGGAGAWA SA ROYAL
(TNMR-APL), respondents.
G.R. No. 150326. March 12, 2014.
FACTS:
RTWPB-NCR issued Wage Order No. NCR-07 on October 14, 1999 imposing an increase of P25.50/day
on the wages of all private sector workers and employees in the NCR and pegging the minimum wage rate in the
NCR at P223.50/day. However, Section 2 and Section 9 of Wage Order No. NCR-07 exempted certain sectors and
industries from its coverage, to wit:
Section 2. The adjustment in this Order does not cover the following:
A. [W]orkers in the following sectors which were granted corresponding wage increases on January 1,
1999 as prescribed by Wage Order No. NCR-06:
a.1. Agriculture workers
- Plantation P12.00
- Non-plantation P18.50
a.2. Cottage/handicraft industry P16.00
a.3. Private hospitals with bed capacity
of 100 or less P12.00
a.4. Retail/Service establishments
- Employing 11-15 workers P12.00
- Employing not more than 10 workers P19.00
B. Workers in small establishments employing less than ten (10) workers. HSEIAT
xxx xxxxxx
Section 9. Upon application with and as determined by the Board, based on documentation and other re-
quirements in accordance with applicable rules and regulations issued by the Commission, the following
may be exempt from the applicability of this Order:
1. Distressed establishments as defined in the NPWC Guidelines No. 01, series of 1996;
2. Exporters including indirect exporters with at least 50% export sales and with forward contracts with
their foreign buyers/principals entered into on or twelve (12) months before the date of publication of this
Order may be exempt during the lifetime of said contract but not to exceed twelve (12) months from the
effectivity of this Order.
a.) Petitioners’ Arguments ( The National Wages and Productivity Commission (NWPC) and the the
Regional Tripartite Wages and Productivity Board ( RTWPB) – NCR – Win )
On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize wages throughout the
Philippines, Republic Act No. 6727 created the NWPC and the RTWPBs of the different regions.
Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727, empowered the NWPC
to formulate policies and guidelines on wages, incomes and productivity improvement at the enterprise, industry and
national levels; to prescribe rules and guidelines for the determination of appropriate minimum wage and productivi-
ty measures at the regional, provincial or industry levels; and to review regional wage levels set by the RTWPBs to
determine whether the levels were in accordance with the prescribed guidelines and national development plans,
among others.
On the other hand, Article 122 (b) of the Labor Code, also amended by Section 3 of Republic Act No.
6727, tasked the RTWPBs to determine and fix minimum wage rates applicable in their region, provinces or indus-
tries therein; and to issue the corresponding wage orders, subject to the guidelines issued by the NWPC. The
RTWPBs were also mandated to receive, process and act on applications for exemption from the prescribed wage
rates as may be provided by law or any wage order.
b.) Respondents’ Aruguments (THE ALLIANCE OF PROGRESSIVE LABOR (APL) and THE TUNAY NA
NAGKAKAISANG MANGGAGAWA SA ROYAL (TNMR-APL) – Lost)
The Alliance of Progressive Labor (APL) and the TunaynaNagkakaisangManggagawasa Royal (TNMR)
filed an appeal with the NWPC assailing Section 2 (A) and Section 9 (2) of Wage Order No. NCR-07. They con-
tended that neither the NWPC nor the RTWPB-NCR had the authority to expand the non-coverage and exemptible
categories under the wage order; hence, the assailed sections of the wage order should be voided.
ISSUES:
(a) Whether or not the RTWPB-NCR had the authority to provide additional exemptions from the
minimum wage adjustments embodied in Wage Order No. NCR-07; and (b) whether or not Wage Order No.
NCR-07 complied with the requirements set by NWPC Guidelines No. 01, Series of 1996
RULING:
NWPC
NWPC upheld the validity of Section 2 (A) and Section 9 (2) of Wage Order No. NCR-07. It observed that
the RTWPB's power to determine exemptible categories was adjunct to its wage fixing function conferred by Article
122 (e) of the Labor Code, as amended by Republic Act No. 6727; that such authority of the RTWPB was also rec-
ognized in NWPC Guidelines No. 01, Series of 1996; that APL and TNMR did not adduce evidence to show any
arbitrariness on the part of the RTWPB-NCR when it included in Wage Order No. NCR-07 the disputed exclusio-
nary provisions; and that the RTWPB-NCR was able to submit strong and justifiable reasons for the inclusion of the
exemptible categories in Wage Order No. NCR-07.
Court of Appeals
CA granted the petition for certiorari, 10 holding that the powers and functions of the NWPC and RTWPB-
NCR as set forth in Republic Act No. 6727 did not include the power to grant additional exemptions from the ad-
justed minimum wage; that an administrative rule or regulation must be in harmony with the enabling law; and that
the statutory grant of power could not be extended by implication beyond what was necessary for their just and rea-
sonable execution.
The NWPC and RTWPB-NCR moved to reconsider the decision, but the CA denied their motion in the
resolution promulgated on September 11, 2001, ruling that notwithstanding the pronouncement in Nasipit Lumber
Company, Inc. v. National Wages and Productivity Commission to the effect that the NWPC had the power not
only to prescribe guidelines to govern wage orders but also to issue exemptions therefrom, Section 2 (A) and Section
9 (2) of Wage Order No. NCR-07 were invalid due to lack of approval by the NWPC.
Supreme Court
NWPC promulgated NWPC Guidelines No. 001-95 (Revised Rules of Procedure on Minimum Wage Fix-
ing) to govern the proceedings in the NWPC and the RTWPBs in the fixing of minimum wage rates by region, prov-
ince and industry. Section 1 of Rule VIII of NWPC Guidelines No. 001-95 recognized the power of the RTWPBs to
issue exemptions from the application of the wage orders subject to the guidelines issued by the NWPC,
viz.: ESTAIH
SECTION 1. APPLICATION FOR EXEMPTION. —
Whenever a wage order provides for exemption, applications for exemption shall be filed with the appro-
priate Board which shall process these applications, subject to the guidelines issued by the Commission.
The NWPC also issued NWPC Guidelines No. 01, Series of 1996, to fix the rules on the exemption from
compliance with the wage increases prescribed by the RTWPBs. Section 2 of the Guidelines No. 01 reads:
SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS. —
Exemption of establishments from compliance with the wage increases and cost of living allowances pre-
scribed by the Boards may be granted in order to (1) assist establishments experiencing temporary diffi-
culties due to losses maintain the financial viability of their businesses and continued employment of
their workers; (2) encourage the establishment of new businesses and the creation of more jobs, particu-
larly in areas outside the National Capital Region and Export Processing Zones, in line with the policy on
industry dispersal; and (3) ease the burden of micro establishments, particularly in the retail and service
sector, that have a limited capacity to pay.
Pursuant to the above, the following categories of establishments may be exempted upon application with
and as determined by the Board, in accordance with applicable criteria on exemption as provided in this
Guidelines; provided further that such categories are expressly specified in the Order.
1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10) workers SDITAC
4. Establishments adversely affected by natural calamities
Exemptible categories outside of the abovementioned list may be allowed only if they are in accord with
the rationale for exemption reflected in the first paragraph of this section. The concerned Regional Board
shall submit strong and justifiable reason/s for the inclusion of such categories which shall be subject to
review/approval by the Commission.
Under the guidelines, the RTWPBs could issue exemptions from the application of the wage orders as long
as the exemptions complied with the rules of the NWPC.
Application:
In this case, NWPC stated that it had reviewed and approved the challenged sections when it upheld the va-
lidity of Wage Order No. NCR-07 in its decisions of February 28, 2000 and July 17, 2000.
Conclusion:
The RTWPBs are the thinking group of men and women guided by statutory standards and bound by the
rules and guidelines prescribed by the NWPC. In the nature of their functions, the RTWPBs investigate and study all
the pertinent facts to ascertain the conditions in their respective regions. Hence, they are logically vested with the
competence to determine the applicable minimum wages to be imposed as well as the industries and sectors to ex-
empt from the coverage of their wage orders.
Lastly, Wage Order No. NCR-07 is presumed to be regularly issued in the absence of any strong showing
of grave abuse of discretion on the part of RTWPB-NCR. The presumption of validity is made stronger by the fact
that its validity was upheld by the NWPC upon review
YIELS HOG DEALER, petitioner, vs. John G. Macasio, respondent
FACTS:
John Macasio alleged that he had been working as a butcher for David since January 6, 1995. Macasio claimed
that David exercised effective control and supervision over his work, pointing out that David: (1) set the work day,
reporting time and hogs to be chopped, as well as the manner by which he was to perform his work; (2) daily paid
his salary of P700.00, which was increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005, and (3)
approved and disapproved his leaves. Macasio added that David owned the hogs delivered for chopping, as well as
the work tools and implements; the latter also rented the workplace. Macasio further claimed that David employs
about twenty-five (25) butchers and delivery drivers.
PETITIONER, contention:
- Claimed that he started his hog dealer business in 2005 that he only has ten employees
- Alleged that he hired Macasio as a butcher or chopper on “pakyaw” or task basis who is, therefore, not en-
titled to overtime pay, holiday pay and 13 th month pay pursuant to the provisions of the IRR of the Labor
Code
- David pointed out that Macasio: (1) usually starts his work at 10:00pm and ends at 2:00am of the following
day or earlier depending on 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 en-
gaged to report for work and accordingly, did not receive any fee when no hogs were delivered.
RESPONDENTS, et.al’s contention:

- David did not starts 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.
- He reported for work every day which the payroll or time record could have easily proved had David sub-
mitted them in evidence
Petitioner, contention:
- Claims that Macasio was not his employee as he hired the latter on “pakyaw” or task basis.
- Also claimed that he issued the Certificate of Employment, upon Macasio’s request, only for overseas em-
ployment purposes.
NLRC 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 spend in the workplace, Macasio is not covered by
the Labor Standards laws on overtime, SIL and holiday pay, and 13 th month pay under the Rules and Regulations
Implementing the 13th month pay law.
CA Ruling:
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 Macasio's case, the elements that characterize a "field personnel" are evidently lacking as he had been
working as a butcher at David's "Yiels Hog Dealer" business in Sta. Mesa, Manila under David's supervision and
control, and for a fixed working schedule that starts at 10:00
p.m.
ISSUES:
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.
RULING:
The SC partially grant the petition
RULE:
Very noticeably, David confuses engagement on "pakyaw" or task basis with the lack of employment relation-
ship. Impliedly, David asserts that their "pakyawan" or task basis arrangement negates the existence of employment
relationship.
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 ".
. . 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 101 36 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.
EE-ER Relationship
To determine the existence of an employer-employee relationship, four elements generally need to be consi-
dered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dis-
missal; and (4) the power to control the employee's conduct. These elements or indicators comprise the so-called
"four-fold" test of employment relationship. Macasio's relationship
with David satisfies this test.
Pakyaw or task basis

At this point, we note that all three tribunals — the LA, the NLRC and the CA — found that Macasio was en-
gaged 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.
On payment of holiday pay, 13th month and SIL
Under the IRR, exemption from the coverage of holiday and SIL pay refer to "field personnel and other em-
ployees 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 person-
nel." Rather, these employees are altogether merged into one classification of exempted employees.
APPLICATION:
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 David's 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 casesufficiently points to an employer-employee relationship
existing between Davidand Macasio.
In Macasio's case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter, re-
gardless of the total hours that he spent at the workplace or of the total number of the hogs assigned to him for chop-
ping, Macasio would receive the fixed amount of P700.00 once he had completed his task. Clearly, these circums-
tances show a "pakyaw" or task basis engagement that all three tribunals uniformly found. In sum, the existence of
employment
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 interpreta-
tion 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 determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and SIL pay, the
presence (or absence) of employer supervision as regards the worker's time and performance is the key: if the work-
er is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and SIL pay
unless exempted from the exceptions specifically provided under Article 94 (holiday pay) and Article 95 (SIL pay)
of the Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the meaning of "field
personnel" under the law, then he is not entitled to these monetary benefits.
The governing law on 13th month pay is PD No. 851. As with holiday and SIL pay, 13th month pay benefits
generally cover all employees; an employee must be one of those expressly enumerated to be exempted. Section 3 of
the Rules and Regulations Implementing P.D. No. 851 enumerates the exemptions from the coverage of 13th month
pay benefits. Under Section 3 (e), "employers of those who are paid on . . . task basis, and those who are paid a fix-
edamount for performing a specific work, irrespective of the timeconsumed in the performance thereof" are ex-
empted.
OUR HAUS REALTY DEVELOPMENT CORPORATION, petitioner, vs. PARIAN et al., respondents. GR
No. 204651, August 6, 2014
FACTS:
Respondents were all laborers working for petitioner Our Haus, a company engaged in the construction busi-
ness. Sometime in May 2010, Our Haus experienced financial distress. To alleviate itscondition, Our Haus sus-
pended some of its construction projects and asked the affected workers, including the respondents, to take vacation
leaves. Eventually, the respondents were asked to report back to work but instead of doing so, they filed with the LA
a complaint for underpayment of their daily wages.
a) Petitioner’s Arguments(Our Haus – Lost)

Primarily argued that the respondents' wages complied with the law's minimum requirement. Aside from pay-
ing the monetary amount of the respondents' wages, Our Haus also subsidized their meals (3 times a day), and gave
them free lodging near the construction project they were assigned to. In determining the total amount of the res-
pondents' daily wages, the value of these benefits should be considered, in line with Article 97 (f) 11 of the Labor
Code.(considered the meals and lodging as facilities to be deducted from the wages of the employees).
b) Respondent’s Argument’s (Parian et al - Won)

They claimed that except for respondent Bernardo N. Tenedero, their wages were below the minimum rate in
relation to two wage orders made effective from 2007-2010 ( Wage Order No. NCR-13, which provides for a daily
minimum wage rate of P362.00 for the non-agriculture sector and effective from August 28, 2007 until June 13,
2008; Wage Order No. NCR-14, which provides for a daily minimum wage rate of P382.00 for the non-agriculture
sector and effective from June 14, 2008 until June 30, 2010 ) and that they were not paid of their holiday, service
incentive leave (SIL), 13th month and overtime pays.
LA ruled in favor of respondents.Petitioners appealed to the NLRC, which in turn, reversed LA’s decision. Mo-
tion for Recon was also denied by NLRC. CA dismissed respondents’' certiorari petition and affirmed the NLRC
rulings.Thus, the present petition.
ISSUE:
Whether or not the respondents' wages complied with the law's minimum requirement.
Whether or not the meals and free lodging shall be considered indetermining the total amount of the respondents'
daily wages.
RULING:
The petition is denied.
Rule:
Under the law, only the value of the facilities may be deducted from the employees' wages but not the value of
supplements. Facilities include articles or services for the benefit of the employee or his family but exclude tools of
the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the emplo y-
er's business.
The law also prescribes that the computation of wages shall exclude whatever benefits, supplements or allow-
ances given to employees. Supplements are paid to employees on top of their basic pay and are free of charge. Since
it does not form part of the wage, a supplement's value may not be included in the determination of whether an em-
ployer complied with the prescribed minimum wage rates.
The distinction between facilities and supplements lies not so much in the kind of benefit or item (food, lodging,
bonus or sick leave) given, but in the purpose for which it is given. If it is primarily for the employee's gain, then the
benefit is a facility; if its provision is mainly for the employer's advantage, then it is a supplement.
Application:
The subsidized meals and free lodging provided by Our Haus are actually supplements. Although they also
work to benefit the respondents, an analysis of the nature of these benefits in relation to Our Haus' business shows
that they were given primarily for Our Haus' greater convenience and advantage.
Our Haus is engaged in the construction business, a labor-intensive enterprise. The success of its projects is
largely a function of the physical strength, vitality and efficiency of its laborers. Its business will be jeopar-
dized if its workers are weak, sickly, and lack the required energy to perform strenuous physical activities.
Thus, by ensuring that the workers are adequately and well fed, the employer is actually investing on its
business. Also, construction industry relies heavily and directly on the physical capacity and endurance of
its workers, they are usually faced with the problem of meeting target deadlines. More often than not, work
is performed continuously, day and night, in order to finish the project on the designated turn-over date.
Thus, it will be more convenient to the employer if its workers are housed near the construction site to en-
sure their ready availability.
Under the circumstances, the daily wages paid to the respondents are clearly below the prescribed minimum
wage rates in the years 2007-2010.
Conclusion:
Thus, the petitioner cannot consider the values of its meal and housing facilities in the computation of the respon-
dents' total wages.
MILAN, et. al, petitioners vs. NLRC, SOLID MILLS INC., and/or PHILIP ANG, respondents.
G.R. No. 202961. February 4, 2015.
FACTS:
Petitioners are the employees of respondent Solid Mills Inc. They are represented by their collective bargaining
agent, NAFLU.
Petitioners were allowed to occupy SMI Village (property owned by Solid Mills) out of liberality and for the
convenience of its employees. They further agreed that petitioners would vacate the lot anytime the company deems
fit. On October 2003, Solid Mills would cease operations due to serious business losses.
Petitioners were sent individual notices to vacate SMI Village. They were asked to sign a Memorandum of
Agreement with Release and Quitclaim; employees who signed it were considered to have agreed to vacate SMI
Village as a condition for the release of their termination benefits and separation pay. Petitioners however refused to
sign it and demanded their benefits and separation pay.
Thereafter Petitioners Milan, et al filed a complaint before the Labor Arbiter on the ground that their accrued
benefits and separation pay cannot be withheld because it is based on company policy and practice. Solid Mills
countered by saying the complaint was premature because they have not vacated the property in view of the Memo-
randum of Agreement.
The Labor Arbiter favored the petitioners, stating Solid Mills’ illegality of the withholding of benefits. Solid
Mills appealed to the NLRC and reversed pertinent parts of the decision. Because of petitioners' failure to vacate
Solid Mills' property, Solid Mills was justified in withholding their benefits and separation pay.
Petitioners moved to reconsider but was denied, so they file a petition for certiorari with the CA. This was dis-
missed, hence their present petition.
One Petitioners argue that respondent Solid Mills and NAFLU's memorandum of agreement has no provision
stating that benefits shall be paid only upon return of the possession of respondent Solid Mills' property. It only pro-
vides that the benefits shall be "less accountabilities," which should not be interpreted to include such possession.
The fact that majority of NAFLU's members were not occupants of respondent Solid Mills' property is evidence that
possession of the property was not contemplated in the agreement. "Accountabilities" should be interpreted to refer
only to accountabilities that were incurred by petitioners while they were performing their duties as employees at the
worksite. Moreover, applicable laws, company practice, or policies do not provide that 13th month pay, and sick and
vacation leave pay benefits, may be withheld pending satisfaction of liabilities by the employee.
Petitioners also point out that the National Labor Relations Commission and the Court of Appeals have no ju-
risdiction to declare that petitioners' act of withholding possession of respondent Solid Mills' property is illegal. The
regular courts have jurisdiction over this issue. It is independent from the issue of payment of petitioners' monetary
benefits.
For these reasons, and because, according to petitioners, the amount of monetary award is no longer in question,
petitioners are entitled to 12% interest per annum.
Respondent, in their joint comment, argue that petitioners' failure to turn over respondent Solid Mills' property
"constituted an unsatisfied accountability" for which reason "petitioners' benefits could rightfully be withheld." The
term "accountability" should be given its natural and ordinary meaning. Thus, it should be interpreted as "a state of
being liable or responsible," or "obligation." Petitioners' differentiation between accountabilities incurred while per-
forming jobs at the worksite and accountabilities incurred outside the worksite is baseless because the agreement
with NAFLU merely stated "accountabilities," without qualification.
On the removal of the award of 12% interest per annum, respondents argue that such removal was proper since
respondent Solid Mills was justified in withholding the monetary claims.
ISSUE: Whether or not the benefits of Petitioners may be validly and legally withheld by Solid Mills Inc.
RULING: Petition DENIED; Solid Mills may validly and legally withhold the benefits.
Rule:
As a general rule, the Labor Code provides that employers are prohibited from withholding wages from em-
ployees (Article 116 – Withholding of wages and kickbacks). It also prohibits the elimination or diminution of bene-
fits (Article 100).
However, the law supports the employers' institution of clearance procedures before the release of wages as an
exception to the general rule that wages may not be withheld and benefits may not be diminished (Article 113, La-
bor Code). Also, the Civil Code provides that the employer is authorized to withhold wages for debts due (Article
1706, Civil Code).
Application:
"Debt" in this case refers to any obligation due from the employee to the employer. It includes any accountabili-
ty that the employee may have to the employer. There is no reason to limit its scope to uniforms and equipment, as
petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the re-
lease of petitioners' benefits shall be "less accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the term "accounta-
bility" does not limit the definition of accountability to those incurred in the worksite. As long as the debt or obliga-
tion was incurred by virtue of the employer-employee relationship, it shall be included in the employee's accounta-
bilities that are subject to clearance procedures.
Petitioners do not categorically deny respondent Solid Mills' ownership of the property, and they do not claim
superior right to it. What can be gathered from the findings of the Labor Arbiter, NLRC, and the CA is that respon-
dent Solid Mills allowed the use of its property for the benefit of petitioners as its employees. Petitioners were mere-
ly allowed to possess and use it out of respondent Solid Mills' liberality. The employer may, therefore, demand the
property at will.
Withholding of payment by the employer does not mean that the employer may renege on its obligation to pay
employees their wages, termination payments, and due benefits. The employees' benefits are also not being reduced.
It is only subjected to the condition that the employees return properties properly belonging to the employer. This is
only consistent with the equitable principle that "no one shall be unjustly enriched or benefited at the expense of
another."
The law does not sanction a situation where employees who do not even assert any claim over the employer's
property are allowed to take all the benefits out of their employment while they simultaneously withhold possession
of their employer's property for no rightful reason.
another."
Conclusion:
Therefore, petitioners are not entitled to interest of their withheld separation benefits. These benefits were properly
withheld by respondent Solid Mills because of their refusal to return its property
TOYOTA PASIG, INC., petitioner, vs. VILMA S. DE PERALTA, respondent.

G.R. No. 213488. November 7, 2016
Facts:
Petitioner Peralta filed a complaint for illegal dismissal, illegal deduction, unpaid commission, annual
profit sharing, damages, and attorney's fees against Toyota Pasig. Toyota initially hired Peralta as a cashier and
eventually, she was promoted to the position of Insurance Sales Executive (ISE) where she received various dis-
tinctions from petitioner, including "Best Insurance Sales Executive" for the years 2007 and 2011. Her husband,
Romulo Peralta, who was the President of the Toyota Shaw-Pasig Workers Union — Automotive Industry
Workers Alliance (TSPWU-AIWA), organized a collective bargaining unit through a certification election.
Respondent’s Arguments: (Vilma Peralta - won)
Toyota suddenly dismissed from service the officials/directors of TSPWU-AIWA, including her husband
and started harassing her for her husband's active involvement in TSPWU-AIWA, which resulted to the is-
suance of a Notice to Explain which accused her of "having committed various acts" relative to the processing
of 3 units of "outside transactions" and claiming commissions, instead of considering them as "new business ac-
counts" under the dealership's marketing department where preventively suspended. She received a Notice of
Termination, which prompted her to file the instant complaint, where she also prayed for the payment of her
earned substantial commissions, tax rebates, and other benefits dating back from July 2011 to January 2012,
amounting to P617,248.08.
Petitioner’s Arguments: (Toyota Pasig - lost)
Respondent was dismissed from service for just cause and with due process. They explained that res-
pondent was charged and proven to have committed acts of dishonesty and falsification by claiming commis-
sions for new business accounts which should have been duly credited to the dealership's marketing depart-
ment. They further averred that respondent's claims for commissions, tax rebates, and other benefits were un-
founded and without documentation and validation.
Issue:
Whether or not the CA erred in awarding Peralta the unpaid commissions, tax rebate for achieved
monthly targets, salary deductions, salary for the month of January 2012, and success share/profit sharing
should be awarded?
Ruling:
The petition is without merit.
Rules:
Section 97 (f) of the Labor Code reads: "Wage" paid to any employee shall mean the remuneration
of earnings, however designated, capable of being expressed in terms of money, whether fixed or ascer-
tained 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 and includes the fair and reasonable value, as determined by the
Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employ-
er to the employee. "Fair and reasonable value" shall not include any profit to the employer, or to any person af-
filiated with the employer. The provision explicitly includes commissions as part of wages. In Iran v. NLRC:
While commissions are incentives or forms of encouragement to inspire employees to put a little more industry
on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered.
The nature of the work of a salesman and the reason for such type of remuneration for services rendered dem-
onstrate clearly that commissions are part of a salesman's wage or salary.
Heirs of Ridad v. Gregorio Araneta University Foundation states that “once the employee has set out
with particularity in his complaint and other documents the labor standard benefits he is entitled to, and which
he alleged that the employer failed to pay him, it becomes the employer's burden to prove that it has paid these
money claims. One who pleads payment has the burden of proving it, and even where the employees must al-
lege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the
employees to prove non-payment.”
Application:
Peralta’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.
Toyota simply dismissed Peralta’s claims for being purely self-serving and unfounded, without even
presenting any tinge of proof showing that Peralta was already paid of such benefits or that she was not entitled
thereto. Even during the LA proceedings, Toyota was even given the opportunity to rebut Peralta’s claims but
opted not to do so. The failure of Toyota to submit the necessary documents that are in their possession gives
rise to the presumption that the presentation thereof is prejudicial to its cause.
Conclusion:
Indubitably, Toyota is bound to pay the monetary benefits claimed by Peralta since Peralta already
earned these monetary benefits, she must promptly receive the same, notwithstanding the fact that she was le-
gally terminated from employment.
WAGE ENFORCEMENT AND RECOVERY 79
TIGER CONSTRUCTION AND DEVELOPMENT CORP., petitioner vs.ABAY et.al, defendant.

GR No. 164141, Feb. 26, 2010
FACTS:
On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the Regional
Office of the Department of Labor and Employment (DOLE), an inspection was conducted by DOLE officials
at the premises of petitioner Tiger Construction and Development Corp. (TCDC). Several labor standard viola-
tions were noted, such as deficiencies in record keeping, non-compliance with various wage orders, non-
payment of holiday pay, and underpayment of 13th month pay. The case was then set for summary hearing.
Before the hearing could take place, the Director of Regional Office No. V, Ma. Glenda A. Manalo, issued an Order
on July 25, 2002, which states that jurisdiction on this case vests with the National Labor Relations Commission
(NLRC), on the ground that the aggregate money claim of each worker exceeds the jurisdictional amount of the
Regional Office [which] is Five Thousand Pesos.
Before the NLRC could take action, DOLE Secretary Patricia A. Sto. Tomas, issued another inspection authority on
August 2, 2002 in the same case wherein the violations stated were discovered. The DOLE officials issued a
Notice of Inspection Results to petitioner directing it to rectify the violations within five days from notice. For
failure to comply with the directive, the case was set for summary hearing on August 19, 2002.
According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on the ground of lack of jurisdiction,
which dismissal had attained finality; hence, all proceedings before the DOLE regional office after July 25,
2002 were null and void for want of jurisdiction.
On September 30, 2002, Director Manalo issued an Order directing TCDC to pay ₱2,123,235.90 to its employees
representing underpayment of salaries, 13th month pay, and underpayment of service incentive leave pay and
regular holiday pay.
Apparently convinced by petitioner’s arguments, Director Manalo again endorsed the case to the NLRC Regional
Arbitration Branch V (Legaspi City). On January 27, 2003, the NLRC returned the entire records of the case to
Director Manalo on the ground that the NLRC does not have jurisdiction over the complaint.
After NLRC returned the case back to Director Manalo and having the case in her office once more, Director Mana-
lo finally issued an Order dated January 29, 2003 denying petitioner’s motion for reconsideration for lack of
merit.
On appeal to the Sec of DOLE, case was dismissed due to lack of merit. CA also dismissed the petition for failure to
certify against non-forum shopping.
a) Petitioner’s Arguments (Tiger Construction and Development Corp. – Lost/Motion Denied)
Petitioner questioned the inspector’s findings in the Notice of Inpsection Result and Director Manalo’s order direct-
ing the Petitioner to pay its employees for their corresponding underpayment of wage. Theyargued that the pro-
ceedings before the regional office had been rendered moot by the issuance of the July 25, 2002 Order endors-
ing the case to the NLRC. According to petitioner, the July 25, 2002 Order was tantamount to a dismissal on the
ground of lack of jurisdiction, which dismissal had attained finality; hence, all proceedings before the DOLE
regional office after July 25, 2002 and the Director’s order for payment were null and void for want of jurisdic-
tion.
b) Respondent’s Argument’s (Abay, et al.–Won/Case Dismissed; Cost against Petitioner)
Respondents Reynaldo Abay and fifty-nine (59) argued that the petitioner violated labor standards such as deficien-
cies in record keeping, non-compliance with various wage orders, non-payment of holiday pay, and underpay-
ment of 13th month pay.
SecreatarySto. Tomas held that jurisdiction over the case properly belongs with the regional director; hence, Direc-
tor Manalo's endorsement to the NLRC was a clear error. Such mistakes of its agents cannot bind the State, thus
Director Manalo was not prevented from continuing to exercise jurisdiction over the case.
ISSUE:
1. Whether or not there was lack of jurisdiction on the part of Director Manalo?
2. Whether or not the petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly on
the ground of lack of jurisdiction, after said Order has attained finality and is already in the execution
stage?
RULING:
The petition lacks merit.
Rule:
1. Director Manalo’s initial endorsement of the case to the NLRC, on the mistaken opinion that the claim was
within the latter’s jurisdiction, did not oust or deprive her of jurisdiction over the case. She therefore re-
tained the jurisdiction to decide the case when it was eventually returned to her office by the DOLE Secre-
tary. Jurisdiction or authority to try a certain case is conferred by law and not by the interested parties,
much less by one of them, and should be exercised precisely by the person in authority or body in whose
hands it has been placed by the law.
The said endorsement was evidently not meant as a final disposition of the case; it was a mere referral to
another agency, the NLRC, on the mistaken belief that jurisdiction was lodged with the latter. It cannot
preclude the regional director from subsequently deciding the case after the mistake was rectified and the
case was returned to her by the DOLE Secretary, particularly since it was a labor case where procedural
lapses may be disregarded in the interest of substantial justice.
2. In view of our ruling above that the January 29, 2003 Order was rendered with jurisdiction and can no
longer be questioned since it is already deemed final and executory. Thus, we can no longer entertain peti-
tioner’s half-hearted and unsubstantiated arguments that the said Order was allegedly based on erroneous
computation and included non-employees.
Application:
While it is true that orders issued without jurisdiction are considered null and void and, as a general rule,
may be assailed at any time, the fact of the matter is that in this case, Director Manalo acted within her ju-
risdiction. Under Article 128 (b) of the Labor Code, as amended by Republic Act (RA) No. 7730, the
DOLE Secretary and her representatives, the regional directors, have jurisdiction over labor standards vi-
olations based on findings made in the course of inspection of an employer’s premises. The said jurisdic-
tion is not affected by the amount of claim involved, as RA 7730 had effectively removed the jurisdictional
limitations found in Articles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the vi-
sitorial and enforcement powers of the DOLE Secretary, are concerned.
Also in this case since the order is final and executory, it follows that the decision in question can no longer
be altered, modified, or reversed by the trial court nor by the appellate court. The general rule is that any
decision rendered without jurisdiction is a total nullity and may be struck down
at any time, provided that the party that asserts it must be in good faith and not evidently availing thereof
simply to thwart the execution of an award that has long become final and executory.
Conclusion:
Thus jurisdiction or authority to try a certain case is conferred by law and not by the interested parties, and should be
exercised precisely by the person in authority or body in whose hands it has been placed by the law.
Also, well-settled is the rule that perfection of an appeal in the manner and within the reglementary period allowed
by law is not only mandatory but also jurisdictional. Thus, if no appeal is perfected on time, the decision be-
comes final and executory by operation of law after the lapse of the reglementary period of appeal.
People’s Broadcasting (BomboRadyoPhils) vs. Sec. of DOLE et al.,

GR No. 179652, March 6, 2012 Resolution on the main Decision of May 8, 2009
FACTS:
JandeleonJuezan (respondent) filed a complaint against People’s Broadcasting Service, Inc. (BomboRadyo-
Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave, 13th month pay, premium pay
for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS,
PAG-IBIG and Philhealth before the Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu
City.
On the basis of the complaint, the DOLE conducted a plant level inspection of 23 September 2003. In the In-
spection Report Form, the Labor Inspector wrote under the heading “Findings/Recommendations” “non-diminution
of benefits” and “Note: Respondent deny employer-employee relationship with the complainant- see Notice of In-
spection results.”
Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was
effected by petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit
their respective position papers.
In his Order dated 27 February 2004, DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director)
ruled that respondent is an employee of petitioner, and that the former is entitled to his money claims amounting
P203, 726.30. Petitioner sought reconsideration of the Order, claiming that the Regional Director gave credence to
the documents offered by respondent without examining the originals, but at the same time he missed or failed to
consider petitioner’s evidence. Petitioner’s motion of reconsideration was denied. On appeal to the DOLE Secretary,
petitioner denied once more the existence of employer-employee relationship. In its Order dates 27 January 2005,
the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cast or surety bond and
instead submitted a Deed of Assignment of Bank Deposit. Petitioner maintained that there is no employer-employee
relationship had ever existed between it and respondent because it was the drama directors and producers who paid,
supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of the DOLE and
should have been considered by the labor arbiter because respondent’s claim exceeded P5,000.00.
Petitioner argues that the National Labor Relations Commission (NLRC), and not the DOLE Secretary, has ju-
risdiction over respondent's claim, in view of Articles 217 and 128 of the Labor Code. 12 It adds that the Court of
Appeals committed grave abuse of discretion when it dismissed petitioner's appeal without delving on the issues
raised therein, particularly the claim that no employer-employee relationship had ever existed between petitioner and
respondent. Finally, petitioner avers that there is no appeal, or any plain, speedy and adequate remedy in the ordi-
nary course of law available to it.
Respondent posits that the Court of Appeals did not abuse its discretion. He invokes Republic Act No.
7730, which "removes the jurisdiction of the Secretary of Labor and Employment or his duly authorized representa-
tives, from the effects of the restrictive provisions of Article 129 and 217 of the Labor Code, regarding the confine-
ment of jurisdiction based on the amount of claims". 13 Respondent also claims that petitioner was not denied due
process since even when the case was with the Regional Director, a hearing was conducted and pieces of evidence
were presented. Respondent stands by the propriety of the Court of Appeals' ruling that there exists an employer-
employee relationship between him and petitioner.
ISSUE:
 Does the Secretary of Labor have the power to determine the existence of an employer-employee relation-
ship?
RULING:
In order for DOLE may exercise its powers under Article 128, two important questions must be resolved; (1) Does
the employer-employee relationship still exist; and (2) Are there violations of the Labor Code or of any labor law?
Rule:
No.
Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship has
terminated or such relationship has not arisen at all. The reason is obvious. In the second situation especially, the
existence of an employer-employee relationship is a matter which is not easily determinable from an ordinary in-
spection, necessarily so, because the elements of such a relationship are not verifiable from a mere ocu-
lar examination. The intricacies and implications of an employer-employee relationship demand that the level
of scrutiny should be far above the cursory and the mechanical. While documents, particularly documents found in
the employer’s office are the primary source materials, what may prove decisive are factors related to the history of
the employer’s business operations, its current state as well as accepted contemporary practices in the industry.
More often than not, the question of employer-employee relationship becomes a battle of evidence, the determina-
tion of which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body
that is the NLRC.
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 rationale underlying this limi-
tation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter
fraught with questions of fact and law, which is best resolved by a quasi—judicial body, which is the NLRC, rather
than an administrative official of the executive branch of the government. If the Secretary of Labor proceeds to ex-
ercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes, his office confers ju-
risdiction on itself which it cannot otherwise acquire.
Reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was
granted visitorial and enforcement powers for the purpose of determining violations of, and enforcing, the Labor
Code and any labor law, wage order, or rules and regulations issued pursuant thereto. Necessarily, the actual exis-
tence of an employer-employee relationship affects the complexion of the putative findings that the Secretary
of Labor may determine, since employees are entitled to a different set of rights under the Labor Code from the em-
ployer as opposed to non-employees. Among these differentiated rights are those accorded by the ³labor standards´
provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If there is no employer-
employee relationship in the first place, the duty of the employer to adhere to those labor standards with respect to
the non-employees is questionable.
At least a prima facie showing of such absence of relationship, as in this case, is needed to preclude the DOLE
from the exercise of its power. The Secretary of Labor would not have been precluded from exercising the powers
under Article 128 (b) over petitioner if another person with better-grounded claim of employment than that which
respondent had. Respondent, especially if he were an employee, could have very well enjoined other employees to
complain with the DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment relationship
with all of the people under its aegis.
The most important consideration for the allowance of the instant petition is the opportunity for the Court not
only to set the demarcation between the NLRC’s jurisdiction and the DOLE’s prerogative but also the procedure
when the case involves the fundamental challenge on the DOLE’s prerogative based on lack of employer-employee
relationship. As exhaustively discussed here, the DOLE’s prerogative hinges on the existence of employer-employee
relationship, the issue is which is at the very heart of this case. And the evidence clearly indicates private respondent
has never been petitioner’s employee. But the DOLE did not address, while the Court of Appeals glossed over, the
issue. The peremptory dismissal of the instant petition on a technicality would deprive the Court of the opportunity
to resolve the novel controversy.
WHEREFORE, the petition is GRANTED.
Application:
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 pro-
visions 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.
Conclusion:
Thus,it can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to
make a determination of the existence of an employer-employee relationship. Such prerogatival determination is
merely preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor standards provi-
sions. The determination of the existence of the employer-employee relationship is still primarily lodged with the
NLRC. This is the meaning of the clause ³in cases where the relationship of employer-employee still exists´ in Art.
128 (b).
SUPERIOR PACKAGING CORP., petitionervs.BALAGSA et.al, defendant.

G.R. No. 178909. October 10, 2012
FACTS:
Petitioner engaged services of Lancer Staffing and Services. Herein respondents were engaged for 4 months and
included tasks such as loading, unloading and segregation of boxes.
Pursuant to a complaint filed by respondents against petitioner Superior Package, DOLE conducted an inspec-
tion of petitioners workplace and found several violations (non-presentation of payrolls and daily time records; non-
submission of annual report of safety organization; medical/illness reports; no trained first aid) Because petitioners
failed to appear in the summary investigations conducted by DOLE, an order was issued ordering petitioners to pay
PHP840,463.38.
Petitioners motioned to reconsider, stating that the respondents are not their employees, but of Lancer Staffing
and Services, but this was denied. The DOLE stated that petitioners failed to support their claim and even if they
were employees of Lancer they could not escape liability as Section 13 of the Department Order No. 10, Series of
1997, makes a principal jointly and severally liable with the contractor to contractual employees to the extent of the
work performed when the contractor fails to pay its employees' wages. The appeal to the SOLE, petition for certiora-
ri to the CA and motion for reconsideration to the CA were all denied, hence the present petition to the Supreme
Court.
a) Petitioner’s Arguments(SUPERIOR PACKAGINGCORPORATION– Lost)

Petitioner argues that the DOLE erred indoubling respondents’ underpayment of wages and regular holiday
payunder Republic Act No. 6727 (Wage Rationalization Act) inasmuch as thesolidary liability of a principal does
not extend to a punitive award against acontractor
Petitioner also contends that there is no evidence showing that the respondents rendered overtime work and that
they actually worked on their rest days for them to be entitled to such pay.
Petitioner objects to the finding that it isengaged in labor-only contracting and is consequently an indirect em-
ployer,considering that it is beyond the visitorial andenforcement power of theDOLE to make such conclusion. Ac-
cording to the petitioner, suchconclusion may be made only upon consideration of evidentiary matters andcannot be
determined solely through a labor inspection.
b) Respondent’s Argument’s (BALAGSA et. al - Won)

Respondents contends that the petitioner and its President, Cesar Luz (Luz), for underpayment of wages, non-
payment of premium pay for worked rest, overtime pay and non-payment of salary, the Department of Labor and
Employment (DOLE) conducted an inspection of the petitioner’s premises and found several violations.
ISSUE:
Whether or not DOLE has the jurisdiction to inspect in petitioners workplace, pursuant to its visitorial and enforce-
ment power.
Whether or not Superior Package Corp. may be held solidarily liable with Lancer Staffing for respondents unpaid
money claims.
RULING:
The petition for review is DENIED
Rule:
Supreme Court said, DOLE clearly acted within its authority when it determined the existence of an employer-
employee relationship between the petitioner and respondents since it falls within the purview of its Visitorial and
Enforcement power under Article 128 (b) of the Labor Code.
Again Supreme Court enunciated its previous ruling in People's Broadcasting (BomboRadyoPhils., Inc.) v. Sec-
retary of the Department of Labor and Employment, that it can be assumed that the DOLE in the exercise of its visi-
torial and enforcement power somehow has to make a determination of the existence of an employer-employee rela-
tionship. Such determination, however, is merely preliminary, incidental and collateral to the DOLE's prima-
ry function of enforcing labor standards provisions.
The existence of employer-employee relationship is ultimately a question of fact. The determination made in
this case by the DOLE, albeit provisional, and as affirmed by the Secretary of DOLE and the CA is beyond the am-
bit of a petition for review on certiorari.
At the time of the respondents' employment in 1998, the applicable regulation was DOLE Department Order No. 10,
Series of 1997.
Labor-only contracting is prohibited and the person acting as contractor [Lancer] shall be considered mere-
ly as an agent or intermediary of the employer [Superior Package] who shall be responsible to the workers
in the same manner and extent as if the latter [Superior Package] were directly employed by him.
The marked disparity between the petitioner's actual capitalization (P25,000.00) and the resources needed to
maintain its business, i.e., "to establish, operate and manage a personnel service company which will conduct and
undertake services for the use of offices, stores, commercial and industrial services of all kinds," supports the find-
ing that Lancer was, indeed, a labor-only contractor. Aside from these is the undisputed fact that the petitioner failed
to produce any written service contract that might serve as proof of its alleged agreement with Lancer.
Application:
If we were to hold the principal without liability to laborers from a contract engaged with services of Lancer
Staffing and Services as such will contravene a contractor is a labor-only contractor which is equivalent to declaring
that there is an employer-employee relationship between the principal and the employees of the supposed contractor,
and the "labor-only" contractor is considered as a mere agent of the principal, the real employer. The former be-
comes solidarily liable for all the rightful claims of the employees.
Conclusion:
Superior Package therefore, being the principal employer and Lancer, being the labor-only contractor, are soli-
darily liable for respondents' unpaid money claims.
WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING WAGES 86
SHS PERFORATED MATERIALS, INC. ET AL., petitionerVS. DIAZ,defendant

GR No. 185814, Oct. 13, 2010
Facts:
Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing under the laws
of the Republic of the Philippines and registered with the Philippine Economic Zone Authority. Petitioner Winfried
Hartmannshenn (Hartmannshenn), a German national, is its president. Thus, the wages of SHS employees are paid
out by ECCP, through its Accounting Services Department headed by Juliet Taguiang (Taguiang). Manuel F. Diaz
(respondent) was hired by petitioner SHS as Manager for Business Development on probationary status
During respondent’s employment, Hartmannshenn was often abroad and, because of business exigencies, his in-
structions to respondent were either sent by electronic mail or relayed through telephone or mobile phone. During
meetings with the respondent, Hartmannshenn expressed his dissatisfaction over respondent’s poor performance.
respondent acknowledged his poor performance and offered to resign from the company.
On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany, and on November 22 and 24,
2005, notified respondent of his arrival through electronic mail messages and advised him to get in touch with him.
Respondent claimed that he never received the messages. Hartmannshenn instructed Taguiang not to release respon-
dent’s salary.
Respondent served on SHS a demand letter and a resignation letter. Appealing for the release of his salary re s-
pondent filed a Complaint against the petitioners for illegal dismissal; non-payment of salaries/wages and 13th
month pay with prayer for reinstatement and full backwages; exemplary damages, and attorney’s fees, costs of suit,
and legal interest.
Petitioners averred that respondent was unable to give a proper explanation for his behavior. Hartmannshenn
then accepted respondent’s resignation and informed him that his salary would be released upon explanation of his
failure to report to work, and proof that he did, in fact, work for the period in question. He demanded that respondent
surrender all company property and information in his possession. Respondent agreed to these exit conditions
through electronic mail. Instead of complying with the said conditions, however, respondent sent another electronic
mail message to Hartmannshenn and Schumacher on December 1, 2005, appealing for the release of his salary.
Respondent’s Contention:
Respondent, on the other hand, claimed that the meeting with Hartmannshenn took place in the evening of De-
cember 1, 2005, at which meeting the latter insulted him and rudely demanded that he accept P25,000.00 instead of
his accrued wage and stop working for SHS, which demands he refused. Later that same night, he sent Hartmann-
shenn and Schumacher an electronic mail message appealing for the release of his salary. Another demand letter for
respondents accrued salary for November 16 to November 30, 2005, 13th month pay, moral and exemplary damag-
es, and attorneys fees was sent on December 2, 2005.
Labor Arbiter:
The Labor Arbiter found that respondent was constructively dismissed because the withholding of his salary
was contrary to Article 116 of the Labor Code as it was not one of the exceptions for allowable wage deduction by
the employer under Article 113 of the Labor Code. He had no other alternative but to resign because he could not be
expected to continue working for an employer who withheld wages without valid cause. The LA also held that res-
pondents probationary employment was deemed regularized because petitioners failed to conduct a prior evaluation
of his performance and to give notice two days prior to his termination as required by the Probationary Contract of
Employment and Article 281 of the Labor Code.
NLRC:
The NLRC explained that the withholding of respondents salary was a valid exercise of management preroga-
tive. The act was deemed justified as it was reasonable to demand an explanation for failure to report to work and to
account for his work accomplishments. The NLRC held that the respondent voluntarily resigned as evidenced by the
language used in his resignation letter and demand letters. Given his professional and educational background, the
letters showed respondents resolve to sever the employer-employee relationship, and his understanding of the import
of his words and their consequences. Consequently, respondent could not have been regularized having voluntarily
resigned prior to the completion of the probationary period. The NLRC further noted that respondent’s 13th month
pay was already integrated in his salary in accordance with his Probationary Contract of Employment and, therefore,
no additional amount should be due him.
Issues: Whether or not the temporary withholding of respondent’s salary/wages by petitioners was a valid exercise
of management prerogative.
Ruling: Withholding respondent’s salary was not a valid exercise of management prerogative.
Management prerogative refers “to the right of an employer to regulate all aspects of employment, such as the
freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of
employees, supervision of their work, lay-off and discipline, and dismissal and recall of work.” Although manage-
ment prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to include the
right to temporarily withhold salary/wages without the consent of the employee.
Any withholding of an employee’s wages by an employer may only be allowed in the form of wage deductions
under the circumstances provided in Article 113 of the Labor Code, as set forth below:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any deduc-
tion from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the deduction is to re-
compense the employer for the amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer be-
comes so unbearable on the part of the employee that it would foreclose any choice by him except to forego his con-
tinued employment. It exists where there is cessation of work because continued employment is rendered impossi-
ble, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.
In this case, the withholding of respondent’s salary does not fall under any of the circumstances provided under
Article 113. Neither was it established with certainty that respondent did not work from November 16 to November
30, 2005. Hence, the Court agrees with the LA and the CA that the unlawful withholding of respondent’s salary
amounts to constructive dismissal.
NIÑA JEWELRY MANUFACTURING OF METAL ARTS, INC. petitioner vs. MADELINE C. MONTE-
CILLO and LIZA M. TRINIDAD, respondents.
G.R. No. 188169, November 28, 2011.
FACTS:
Respondents were employed as goldsmiths by the petitioner Niña Jewelry Manufacturing of Metal Arts, Inc.
There were incidents of theft involving goldsmiths in Niña Jewelry's employ:
The petitioner imposed a policy for goldsmiths, which were intended to answer for any loss or damage which
Niña Jewelry may sustain by reason of the goldsmiths' fault or negligence in handling the gold entrusted to them,
requiring them to post cash bonds or deposits in varying amounts but in no case exceeding 15% of the latter's sala-
ries per week.
The petitioner alleged that the goldsmiths were given the option not to post deposits, but to sign authorizations
allowing the former to deduct from the latter's salaries amounts not exceeding 15% of their take home pay should it
be found that they lost the gold entrusted to them. The deposits shall be returned upon completion of the goldsmiths'
work and after an accounting of the gold received.
The respondents claimed otherwise insisting that petitioner left the goldsmiths with no option but to post the
deposits. The next day after the policy was imposed, the respondents no longer reported for work and signified their
defiance against the new policy which at that point had not even been implemented yet. The respondents alleged that
they were constructively dismissed by the petitioner as their continued employments were made dependent on their
readiness to post the required deposits. The respondents then filed a complaint for illegal dismissal and for the award
of separation pay against the petitioner, and later filed their amended complaint which excluded their earlier prayer
for separation pay but sought reinstatement and payment of back wages, attorney's fees and 13th month pay.
a) Petitioner’s Arguments (NIÑA JEWELRYARTS, INC – Win)

The petitioners likewise insist that the respondents abandoned their work without due notice and to the preju-
dice of the former. The respondents' co-workers attested to the foregoing circumstance. The respondents are
goldsmiths whose skills are indispensable to a jewelry manufacturing business, thus, it is not in accord with both
logic and experience for the petitioners to just fire them only to train new workers. Moreover, in the complaints and
amended complaints, the respondents did not claim for reinstatement, hence, implying their admission that they
were not terminated.
b) Respondent’s Argument’s (MONTECILLO and TRINIDAD - Lost)

The respondents claimed otherwise insisting that Niña Jewelry left the goldsmiths with no option but to post the
deposits. The respondents alleged that they were constructively dismissed by Niña Jewelry as their continued em-
ployments were made dependent on their readiness to post the required deposits. Niña Jewelry averred that on Au-
gust 14, 2004, the respondents no longer reported for work and signified their defiance against the new policy which
at that point had not even been implemented yet.
ISSUES:
1. Whether or not Niña Jewelry Manufacturing of Metal Arts, Inc. may impose the policy for their goldsmiths re-
quiring them to post cash bonds or deposits; and
2. Whether or not there is constructive dismissal.
RULING:
The petition is partly meritorious.
Rule:
1) NO, the Niña Jewelry may not impose the policy. Articles 113 and 114 of the Labor Code are clear as to what are
the exceptions to the general prohibition against requiring deposits and effecting deductions from the employees'
salaries.
ART. 113. Wage Deduction — No employer, in his own behalf or in behalf of any person, shall make any de-
duction from the wages of his employees, except:
a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense
the employer for the amount paid by him as premium on the insurance;
b) For union dues, in cases where the right of the worker or his union to check-off has been recognized by the
employer or authorized in writing by the individual worker concerned; and
c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.
Article 114.Deposits for loss or damage — No employer shall require his worker to make deposits from which
deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by
the employer, except when the employer is engaged in such trades, occupations or business where the practice of
making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appro-
priate rules and regulations.
The petitioners should first establish that the making of deductions from the salaries is authorized by law, or
regulations issued by the Secretary of Labor. The petitioners failed to prove that their imposition of the new policy
upon the goldsmiths under Niña Jewelry's employ falls under the exceptions specified in Articles 113 and 114 of the
Labor Code.
2) There is NO constructive dismissal. Constructive dismissal occurs when there is cessation of work because con-
tinued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution
in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the
employee.
The petitioners did not whimsically or arbitrarily impose the policy to post cash bonds or make deductions from
the workers' salaries. As attested to by the respondents' fellow goldsmiths in their Joint Affidavit, the workers were
convened and informed of the reason behind the implementation of the new policy. Instead of airing their concerns,
the respondents just promptly stopped reporting for work.
Application:
Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to the general prohibition against
requiring deposits and effecting deductions from the employees' salaries. Hence, a statutory construction of the afo-
recited provisions is not called for. Even if we were however called upon to interpret the provisions, our inclination
would still be to strictly construe the same against the employer because evidently, the posting of cash bonds and the
making of deductions from the wages would inarguably impose an additional burden upon the employees. While the
petitioners are not absolutely precluded from imposing the new policy, they can only do so upon compliance with
the requirements of the law.
Conclusion:
The petitioners should first establish that the making of deductions from the salaries is authorized by law, or
regulations issued by the Secretary of Labor. Further, the posting of cash bonds should be proven as a recognized
practice in the jewelry manufacturing business, or alternatively, the petitioners should seek for the determination by
the Secretary of Labor through the issuance of appropriate rules and regulations that the policy the former seeks to
implement is necessary or desirable in the conduct of business. The petitioners failed in this respect. It bears stress-
ing that without proofs that requiring deposits and effecting deductions are recognized practices, or without securing
the Secretary of Labor's determination of the necessity or desirability of the same, the imposition of new policies
relative to deductions and deposits can be made subject to abuse by the employers. This is not what the law intends.
ANTONIO LOCSIN II, petitioner, vs. MEKENI FOOD CORPORATION, defendant.

G.R. No. 192105, December 09, 2013
FACTS:
In February 2004, respondent Mekeni Food Corporation (Mekeni), a Philippine company engaged in food man-
ufacturing and meat processing, offered petitioner Antonio Locsin II (Locsion) the position of Regional Sales Man-
ager to oversee Mekeni’s National Capital Region Supermarket/Food Service and South Luzon operations. Mekeni
offered petitioner a car plan, in addition to a compensation and benefit package, under which one-half of the cost of
the vehicle is to be paid by the company and the other half to be deducted from petitioner’s salary. Mekeni’s offer
was contained in an Offer Sheet which was presented to petitioner.
Petitioner began his stint as Mekeni Regional Sales Manager on March 17, 2004. To be able to effectively cover
his appointed sales territory, Mekeni furnished petitioner with a used Honda Civic car valued at P280,000.00, which
used to be the service vehicle of petitioner’s immediate supervisor. Petitioner paid for his 50% share through salary
deductions of P5,000.00 each month.
On February 25, 2006, Locsin’s resignation took effect. By then, a total of P112,500.00 had been deducted from
his monthly salary and applied as part of the employee’s share in the car plan. Mekeni supposedly put in an equiva-
lent amount as its share under the car plan. In his resignation letter, petitioner made an offer to purchase his service
vehicle by paying the outstanding balance thereon. The parties negotiated, but could not agree on the terms of the
proposed purchase. Petitioner thus returned the vehicle to Mekeni on May 2, 2006.
Petitioner made personal and written follow-ups regarding his unpaid salaries, commissions, benefits, and offer
to purchase his service vehicle. Mekeni replied that the company car plan benefit applied only to employees who
have been with the company for five years; for this reason, the balance that petitioner should pay on his service ve-
hicle stood at P116,380.00 if he opts to purchase the same.
On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio Garcia, a Complaint for recov-
ery of monetary claims consisting of unpaid salaries, commissions, sick/vacation leave benefits, and recovery of
monthly salary deductions which were held for his cost-sharing in the car plan.
The Labor Arbiter rendered a decision directing respondents to turn-over to petitioner the subject vehicle upon
the latter’s payment to them of the sum of P100,435.84. On appeal, NLRC rendered a decision that petitioner’s
amortization payments on his service vehicle amounting to P112,500.00 should be reimbursed; if not, unjust
enrichment would result, as the vehicle remained in the possession and ownership of Mekeni. In addition, the em-
ployer’s share in the monthly car plan payments should likewise be awarded to petitioner because it forms part of
the latter’s benefits under the car plan. It held further that Mekeni’s claim that the company car plan benefit applied
only to employees who have been with the company for five years has not been substantiated by its evidence, in
which case the car plan agreement should be construed in petitioner’s favor. However, CA reversed the NLRC deci-
sion, stating that in the absence of evidence as to the stipulations of the car plan arrangement between Mekeni and
petitioner, the petitioner’s monthly contributions in the total amount of P112,500.00 should be treated as rentals for
the use of his service vehicle for the duration of his employment with Mekeni.Thus, petitioner filed the instant Peti-
tion
a.) Petitioner’s Arguments(Locsin – partly Win)

Petitioner mainly argues that the CA erred in treating his monthly contributions to the car plan, totaling
P112,500.00 as rentals for the use of his service vehicle during his employment; the car plan which he availed of
was a benefit and it formed part of the package of economic benefits granted to him when he was hired. Petitioner
submits that this is shown by the Offer Sheet which was shown to him and which became the basis for his decision
to accept the offer and work for Mekeni.
Petitioner adds that the absence of documentary or other evidence showing the terms and conditions of the Me-
keni company car plan cannot justify a reliance on Mekeni’s self-serving claims that the full terms thereof applied
only to employees who have been with the company for at least five years; in the absence of evidence, doubts should
be resolved in his favor pursuant to the policy of the law that affords protection to labor, as well as the principle that
all doubts should be construed to its benefit.
Finally, petitioner claims that the car plan was in fact more beneficial to Mekeni than to him; besides, he did not
choose to avail of it, as it was simply imposed upon him. He concludes that it is only just that his payments should
be refunded and returned to him.
b.) Respondent’s Arguments(Mekeni Food Corporation – partly Lost)

Mekeni argues that the service vehicle was merely a loan which had to be paid through the monthly salary de-
ductions. If it is not allowed to recover on the loan, this would constitute unjust enrichment on the part of petitioner.
ISSUE:
Whether or not petitioner is entitled to a refund of all the amounts applied to the cost of the service vehicle under the
car plan.
RULING:
The Petition is granted in part. Respondent Mekeni Food Corporation is ordered to refund petitioner Antonio Locsin
II’s payments under the car plan agreement in the total amount of P112,500.00.
Rule:
In the case of Elisco Tool Manufacturing Corporation v. Court of Appeals, the SC said that installments made
on the car plan may be treated as rentals only when there is an express stipulation in the car plan agreement to such
effect. It was therefore patent error for the appellate court to assume that, even in the absence of express stipulation,
petitioner’s payments on the car plan may be considered as rentals which need not be returned.
Under Article 22 of the Civil Code, “every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall
return the same to him." Article 2142 of the same Code likewise clarifies that there are certain lawful, voluntary and
unilateral acts which give rise to the juridical relation of quasi-contract, to the end that no one shall be unjustly
enriched or benefited at the expense of another.
Application:
In the instant case, in the absence of specific terms and conditions governing the car plan arrangement between
the petitioner and Mekeni, a quasi-contractual relation was created between them. The Court cannot allow that pay-
ments made on the car plan should be forfeited by Mekeni and treated simply as rentals for petitioner’s use of the
company service vehicle. Nor may they be retained by it as purported loan payments, as it would have this Court
believe. In the first place, there is precisely no stipulation to such effect in their agreement. Secondly, it may not be
said that the car plan arrangement between the parties was a benefit that the petitioner enjoyed. Any benefit or privi-
lege enjoyed by petitioner from using the service vehicle was merely incidental and insignificant, because for the
most part the vehicle was under Mekeni’s control and supervision. Free and complete disposal is given to the peti-
tioner only after the vehicle’s cost is covered or paid in full. Until then, the vehicle remains at the beck and call of
Mekeni. Given the vast territory petitioner had to cover to be able to perform his work effectively and generate busi-
ness for his employer, the service vehicle was an absolute necessity, or else Mekeni’s business would suffer adverse-
ly. Thus, it is clear that while petitioner was paying for half of the vehicle’s value, Mekeni was reaping the full bene-
fits from the use thereof.
Consequently, Mekeni may not enrich itself by charging petitioner for the use of its vehicle which is otherwise
absolutely necessary to the full and effective promotion of its business. It may not, under the claim that petitioner's
payments constitute rents for the use of the company vehicle, refuse to refund what petitioner had paid, for the rea-
sons that the car plan did not carry such a condition; the subject vehicle is an old car that is substantially, if not fully,
depreciated; the car plan arrangement benefited Mekeni for the most part; and any personal benefit obtained by peti-
tioner from using the vehicle was merely incidental.
Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart contribution to the cost of the
vehicle; that is not property or money that belongs to him, nor was it intended to be given to him in lieu of the car
plan. Mekeni's share of the vehicle's cost was not part of petitioner's compensation package. The vehicle is an asset
that belonged to Mekeni. Just as Mekeni is unjustly enriched by failing to refund petitioner's payments, so should
petitioner not be awarded the value of Mekeni's counterpart contribution to the car plan, as this would unjustly
enrich him at Mekeni's expense.
Conclusion:
Thus, Mekeni should refund petitioner Locsin's payments under the car plan agreement amounting only to the extent
of the contribution Locsin made, totalling to the amount of P112,500.00.
T&H SHOPFITTERS CORPORATION, petitioner vs. T&H SHOPFITTERS CORPORATION UNION, de-
fendant.
G.R. No. 191714. February 26, 2014.
FACTS:
Respondents are officers and/or members of T&H Shopfitters Union (Union) who filed a complaint for Unfair
Labor Practice (ULP) by way of union busting, and Illegal Lockout, with moral and exemplary damages and attor-
ney's fees, against T&H Shopfitters Corporation (Corporation) and Gin Queen Corporation (Gin Queen) (collective-
ly referred to as "petitioners"), before the Labor Arbiter (LA).
First Cause of Action:

In their desire to improve their working conditions, respondents and other employees of petitioners held their
first formal meeting on November 23, 2003 to discuss the formation of a union. The following day or on November
24, 2003, seventeen (17) employees were barred from entering petitioners' factory premises and were ordered to
transfer to the warehouse purportedly because of its expansion. Afterwards, the said seventeen (17) employees were
repeatedly ordered to go on forced leave due to the unavailability of work.
On December 18, 2003, the Department of Labor and Employment (DOLE), Regional Office No. III issued a
certificate of registration in favor of THSGQ Union.
Respondents contended that the affected employees were not given regular work assignments, while subcon-
tractors were continuously hired to perform their functions. This development prompted respondents to seek the
assistance of the National Conciliation and Mediation Board. Subsequently, an agreement between petitioners and
THSGQ Union was reached. Petitioners agreed to give priority to regular employees in the distribution of work
assignments. Respondents averred, however, that petitioners never complied with its commitment but instead hired
contractual workers.
Second Cause of Action:

On March 24, 2004, THS-GQ Union filed a petition for certification election and an order was issued to hold
the certification election in both T&H Shopfitters and Gin Queen.
On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its employees. The officers and
members of the THS-GQ Union were purportedly excluded from the field trip. On the evening of the field trip, a
certain Angel Madriaga, a sales officer of petitioners, campaigned against the union in the forthcoming certification
election.
When the certification election was scheduled on October 11, 2004, the employees were escorted from the field
trip to the polling center in Zambales to cast their votes. The remaining employees situated at the SBFZ plant cast
their votes as well. Due to the heavy pressure exerted by petitioners, the votes for "no union" prevailed.
Third Cause of Action:

A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin Queen, informed its employees
of the expiration of the lease contract between Gin Queen and its lessor in Castillejos, Zambales and announced the
relocation of its office and workers to Cabangan, Zambales.
When the respondents, visited the site in Cabangan, discovered that it was a "talahiban" or grassland. The said
union officers and members were made to work as grass cutters in Cabangan, under the supervision of a certain Ba-
rangay Captain Greg Pangan. Due to these circumstances, the employees assigned in Cabangan did not report for
work. The other employees who likewise failed to report in Cabangan were meted out with suspension.
Petitioner’s Arguments (Corporation- Lost)

Petitioners allege that they cannot be held liable for ULP as there is no employer-employee relationship be-
tween the petitioners and respondents. Further, Gin Queen avers that its decision to implement an enforced rotation
of work assignments for respondents was a management prerogative permitted by law, justified due to the decrease
in orders from its customers, they had to resort to cost cutting measures to avoid anticipated financial losses. Thus, it
assigned work on a rotational basis. It explains that its failure to present concrete proof of its decreasing orders was
due to the impossibility of proving a negative assertion. It also asserts that the transfer from Castillejos to Cabangan
was made in good faith and solely because of the expiration of its lease contract in Castillejos. It was of the impres-
sion that the employees, who opposed its economic measures, were merely motivated by spite in filing the complaint
for ULP against it.
ISSUE:
Whether or not the acts of petitioners constitute ULP.
RULING:
The petitioners acts are tantamount to ULP.
RULE:
Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article 257 (formerly Article 248)
of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers.––It shall be unlawful for an employer to commit any of the fol-
lowing unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
xxxx
(c) To contract out services or functions being performed by union members when such will interfere with, restrain,
or coerce employees in the exercise of their right to self-organization;
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to
encourage or discourage membership in any labor organization. x x x
APPLICATION:
The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the ex-
clusion of union members, before the scheduled certification election; 2) the active campaign by the sales officer of
petitioners against the union prevailing as a bargaining agent during the field trip; 3) escorting its employees after
the field trip to the polling center; 4) the continuous hiring of subcontractors performing respondents’ functions; 5)
assigning union members to the Cabangan site to work as grass cutters; and 6) the enforcement of work on a rota-
tional basis for union members, taken together, reasonably support an inference that, indeed, such were all orches-
trated to restrict respondents’ free exercise of their right to self-organization.
CONCLUSION:
The Court is of the considered view those petitioners’ undisputed actions prior and immediately before the
scheduled certification election, while seemingly innocuous, unduly meddled in the affairs of its employees in se-
lecting their exclusive bargaining representative.
Wesleyan University-Phils,, petitioner vs.Wesleyan University-Phils., Faculty & Staff Association, respondent.
G.R. No. 181806. March 12, 2014.
FACTS:
Wesleyan University-Philippines is a non-stock, non-profit educational institution duly organized and existing
under the laws of the Philippines. Respondent Wesleyan University-Philippines Faculty and Staff Association, on
the other hand, is a duly registered labor organization acting as the sole and exclusive bargaining agent of all rank-
and-file faculty and staff employees of petitioner.
In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May 31, 2008.On August 16,
2005, petitioner, through its President, Atty. Guillermo Maglayaissued a Memorandum providing guidelines on the
implementation of vacation and sick leave credits as well as vacation leave commutation which states that vacation
and sick leave credits are not automatic as leave credits would be earned on a month-to-month and only vacation
leave is commuted or monetized to cash which is effected after the second year of continuous service of an em-
ployee.
Respondents President, Cynthia De Lara questioned the guidelines for being violative of existing practices and
the CBA which provide that all covered employees are entitled to 15 days sick leave and 15 days vacation leave
with pay every year and that after the second year of service, all unused vacation leave shall be converted to cash
and paid to the employee at the end of each school year, not later than August 30 of each year.
Respondent file a grievance complaint on the implementation of the vacation and sick leave policy. Petitioner
also announced its plan of implementing a one-retirement policy which was unacceptable to respondent.Respondent
submitted affidavits to prove that there is an established practice of giving two retirement benefits, one from the
Private Education Retirement Annuity Association (PERAA) Plan and another from the CBA Retirement Plan.
The Voluntary Arbitrator rendered a Decision declaring the one-retirement policy and the Memorandum dated
August 16, 2005 contrary to law. CA also affirmed the ruling of the Voluntary Arbitrator.
a) Petitioner’s Arguments(LOST)
Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and thePERAA Plan are
one and the same. It maintains that there is no established companypractice or policy of giving two retirement bene-
fits to its employees. Assuming, withoutadmitting, that two retirement benefits were released, petitioner insists that
these weredone by mere oversight or mistake as there is no Board Resolution authorizing their release. And since
these benefits are unauthorized and irregular, these cannot ripen into a company practice or policy. As to the affida-
vits submitted by respondent, petitionerclaims that these are self-serving declarations, and thus, should not be given
weight and credence. In addition, petitioner claims that the Memorandum dated August 16, 2005, whichprovides for
the guidelines on the implementation of vacation and sick leave credits aswell as vacation leave commutation, is
valid because it is in full accord with existing policy.
b) Respondent’s Arguments(WON)
Respondent belies the claims of petitioner and asserts that there are two retirement plansas the PERAA Retire-
ment Plan, which has been implemented for more than 30 years, is different from the CBA Retirement Plan. Re-
spondent further avers that it has alwaysbeen a practice of petitioner to give two retirement benefits and that this
practice wasestablished by substantial evidence as found by both the Voluntary Arbitrator and the CA. As to the
Memorandum dated August 16, 2005, respondent asserts that it is arbitrary andcontrary to the CBA and existing
practices as it added qualifications or limitations whichwere not agreed upon by the parties.
ISSUE:
Whether or not the respondents are entitled to two retirement plans.
RULING:
Petition for review is denied.
Rule:
The Non-Diminution Rule under Article 100 of the Labor Code explicitly prohibits employers from
eliminating or reducing the benefits received by their employees. This rule, however, applies only if the benefit is
based on an express policy, a written contract, or has ripened into a practice. To be considered a practice, it must be
consistently and deliberately made by the employer over a long period of time. An exception to the rule is when "the
practice is due to error in the construction orapplication of a doubtful or difficult question of law." The error, how-
ever, must be corrected immediately after its discovery; otherwise, the rule on Non-Diminution of Benefits would
still apply.
Application:
Respondent was able to present substantial evidence in the form of affidavits to support its claim that
there are two retirement plans. Based on the affidavits, petitioner has been giving two retirement benefits as early as
1997. Petitioner, on the other hand, failed to present any evidence to refute the veracity of these affidavits. Petition-
er's assertion that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan are one and the
same is not supported by any evidence.These circumstances and affidavits presented if taken together, bolster the
finding that the two-retirement policy is a practice. Thus,petitioner cannot, without the consent of respondent, elimi-
nate the two-retirement policyand implement a one-retirement policy as this would violate the rule on non-
diminution of benefits.
Conclusion:
Thus, the Memorandum dated August 16, 2005 which is contrary to the existing CBA must be struck down for
it limits the available leave credits of an employee at the start of the school year. The Memorandum dated imposes a
limitation not agreed upon by the parties nor stated in the CBA.
BLUER THAN BLUE JOINT VENTURES COMPANY/ MARY ANN DELA VEGA, petitionersvs. GLYZA
ESTEBAN,respondents
G.R. No. 192582. April 7, 2014.
FACTS:
Respondent, Glyza Esteban was employed in January 2004 as Sales Clerk, assigned at petitioner, Bluer Than
Blue Joint Ventures Company’s EGG Boutique in SM City Marilao, Bulacan beginning 2006. Her position was de-
nominated at a Sales Clerk but the nature of her work included inventory and cashiering. November 2006, petitioner
received report that several employees have access to the POS System through a universal password given by Elmer
Flores. Discovered during the investigation that it was respondent who gave Flores the password. Petitioner sent a
letter memorandum to Esteban, after submitting her explanation, she was given preventive suspension. (November
13, 2006) A notice of termination sent to her, finding her explanation unsatisfactory thus, terminating her employ-
ment immediately on the ground of loss of trust and confidence. Respondent was given her final pay, including ben-
efits and bonuses, less inventory and variances incurred by the store amounting to P8,304.93. Respondent also
signed a quitclaim in favor of the the petitioner.
December 6, 2006 – Respondent filed a complaint (Labor Arbiter)for illegal dismissal, illegal suspension, holi-
day pay, rest day and separation pay.
LA ruled in favor of respondent and found that she was illegally dismissed and awarded/entitled her to receive
147,503.12 for separation pay, backwages, unpaid salaries, Service Incentive Leave pay, 13th month pay and 10%
attorney’s fee.
Petitioner filed an appeal with NLRC. NLRC reversed (Sept 23, 2008) the decision of the LA and dismissed
the case for illegal dismissal. NLRC also ordered petitioner to refund respondent P8,304.93 which was illegally de-
ducted from her salary. Esteban went to CA on certiorari which granted respondent’s petition and reinstated the LA
decision.
(a) Petitioner’s Argument/s (lost)

(1) It had just cause to terminate the employment of respondent (loss of trust and confidence.
(2) CA failed to appreciate the significance of respondent’s infraction when it ruled that suspension would
have sufficed to discipline her.
(3) The deduction on respondent’s wages of the negative variances in the sales is allowed by the Labor
Code, and such practice has been widely recognized in the retail industry.
(b) Respondent’s Argument/s (win)

(1) Notice to explain given to her did not identify the acts or omissions allegedly committed by her. She
also contends that it was the company’s fault in not creating a strong password
(2) She was forced into signing the quitclaim and waiver, among others.
ISSUE:
Whether Esteban’s acts constitute just cause to terminate her employment with the company on the ground of loss of
trust and confidence.
RULING:
PETITION IS PARTIALLY GRANTED. CA DECISION/RESOLUTION insofar as it reinstated the DECI-

SION of the Labor Arbiter are AFFIRMED, insofar as is affirmed respondent’s preventive suspension, the
same is hereby REVERSED. LABOR ARBITER is hereby ORDERED to re-compute the monetary award in
favor of respondent and exclude the award of backwages during such period of preventive suspension, if any.
Rule:
(1) Loss of trust and confidence to be a valid to be a valid cause for dismissal must be work related such as
would show the employee concerned to be unfit to continue working for the employer and it must be based on
a willful breach of trust and founded on a clearly established facts. Such breach is willful if it is done intention-
ally, knowingly and purposely, without justifiable excuse as distinguished from an act done carelessly, thoughtless-
ly, heedlessly or inadvertently.
(2) Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees. Except in cases where the employer is authorized by law or
regulations issued by the SOLE, among others.
The Omnibus Rules Implementing the Labor Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. — Where the employer is engaged in a trade, occupation
or business where the practice of making deductions or requiring deposits is recognized to answer for
the reimbursement of loss or damage to tools, materials, or equipment supplied by the employer to the
employee, the employer may make wage deductions or require the employees to make deposits from
which deductions shall be made, subject to the following conditions:
(a) That the employee concerned is clearly shown to be responsible for the loss or damage;
(b) That the employee is given reasonable opportunity to show cause why deduction should not be
made;
(c) That the amount of such deduction is fair and reasonable and shall not exceed the actual loss or
damage; and
(d) That the deduction from the wages of the employee does not exceed 20 percent of the em-
ployee's wages in a week.
Application:
(1) In this case, the court finds that the acts committed by Esteban do not amount to willful breach of trust. She
admitted that she accessed the POS system with the use of the unauthorized “123456” password. She did so, howev-
er, out of curiosity and without any obvious intention of defrauding the petitioner.
(2) The petitioner failed to sufficiently establish that Esteban was responsible for the negative variance it had
in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to show cause the deduction from
her last salary should not be made
Conclusion:
Thus, the practice in the retail industry to deduct variances from an employee’s salary, is unacceptable. It is there-
fore established that before employers could deduct from the employees’s salary sales negative variances, it should
first establish that the deductions is authorized by law, or regulations issued by the Secretary of Labor.
NETLINK COMPUTER v. DELMO

G.R. No. 160827, June 18, 2014
FACTS:
In 1991, Delmo was hired as account manager by Netlink to convine and source clients to buy Netlink products
and services. He worked in the field most of the time. Delmo was able to generate sales and requested payment of
his commissions but Netlink only gave him partial advances and began nitpicking on his tardiness and absences.
Netlink issued a memoranda on his attendance infractions yet Delmo continue selling products and were able to
generate sales.
By 1996, Delmo was refused entry to the company due to his alleged attendance infractions. His belongings
were still in the office, and this prompted him to file a complaint on illegal dismissal. Netlink stands by its company
policy of having employees’ attendance monitored using a bundy clock, which should be followed. Furthermore, the
petitioner adds that Delmo became lax and made other account managers outperform him.
LABOR ARBITER DECISION

The LA decided in favour of Delmo and ordered that he be reinstated to his former position. In addition, back-
wages, allowances, basic pay, 13th month pay (1996-1998) and other benefits were ordered to be paid to him.
NLRC DECISION
NLRC modified the LA decision by setting aside backwages and reinstatement due to the just causes for the
termination of Delmo’s employment.
Netlink filed a motion for reconsideration but was denied, hence they filed a petition for certiorari in the Court
of Appeals.
COURT OF APPEALS DECISION

The CA upheld the NLRC decision with some modifications. The CA ordered that since the client of Delmo
was not yet able to pay fully Netlink, the obligation to pay the commission has not yet arisen. The advance payment
of the commission of Delmo from Netlink should be deducted to the total amount of commission, which shall be
payable to Delmo after the payment of the accounts of his client in Netlink.
The decision on the 13th month pay was modified too, ruling that he is only entitled to a pro-rate 13th month pay
from January 1996 to November 1996, since he was not ordered reinstated after his termination. Lastly, the unpaid
commission, which was in dollar currency, should be paid in US dollars. The devaluation of the peso should not be
used as a shield against complainant (Delmo).
It was held too that findings of the NLRC, which the NLRC and the LA are in agreement, are deemed binding
and conclusive in Court.
Netlink appealed the CA decision citing that an error was made when it the CA did not rule that the applicable
exchange rate at the time of the sale, and not the exchange rate at the time of payment, should be used in computing
the commissions of Delmo.
ISSUE
 Whether or not commissions paid in foreign currency should be paid the same currency.
RULING
The appeal lacks merit. As a general rule, all obligations shall be paid in Philippine currency. However, the con-
tracting parties may stipulate that foreign currencies may be used for settling obligations. This is pursuant to Repub-
lic Act No. 8183.
There was no written contract between Netlink and Delmo stipulating that the latter's commissions would be
paid in US dollars. The absence of the contractual stipulation notwithstanding, Netlink was still liable to pay Delmo
in US dollars because the practice of paying its sales agents in US dollars for their US dollar denominated sales had
become a company policy. This was impliedly admitted by Netlink when it did not refute the allegation that the
commissions earned by Delmo and its other sales agents had been paid in US dollars.The principle of non-
diminution of benefits, which has been incorporated in Article 100 13 of the LaborCode, forbade Netlink from unila-
terally reducing, diminishing, discontinuing or eliminating the practice.
APPLICATION
Article 100 of the Labor Code specifically provides the principle of non-diminution of benefits. Since payments
of other currencies have been allowed, as such, it must be applied if it was agreed between parties. In absence of
such agreement, if such practice has ripened into a company policy then the employee must receive his pay in said
currency .
CONCLUSION
Delmo was not reinstated but his was entitled to unpaid commissions (in dollars or in Philippine equivalent at time
of payment) and a pro-rate 13th month pay from January 1996 to November 1996.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND/OR ERNANI TUMIMBANG, petitioners

v. HENRY ESTRANERO, respondent
G.R. No. 192518. October 15, 2014
FACTS:
On July 1, 1995, PLDT employed the respondent as an Auto-Mechanic/Electrician Helper with a monthly sal-
ary of P15,000 at the time of his separation from the service in 2003.
In the year 1995, PLDT adopted a company-wide Manpower Reduction Program (MRP), aimed at reducing its
work force. To commence with its program, PLDT offered the affected employees an attractive redundancy pay
consisting of 100% of their basic monthly salary for every year of service, in addition to their retirement benefits, if
entitled. For those who were not qualified to the retirement benefits, they were offered separation or redundancy
package of 200% of their basic monthly salary for every year of service. Among those gravely affected by the MRP
was the Fleet Management Division where the respondent was assigned. Attracted by the separation pay offered by
the company, the respondent expressed his conformity to his inclusion in the MRP in April 25, 2003. He was then
made to sign a deed denominated as a Receipt, Release and Quitclaim for his severance from employment, thus
availed of the offered personnel reduction program. Thereafter, PLDT proceeded to compute the respondent's re-
dundancy/separation benefits.
Since his length of service was seven (7) years, eleven (11) months and fifteen (15) days, which was rounded to
8 years, the respondent was entitled to 200% of his basic monthly salary for every year of service by way of redun-
dancy pay equivalent to P240,000.00 plus other benefits and bonuses equivalent to P27,028.37 for a total of
P267,028.37.
However, the respondent had outstanding liabilities arising from various loans he obtained from different enti-
ties, namely: the Home Development Mutual Fund (HDMF), PLDT Employees Credit Cooperative, Inc., PLDT
Service Cooperative, Inc., Social Security System (SSS), and the Manggagawa ng KomunikasyonsaPilipinas, which
summed to P267,028.37. Thus, PLDT deducted the said amount from the payment that the respondent was supposed
to receive as his redundancy pay. As a result his take home pay was in the amount of “zero pesos”. This prompted
the respondent to retract his availment of the separation pay package offered to him through a letter addressed to the
company dated May 8, 2003. Despite said retraction, however, the respondent was no longer allowed to report for
work.
The respondent filed a complaint for illegal dismissal with reinstatement, as well as moral and exemplary dam-
ages plus attorney's fees against PLDT and ErnaniTumimbang (petitioners), the Division Head of the Fleet Man-
agement Division where the respondent was assigned.
The Labor Arbiter (LA) rendered a decision in favor of Estrañero ordering PLDT to pay him P267,038.37 as
separation pay. The LA sustained the validity of PLDT's redundancy program as an authorized cause to terminate
the employment of the respondent, and his entitlement to the redundancy/separation pay pursuant to the MRP, being
more advantageous than the benefits allowed under the law. The LA, however, ruled that the office lacks jurisdiction
to pass upon the issue of PLDT's act in deducting the total outstanding loans which the respondent obtained from
different entities since the same does not involve an employer-employee relationship, and may only be enforced by
PLDT through a separate civil action in the regular courts. On appeal to the NLRC and eventually to the CA, the
decision of the LA was also affirmed.
ISSUE:
Whether or not PLDT can validly deduct the respondent's outstanding loan obligation from his redundancy
pay.
RULING:
It is clear in Article 113 of the Labor Code that no employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees, except in cases where the employer is authorized by law or
regulations issued by the Secretary of Labor and Employment, among others. The Omnibus Rules Implementing the
Labor Code, meanwhile, provides that deductions from the wages of the employees may be made by the employer
when such deductions are authorized by law, or when the deductions are with the written authorization of the em-
ployees for payment to a third person. Thus, any withholding of an employee's wages by an employer may only be
allowed in the form of wage deductions under the circumstances provided in Article 113 of the Labor Code, as well
as the Omnibus Rules implementing it. Further, Article 116 of the Labor Code clearly provides that it is unlawful for
any person, directly or indirectly, to withhold any amount from the wages of a worker without the worker's consent.
In this case, the deductions made to the respondent's redundancy pay do not fall under any of the circumstances
provided under Article 113, nor was it established with certainty that the respondent has consented to the said deduc-
tions or that the petitioners had authority to make such deductions. Furthermore, the petitioners may not offset the
outstanding loans of the respondent against the latter's monetary benefits. The records expressly revealed that the
respondent has obtained various loans from different entities and not with PLDT. Accordingly, set-off or legal com-
pensation cannot take place between PLDT and the respondent because they are not mutually creditor and debtor of
each other. Thus, there can be no valid set-off because the respondent's creditor is not PLDT.
The Court further agrees with the labor tribunals that the petitioners cannot offset the outstanding balance of the
respondent's loan obligation with his redundancy pay because the balance on the loan does not come within the
scope of jurisdiction of the LA. The demand for payment of the said loans is not a labor, but a civil dispute. It in-
volves debtor-creditor relations, rather than employee-employer relations. Evidently, the respondent's unpaid bal-
ance on his loans cannot be offset against the redundancy pay due to him.
The Court rules that PLDT has no legal right to withhold the respondent's redundancy pay and other benefits to
recompense for his outstanding loan obligations to different entities. The respondent's entitlement to his redundancy
pay is mandated by law which the petitioners cannot unjustly deny.
MILAN, et. al, petitioners vs. NLRC, SOLID MILLS INC., and/or PHILIP ANG, respondents.
G.R. No. 202961. February 4, 2015.
FACTS:
Petitioners are the employees of respondent Solid Mills Inc. They are represented by their collective bargaining
agent, NAFLU.
Petitioners were allowed to occupy SMI Village (property owned by Solid Mills) out of liberality and for the
convenience of its employees. They further agreed that petitioners would vacate the lot anytime the company deems
fit. On October 2003, Solid Mills would cease operations due to serious business losses.
Petitioners were sent individual notices to vacate SMI Village. They were asked to sign a Memorandum of
Agreement with Release and Quitclaim; employees who signed it were considered to have agreed to vacate SMI
Village as a condition for the release of their termination benefits and separation pay. Petitioners however refused to
sign it and demanded their benefits and separation pay.
Thereafter Petitioners Milan, et al filed a complaint before the Labor Arbiter on the ground that their accrued
benefits and separation pay cannot be withheld because it is based on company policy and practice. Solid Mills
countered by saying the complaint was premature because they have not vacated the property in view of the Memo-
randum of Agreement.
The Labor Arbiter favored the petitioners, stating Solid Mills’ illegality of the withholding of benefits. Solid
Mills appealed to the NLRC and reversed pertinent parts of the decision. Because of petitioners' failure to vacate
Solid Mills' property, Solid Mills was justified in withholding their benefits and separation pay.
Petitioners moved to reconsider but was denied, so they file a petition for certiorari with the CA. This was dis-
missed, hence their present petition.
One Petitioners argue that respondent Solid Mills and NAFLU's memorandum of agreement has no provision
stating that benefits shall be paid only upon return of the possession of respondent Solid Mills' property. It only pro-
vides that the benefits shall be "less accountabilities," which should not be interpreted to include such possession.
The fact that majority of NAFLU's members were not occupants of respondent Solid Mills' property is evidence that
possession of the property was not contemplated in the agreement. "Accountabilities" should be interpreted to refer
only to accountabilities that were incurred by petitioners while they were performing their duties as employees at the
worksite. Moreover, applicable laws, company practice, or policies do not provide that 13th month pay, and sick and
vacation leave pay benefits, may be withheld pending satisfaction of liabilities by the employee.
Petitioners also point out that the National Labor Relations Commission and the Court of Appeals have no ju-
risdiction to declare that petitioners' act of withholding possession of respondent Solid Mills' property is illegal. The
regular courts have jurisdiction over this issue. It is independent from the issue of payment of petitioners' monetary
benefits.
For these reasons, and because, according to petitioners, the amount of monetary award is no longer in question,
petitioners are entitled to 12% interest per annum.
Respondent, in their joint comment, argue that petitioners' failure to turn over respondent Solid Mills' property
"constituted an unsatisfied accountability" for which reason "petitioners' benefits could rightfully be withheld." The
term "accountability" should be given its natural and ordinary meaning. Thus, it should be interpreted as "a state of
being liable or responsible," or "obligation." Petitioners' differentiation between accountabilities incurred while per-
forming jobs at the worksite and accountabilities incurred outside the worksite is baseless because the agreement
with NAFLU merely stated "accountabilities," without qualification.
On the removal of the award of 12% interest per annum, respondents argue that such removal was proper since
respondent Solid Mills was justified in withholding the monetary claims.
ISSUE: Whether or not the benefits of Petitioners may be validly and legally withheld by Solid Mills Inc.
RULING: Petition DENIED; Solid Mills may validly and legally withhold the benefits.
Rule:
As a general rule, the Labor Code provides that employers are prohibited from withholding wages from em-
ployees (Article 116 – Withholding of wages and kickbacks). It also prohibits the elimination or diminution of bene-
fits (Article 100).
However, the law supports the employers' institution of clearance procedures before the release of wages as an
exception to the general rule that wages may not be withheld and benefits may not be diminished (Article 113, La-
bor Code). Also, the Civil Code provides that the employer is authorized to withhold wages for debts due (Article
1706, Civil Code).
Application:
"Debt" in this case refers to any obligation due from the employee to the employer. It includes any accountabili-
ty that the employee may have to the employer. There is no reason to limit its scope to uniforms and equipment, as
petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing petitioners, agreed that the re-
lease of petitioners' benefits shall be "less accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The ordinary meaning of the term "accounta-
bility" does not limit the definition of accountability to those incurred in the worksite. As long as the debt or obliga-
tion was incurred by virtue of the employer-employee relationship, it shall be included in the employee's accounta-
bilities that are subject to clearance procedures.
Petitioners do not categorically deny respondent Solid Mills' ownership of the property, and they do not claim
superior right to it. What can be gathered from the findings of the Labor Arbiter, NLRC, and the CA is that respon-
dent Solid Mills allowed the use of its property for the benefit of petitioners as its employees. Petitioners were mere-
ly allowed to possess and use it out of respondent Solid Mills' liberality. The employer may, therefore, demand the
property at will.
another."
The law does not sanction a situation where employees who do not even assert any claim over the employer's
property are allowed to take all the benefits out of their employment while they simultaneously withhold possession
of their employer's property for no rightful reason.
another."
Conclusion:
Therefore, petitioners are not entitled to interest of their withheld separation benefits. These benefits were prop-
erly withheld by respondent Solid Mills because of their refusal to return its property.
ERNESTO GALANG and MA. OLGA JASMIN CHAN, Petitioners vs. BOIE TAKEDA CHEMI-
CALS, INC. and/or KAZUHIKO NOMURA, Defendants
G.R. No. 183934. July 20, 2016
Facts:
Respondent pharmaceutical company BTCI hired petitioners Ernesto Galang and Ma. Olga Jasmin
Chan. Through the years, petitioners were promoted to Regional Sales Managers. When the National Sales Direc-
tor position became vacant, Nomura, asked petitioners to apply for the position of National Sales Director. They
submitted applied but BTCI instead promoted Villanueva as National Sales Director. BTCI explained that the
appointment was pursuant to its management prerogative, and that it arrived at such decision only "after careful
assessment of the situation, the needs of the position and the qualifications of the respective candidates." The
promotion of Villanueva as the National Sales Director caused ill-feelings on petitioners' part.
After Villanueva's promotion, petitioners claimed that Nomura threatened to dismiss them from office if they
failed to perform well under the newly appointed National Sales Director. Petitioners sent a joint written letter of
resignation to Nomura. Thereafter, petitioners received their retirement package and other monetary pay from
BTCI. Chan received P2,187,236.64 while Galang received P3,754,306.56. Petitioners filed the complaint for
constructive dismissal and money claims.
a) Petitioners’ arguments (Ernesto Galang and Ma. Chan- lost)
They were constructively dismissed because of the acts of BTCI's General Manager Nomura. They claim
that they were forced into resigning because instead of promoting them to the position of National Sales Direc-
tors, BTCI hired Villanueva who only had three years of service in the company, who has no background or ex-
perience in sales to speak of, and who was allegedly responsible for almost the bankruptcy of the company.
They allege that Nomura threatened to dismiss them if they do not perform well under the newly-appointed Na-
tional Sales Director.
They also argue that the retirement package given to them is lower compared to others who were holding
the similar position at the time of their retirement. Sarmiento allegedly received a more generous package of
150% of his monthly salary for every year of service on top of the 120% retirement package for his 22 years of
service. Petitioners contend that this was the same retirement package given to other employees.
b) Respondents’ Arguments (Boie Takeda Chemicals Inc and/or Nomura - won)
The complaint is only an attempt to extort additional benefits from the company.
No constructive dismissal can occur because there was no movement or transfer of position or diminution
of salaries or benefits nor was there any circumstance that would make petitioners' continued employment un-
reasonable or impossible. The appointment of Villanueva was within the sphere of management's prerogatives,
and was arrived at after careful consideration. It did not have any adverse effect on petitioners' positions as Re-
gional Sales Managers. Petitioners’ decision to retire was voluntary and of their own volition.
As to the payment of retirement benefits, BTCI insists that petitioners have been paid according to the Col-
lective Bargaining Agreement between BTCI and BTCI Supervisory Union. Although petitioners are managers
and are not covered by it, BTCI by practice grants the same retirement benefits to managers. BTCI admits that it
gave Sarmiento additional financial assistance because of serious health problems, and because he was merely
three years away from normal retirement. Other employees cited by petitioners all received retirement benefits
computed on the CBA provisions.
Issues:
1. Whether petitioners were constructively dismissed from service; and
2. Whether petitioners are entitled to a higher retirement package.
Ruling:
We deny the petition.
Rule:
1. Constructive dismissal is a "dismissal in disguise" or "an act amounting to dismissal but made to appear as
if it were not." It exists where there is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. Constructive dismissal
may still exist when continued employment has become so unbearable because of acts of clear discrimination,
insensibility or disdain by the employer, that the employee has no choice but to resign. Under these two defini-
tions, what is essentially lacking is the voluntariness in the employee's separation from employment.
Our labor laws respect the employer's inherent right to control and manage effectively its enter-
prise. Management has exclusive prerogatives to determine the qualifications and fitness of workers for hiring
and firing, promotion or reassignment. It is only in instances of unlawful discrimination, limitations imposed by
law and collective bargaining agreement can this prerogative of management be reviewed. The promotion of em-
ployees to managerial or executive positions rests upon the discretion of management.
In constructive dismissal cases, the employer is charged with the burden of proving that its conduct and action
or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity. However,
it is likewise true that in constructive dismissal cases, the employee has the burden to prove first the fact of dis-
missal by substantial evidence.
2. The entitlement of employees to retirement benefits must specifically be granted under existing laws, a
CBA or employment contract, or an established employer policy or practice. In Vergara v. Coca-Cola Bottlers
Philippines, Inc., a company practice is proven as follows: “the employee must prove by substantial evidence that
the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberate-
ly. It requires an indubitable showing that the employer agreed to continue giving the benefit knowing fully well
that the employees are not covered by any provision of the law or agreement requiring payment thereof. In sum,
the benefit must be characterized by regularity, voluntary and deliberate intent of the employer to grant the benefit
over a considerable period of time.”
Application:
1. Petitioners were neither demoted nor did they receive a diminution in pay and benefits and also failed to
show that employment is rendered impossible, unreasonable or unlikely. They admitted that they have previously
intended to retire and were actually the ones who requested to avail of an early retirement. The allegations that
petitioners’ raised only showed their general disagreement with the appointment of Villanueva, and not the acts of
discrimination by the management.
Petitioners did not present any evidence showing BTCI's adopted rules and policies laying out the standards
of promotion of an employee to National Sales Director. They did not present the qualification standards which
BTCI did not allegedly follow. They only assumed that one of them was better for the job compared to Villanu-
eva. BTCI's caution to dismiss them if they do not perform well did not constitute a threat since it is expected of
management as part of its supervision and disciplining power over petitioners given their unwelcoming reactions
to Villanueva.
2. Based on both parties' evidence, petitioners are not covered by any agreement. Petitioners’ even received
more than what is mandated by Article 287 of the Labor Code. The concession given to such an employee was
not proved to be company practice or policy such that petitioners can demand of it over and above what has been
specified in the collective bargaining agreement." The petitioners cannot be use the precedents they cited to prove
this specific company practice because these employees were not shown to be similarly situated in terms of rank,
nor are the applicable retirement packages corresponding to their ranks alike. It cannot therefore be disputed that
petitioners already received the benefits as specified in the CBA between BTCI and BTCI Supervisory Union.
Conclusion:
In sum, we hold that petitioners voluntarily retired from service and received their complete retirement pack-
age and other monetary claims from BTCI.
PAYMENT OF WAGES 106
DOMINICO C.CONGSON, petitioner vs.NATIONAL LABOR RELATIONS COMMISSION et al.,defendant.

GR 114250, April 5,1995
FACTS:
Dominico C. Congson is the registered owner of Southern Fishing Industry. Respondents were hired as piece-rate
employees uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80) kilos per movement. They
work for 7 days a week. Due to alleged scarcity of tuna, Congson notified his employees of a proposal to reduce the
rate-per-tuna movement.
When they reported the following day, they found out that they were already replaced with new set of workers.
They were purportedly replaced with a new set of workers because of their alleged refusal/resistance to the proposed
reduction of their piece-rate payment per tuna. They wanted to have a dialogue with the management, but they
waited in vain. Thus, they filed a case before NLRC for underpayment of wages (violation of the minimum wage
law) and non-payment of overtime pay, 13th month pay, holiday pay, rest day pay, and five (5)-day service incen-
tive leave pay; and for constructive dismissal.
The labor arbiter decided in favor of the workers and directed Congson to pay the monetary claims for salary differ-
entials, 13th month pay, service incentive leave pay, and separation pay.
On appeal, the NLRC affirmed the decision of the Labor Arbiter, in toto, thus the instant petition.
a) Petitioner’s Arguments(Dominico C. Congson. – Lost/Motion Denied)
As to separation pay and constructive dismissal:

Petitioner argued that private respondents were not constructively dismissed but rather, they abandoned their work
after learning of petitioner's proposal to reduce tuna movement rates because of the scarcity of tuna, and that, it took
private respondents one (1) month to return to work, but they could no longer be accommodated as petitioner had
already hired their replacements after private respondents failed to heed petitioner's repeated demands for them to
return to work. Upon said premises, petitioner contended that private respondents were not entitled to separation
pay.
Petitioner seeks to defeat the award of separation pay at inasmuch as the existence of strained relationship was not
adequately established.
As to wage:
Petitioner imputes grave abuse of discretion to respondent NLRC in completely disregarding his motion for recon-
sideration and supplemental motion for reconsideration.
He averred that NLRC should have considered as forming a substantial part of private respondents' total wages the
cash value of the tuna liver and intestines private respondents were entitled to retrieve. He argued that the combined
value of the cash wage and monetary value of the tuna liver and intestines clearly exceeded the minimum wage fixed
by law
.
b) Respondent’s Argument’s (NLRC, et al –Won)
As to separation pay pay and constructive dismissal:

Private respondents accused petitioner of constructive dismissal and asked for separation pay claiming that peti-
tioner refused to give them work assignments and replaced them with new workers the next day they reported for
work when they showed resistance to the petitioner's proposed reduction of the rate-per-tuna movement.
Respondent NLRC ruled that petitioner replaced private respondents with a new set of workers without just cause
and the required notice and hearing. The advise to wait for further notice' was indeed a confirmation that complain-
ants were dismissed as underscored by the fact that such notice never came even until this date. Having been con-
structively and illegally dismissed complainants are therefore entitled to their prayer for separation pay.
As to wage:
With respect to their monetary claims, private respondents charged petitioner with violation of the minimum wage
law, alleging that with petitioner's rates and the scarcity of tuna catches, private respondents' average monthly earn-
ings each did not exceed ONE THOUSAND PESOS (P1,000.00).
ISSUE:
1. Whether or not respondents are entitled to separation pay?

2. Whether or not the form of payment by Congson is valid pursuant to Article 102 of the Labor Code?
RULING:
1. Respondents are entitled to a Separation Pay
2. Form of Payment is invalid
Rule:
1. The Labor Arbiter Aponesto's findings were proper as to private respondents' illegal dismissal. As a per-
missible exception to the general rule, separation pay may be awarded to the employee in lieu of reinstate-
ment, by reason of strained relationship between the employer and employee.
We find petitioner's ratiocination on the impropriety of the award of separation pay to private respondents
to be specious
A careful scrutiny of the records of the case readily discloses the existence of strained relationship between
the petitioner and private respondents.
Firstly, petitioner consistently refused to re-admit private respondents in his establishment. Petitioner even
replaced private respondents with a new set of workers to perform the tasks of private respondents. Quite
obviously then, notwithstanding petitioner's argument for reinstatement he was only interested in the dele-
tion of the award of separation pay to private respondents.
2. Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of legal
tender combined with tuna liver and intestines runs counter to the above cited provision of the Labor Code.
The fact that said method of paying the minimum wage was not only agreed upon by both parties in the
employment agreement but even expressly requested by private respondents, does not shield petitioner. Ar-
ticle 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance
when an employer is permitted to pay wages informs other than legal tender, that is, by checks or money
order, is when the circumstances prescribed in the second paragraph of Article 102 are present.
Application:
In determining on whether reinstatement or indemnification of separation pay is applicable in a certain case, a care-
ful scrutiny of the records of the case must be done by the employer. If it shows that there is an existence of strained
relationship between the petitioner and private respondents as shown forth in this case, one should opt to give his
employee for the latter’s separation pay and not reinstate him.
As to the form of payment of wages, it is clearly shown that only legal tender is allowed by the Labor Code to be
given to one’s employees even if there is consent on the part of the latter to receive another thing (like tuna intestine
and liver) apart from legal tender as a part of one’s wage.
Conclusion:
Thus, whenever there is a finding of illegal dismissal, the available and logical remedy is reinstatement. But as an
exception to the general rule, separation pay may be awarded to the employee in lieu of reinstatement, by reason of
strained relationship between the employer and employee.
Also, as to form of payment to employees, only legal tender allowed as a form of payment to the employees in ac-
cordance with Art. 102 of the Labor Code.
NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION TRUST, petitioners, vs. NA-
TIONAL LABOR RELATIONS COMMISSION, et.al, respondents.
G.R. No. 112546. March 13, 1996
FACTS:
Due to financial losses, North Davao Mining Corporation laid off workers. Respondent Wilfredo Guillema is
one among several employees of North Davao who were separated by reason of the company’s closure on May 31,
1992. It appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until
its closure in 1992, it had been giving separation pay equivalent to thirty (30) days’ pay for every year of service.
Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace and
order problems, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, some 58 kilometers
from their workplace and about 2 ½hours’ travel time by public transportation; this arrangement lasted from 1981 up
to 1990.
a) Petitioner’s Arguments (DAVAO – LOSE)

As to the appellants claim that complainants-appeallees time spent in collecting their wages at Tagum, Davao is
not compensable allegedly because it was on official time can not be given credence. No iota of evidence has been
presented to back up said contention. The same is true with appellants assertion that the claim for transportation ex-
penses is without basis since they were incurred by the complainants. Appellants should have submitted the payrolls
to prove that complainants-appellees were not the ones who personally collected their wages and/or the bus/jeep trip
tickets or vouchers to show that the complainants-appellees were provided with free transportation as claimed.
b) Respondents’ Arguments (NLRC – WIN)

From the evidence on record, we find that the hours spent by complainants in collecting salaries at a bank in
Tagum, Davao del Norte shall be considered compensable hours worked.Considering further the distance between
Amacan, Maco to Tagum which is 2 hours by travel and the risks in commuting all the time in collecting complai-
nants salaries, would justify the granting of backwages equivalent to two (2) days in a month as prayed for.
ISSUE:
Whether or not time spent in collecting wages in a place other than the place of employment is compensable
RULING:
Resolution affirmed.
Rule:
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that:
Section 4. Place of payment. - (a) As a general rule, the place of payment shall be at or near the place of undertak-
ing. Payment in a place other than the workplace shall be permissible only under the following circumstances:
(1) When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order
conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity ren-
dering payment thereat impossible;
(2) When the employer provides free transportation to the employees back and forth; and
(3) Under any analogous circumstances; provided that the time spent by the employees in collecting their wages
shall be considered as compensable hours worked.
Application:
It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained
its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two and
a half (2 1/2) hours of travel from the place of work and such travel time is not official.
Records also show that on February 12,1992, when an inspection was conducted by the Department of Labor
and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that peti-
tioners had violated labor standards law, one of which is the place of payment of wages.
CONCLUSION:
Thus, petitioners had violated labor standards law, one of which is the place of payment of wages employ-
er and they should provide free transportation to the employees back and forth.
HOUSE OF SARA LEE, petitioner vs. CYNTHIA F. REY, respondent

GR. No. 149013. August 31 2006.
FACTS:
Petitioner’s business involves distribution of its products to dealers on credit at a discounted rate. Credit term is
either 38 days for Independent Business Managers (IBM) or 52 days for Independent Group Supervisors (IGS).
These dealers, then, sells the products at a price fixed by the petitioner and in turn are paid through a profit
margin between the discounted price and the fixed selling price. On top of this, they are given a sales commission
depending on the volume of their sales.
Petitioner imposed a Credit Administration Charge whereby overdue dealers will be charged with penalty and will
not be able to purchase additional products.
Respondent was first employed as a Account Receivable Clerk on July 1993 at Caloocan City, transferred to
Cagayan on November 1993. She was elevated to the Credit Administration Supervisor on January 1994.
Sometime in 1995, when the respondent was working in Butuan, it was alleged that she instructed the Accounts
Receivable Clerk to change the credit term of one of the IBMs from 52 days to an unauthorized 60 days to the pre-
judice of the company. This was reported to the Branch Operations Manager, elevated to higher authority and re-
sulted to an audit which found the respondent culpable that led to her dismissal after due notice and hearing.
She filed a complaint for illegal dismissal, backwages and damages, with the Labor Arbiter. The latter found
that the dismissal was illegal awarded backwages, separation pay and 13 th month pay. Petitioner appealed to the
NLRC which affirmed the decision of the Labor Arbiter. Hence, the petition to Supreme Court.
a.) Petitioner’s Arguments (House of Sara Lee – Win)

The respondent admitted her infractions and begged not to report the matter to higher authority.
The dismissal was supported by the audit findings and the respondent was given due notice and hearing prior the
dismissal.
b.) Respondent’s Arguments (Cynthia F. Rey – Lose)

The changing of credit term was a long standing practice in Cagayan de Oro Branch.
She was pinned down by the Branch Operations Manager for the latter to have a graceful exit.
ISSUE: Whether or not the dismissal was for just cause and respondent was entitled to backwages, 13 th month pay
and separation pay.
RULING:
The petition was granted.
Rule:
With respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof
of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the
employer will not be sufficient. But as to a managerial employee, the mere existence of a basis for believing that
such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of mana-
gerial employees, proof beyond reasonable doubt is not required; it is sufficient that there is some basis for the loss
of confidence, 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 confi-
dence demanded by his position.
Application:
In this case, the respondent has the rank of a supervisor and involves a high degree of responsibility requiring
trust and confidence. The position carried with it the duty to observe proper company procedures in the fulfillment
of her job, as it relates closely to the financial interests of the company.
Conclusion:
As to the 13th month pay, it should be deleted because the respondent is not a rank and file employee. Backwag-
es and separation pay must also be deleted since the dismissal was for just cause.
CONDITIONS OF EMPLOYMENT 110
San Juan De Dios Hospital, petitioner vs. NLRC, respondent

282 SCRA 316 [1997]
Facts:
Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees
Association, sent a letter requesting for the expeditious implementation and payment by respondent, San Juan De
Dios Hospital, of the '40-hours/5-day workweek' with compensable weekly two (2) days off provided for by Policy
Instruction No. 54 issued by the Secretary of Labor. Said policy instruction purports to implement R.A. No. 5901,
otherwise known as “An Act Prescribing Forty Hours a Week of Labor for Government and Private Hospitals Or
Clinic Personnel.” Respondent hospital failed to give a favorable response; thus, petitioners filed a complaint regard-
ing their claims for statutory benefits under the above-cited law and policy issuance. However, the Labor Arbiter
and, subsequently, NLRC dismissed the complaint. Hence, this petition ascribing grave abuse of discretion on the
part of NLRC in concluding that Policy Instructions No. 54 proceeds from a wrong interpretation of R.A. 5901 and
Article 83 of the Labor Code.
Issue:
Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days upon completion of 40-hour/5-day
workweek, is valid based on existing labor laws.
Ruling:
Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the provision of Article 83 of the
Labor Code, as well as to R.A. No. 5901.
A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for health personnel who
complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of House Bill No. 16630 (later passed
into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working hours of
health personnel and not to dole out a two days off with pay. Petitioners' position is also negated by the very rules
and regulations promulgated by the Bureau of Labor Standards which implement Republic Act No. 5901. Section 15
of aforementioned implementing rules grants specific rate of additional compensation for work performed on Sun-
day or for work performed in excess of forty hours a week. Policy Instruction No. 54 unduly extended the statute.
Article 83 merely provides: (1) the regular office hour of eight hours a day, five days per week for health per-
sonnel, and (2) where the exigencies of service require that health personnel work for six days or forty-eight hours
then such health personnel shall be entitled to an additional compensation of at least thirty percent of their regular
wage for work on the sixth day. There is nothing in the law that supports then Secretary of Labor and petitioner’s
assertion. The Secretary of Labor exceeded his authority by including a two days off with pay in contravention of
the clear mandate of the statute. Administrative interpretation of the law is at best merely advisory, and the Court
will not hesitate to strike down an administrative interpretation that deviates from the provision of the statute.
SIME DARBY PILIPINAS, INC., petitioner, vs. NLRC and SIME DARBY SALARIED EMPLOYEES AS-
SOCIATION (ALU-TUCP), respondents.
G.R. No. L-12426. February 16, 1959.
FACTS:
Petitioner Sime Darby Pilipinas, Inc. is engaged in the manufacture of automotive tires, tubes and other rubber
products, while private respondent Sime Darby Salaried Employees Association is an association of monthly sala-
ried employees of petitioner at its Marikina factory, All company workers in Marikina including members of the
private respondent union worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break.
On August 14, 1992, petitioner issued a memorandum advising all its monthly salaried employees in its Mariki-
na Tire Plant of a change in work schedule. The new prescribed schedule will be 7:45 A.M.-4:45 P.M. (Monday to
Friday) and 7:45 A.M.-11:45 A.M. (Saturday). Their Coffee Breaktime was shortened to 10 minutes only and the
company discontinued the 30-minute paid "on call" lunch break. Aggrieved by the change, the union filed on behalf
of its members a complaint with the Labor Arbiter for unfair labor practice, discrimination and evasion of liability.
The Labor Arbiter dismissed the complaint on the ground that the change constituted a valid exercise of man-
agement prerogative and did not have the effect of diminishing the benefits granted to the workers. On appeal, the
NLRC sustained the Labor Arbiter and dismissed the appeal. However, upon motion for reconsideration, the NLRC
reversed its own decision and declared that the new work schedule deprived the employees a 30-minute paid lunch
break resulting in an unjust diminution of company privileges prohibited by Article 100 of the Labor Code, as
amended. Hence, the present petition.
The Supreme Court affirmed the decision of the NLRC. The Court held that the right to fix the work schedules
of the employees rests principally on their employer. The new work schedule fully complies with the daily work
schedule of eight hours without violating the Labor Code. With the new work schedule, the employees are now giv-
en a one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but
also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since
the employees are no longer required to work during this one-hour break, there is no more need for them to be com-
pensated for this period
a) Petitioner’s Arguments (SIME DARBY PILIPINAS, INC – Win)

The factory workers would be unjustly enriched if they continued to be paid during their lunch break even if
they were no longer "on call" or required to work during the break. He also ruled that the decision in the earlier Sime
Darby case 3 was not applicable to the instant case because the former involved discrimination of certain employees
who were not paid for their 30-minute lunch break while the rest of the factory workers were paid; hence, this Court
ordered that the discriminated employees be similarly paid the additional compensation for their lunch break.
b) Respondent’s Argument’s (NLRC and SIME DARBY SALARIED EMPLOYEES ASSOCIATION (ALU-
TUCP), - Lost)
Respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute
paid "on call" lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor prac-
tice, discrimination and evasion of liability pursuant to the resolution of this Court in Sime Darby International Tire
Co., Inc. v. NLRC. 2
ISSUE:
Whether or not the act of management in revising the work schedule of its employees and discarding their paid
lunch break constitutive of unfair labor practice.
RULING:
The petition is granted.
Rule:
The right to fix the work schedules of the employees rests principally on their employer. In the instant case peti-
tioner, as the employer, cites as reason for the adjustment the efficient conduct of its business operations and its im-
proved production.
Management is free to regulate, according to its own discretion and judgment, all aspects of employment, in-
cluding hiring, work assignments, working methods, time, place and manner of work, processes to be followed, su-
pervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and discip-
line, dismissal and recall of workers. Further, management retains the prerogative, whenever exigencies of the ser-
vice so require, to change the working hours of its employees. So long as such prerogative is exercised in good faith
for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold such exercise.
Application:
Management also has rights which, as such, are entitled to respect and enforcement in the interest of simple fair
play. Although this Court has inclined more often than not toward the worker and has upheld his cause in his con-
flicts with the employer, such favoritism has not blinded the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the applicable law and doctrine.
Conclusion:
The case before us does not pertain to any controversy involving discrimination of employees but only the issue
of whether the change of work schedule, which management deems necessary to increase production, constitutes
unfair labor practice. As shown by the records, the change effected by management with regard to working time is
made to apply to all factory employees engaged in the same line of work whether or not they are members of private
respondent union. Hence, it cannot be said that the new scheme adopted by management prejudices the right of pri-
vate respondent to self-organization.
PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,

LABOR ARBITER ROMULUS PROTACIO and DR. HERMINIO A. FABROS, respondents.
G.R. No. 132805. February 2, 1999.
FACTS:
Private respondent was employed as flight surgeon at petitioner company (PAL). He was assigned at the PAL
Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent (Fabros) left the clinic to have his din-
ner at his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency
call from the PAL Cargo Services. The nurse on duty, Mr. MerlinoEusebio, called private respondent at home to
inform him of the emergency. The patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately
rushed him to the hospital. When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio
had already left with the patient. Mr. Acosta died the following day.
Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight
Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to explain why
no disciplinary sanction should be taken against him.
a) Petitioner’s Arguments(Philippine Airlines – LOST)
Petitioner argues that being a full-time employee, private respondent is obliged to stay in the company premises
for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his
meals.
b) Respondent’s Argument’s (Dr. Herminio A. Fabros - WON)
Private respondent asserted that he was entitled to a thirty-minute meal break and that he immediately left his
residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later;
that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him.
ISSUES:
1. Whether or not the nullifying of the 3-month suspension by the NLRC erroneous.
2. Whether or not the awarding of moral damages is proper.
RULING:
The petition is PARTIALLY GRANTED. The portion of the assailed decision awarding moral damages to pri-
vate respondent is DELETED.
Rule:
The Court found that public respondents did not err in nullifying the three-month suspension of private respon-
dent. They, however, erred in awarding moral damages to private respondent.
Articles 83 and 85 of the Labor Code read:

ARTICLE 83. Normal hours of work. — The normal hours of work of any employee shall not exceed
eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one million (1,000,000) or
in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office
hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where
the exigencies of the service require that such personnel work for six (6) days or forty-eight (48)
hours, in which case they shall be entitled to an additional compensation of at least thirty per cent
(30%) of their regular wage for work on the sixth day. For purposes of this Article, "health person-
nel" shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers,
laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other
hospital or clinic personnel. (emphasis supplied)
ARTICLE 85. Meal periods. — Subject to such regulations as the Secretary of Labor may prescribe, it
shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off
for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:
SECTION 7. Meal and Rest Periods. — Every employer shall give his employees, regardless of sex,
not less than one (1) hour time-off for regular meals, except in the following cases when a meal pe-
riod of not less than twenty (20) minutes may be given by the employer provided that such shorter
meal period is credited as compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than sixteen hours a day;
(c) In cases of actual or impending emergencies or there is urgent work to be performed on machi-
neries, equipment or installations to avoid serious loss which the employer would otherwise
suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as
compensable working time.
As to the award of moral damages to private respondent, not every employee who is illegally dismissed or sus-
pended is entitled to damages. As a rule, moral damages are recoverable only where the dismissal or suspension of
the employee was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy. Bad faith involves a state of mind dominated by ill will or mo-
tive. It implies a conscious and intentional design to do a wrongful act for a dishonest purpose or some moral obliq-
uity.
Application:
As provided in the provisions of the Labor Code, the eight-hour work period does not include the meal break.
Nowhere in the law may it be inferred that employees must take their meals within the company premises. Em-
ployees are not prohibited from going out of the premises as long as they return to their posts on time.
Furthermore, there is no showing that the management of petitioner company was moved by some evil motive
in suspending private respondent. It suspended private respondent on an honest, albeit erroneous, belief that private
respondent’s act of leaving the company premises to take his meal at home constituted abandonment of post which
warrants the penalty of suspension. Also, it is evident from the facts that petitioner gave private respondent all the
opportunity to refute the charge against him and to defend himself. These negate the existence of bad faith on the
part of petitioner.
Conclusion:
Therefore, private respondent’s act of going home to take his dinner does not constitute abandonment and that
he is not entitled to moral damages since the petitioner company was not in bad faith in its act of suspending the
private respondent.
LINTON COMMERCIAL CO., INC., petitioner vs.HELLERA et al., defendant.

G.R. No. 163147. October 10, 2007.
FACTS:
Respondents filed a labor complaint before the National Labor Relations Commission (NLRC) contending that
petitioner Linton Commercial Company, Inc. (Linton) had committed illegal reduction of work when it imposed a
reduction of work hours thereby affecting its employees.
Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication of
steel and its byproducts. On 17 December 1997, Linton issued a memorandum addressed to its employees inform-
ing them of the company's decision to suspend its operations from 18 December 1997 to 5 January 1998 due to the
currency crisis that affected its business operations. Linton submitted an establishment termination reportto the De-
partment of Labor and Employment (DOLE) regarding the temporary closure of the establishment covering the said
period. The company's operation was to resume on 6 January 1998.
On January 7, 1997, Linton issued another memorandum informing them that effective January 12, 1998, it
would implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker
would be working on a rotation basis for three working days only instead for six days a week. On the same day, Lin-
ton submitted an establishment termination report concerning the rotation of its workers. Linton proceeded with
theimplementation of the new policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers
(workers) filed a Complaint for illegal reduction of workdays
a) Petitioner’s Arguments (Linton- Lost)

Petitioners, on the other hand, contended that the devaluation of the peso created a negative impact in interna-
tional trade and affected their business because a majority of their raw materials were imported. They claimed that
their business suffered a net loss of P3,569,706.57 primarily due to currency devaluation and the slump in the mar-
ket. Consequently, Linton decided to reduce the working days of its employees to three (3) days on a rotation basis
as a costcutting measure. Further, petitioners alleged that the compressed workweek was actually implemented on
12 January 1998 and not on 7 January 1998, and that Article 283 was not applicable to the instant case.
b) Respondents’ Arguments (Hellera- Won)

On the other hand, the workers pointed out that Linton implemented the reduction of work hours without ob-
serving Article 283 of the Labor Code, which required submission of notice thereof to DOLE one month prior to the
implementation of reduction of personnel, since Linton filed only the establishment termination report enacting the
compressed workweek on the very date of its implementation.
ISSUE:
Whether or not petitioner’s implementation of a compressed workweek constitutes an illegal reduction of work.
RULING:
The compressed workweek arrangement was unjustified and illegal.
Rule:
ART. 283. Closure of establishment and reduction of personnel.- The employer may also terminate the em-
ployment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the pur-
pose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry
of Labor and Employment at least one (1) month before the intended date thereof.
ART. 286. When employment not deemed terminated. – Thebona-fide suspension of the operation of a business
or undertaking for a period not exceeding six (6) months, or thefulfillment by the employee of a military or civic
duty shall not terminate employment.
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin stating that a reduction of the
number of regular working days is valid where the arrangement is resorted to by the employer to prevent serious
losses due to causes beyond his control, such as when there is a substantial slump in the demand for his goods or
services or when there is lack of raw materials. Although the bulletin stands more as a set of directory guidelines
than a binding set of implementing rules, it has one main consideration, consistent with the ruling in Philippine
Graphic Arts Inc., in determining the validity of reduction of working hours — that the company was suffering from
losses.
Application:
Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimiza-
tion. However, such privilege is not absolute. Management prerogative must be exercised in good faith and with due
regard to the rights of labor. As previously stated, financial losses must be shown before a company can validly opt
to reduce the work hours of its employees. However, to date, no definite guidelines have yet been set to determine
whether the alleged losses are sufficient to justify the reduction of work hours. If the standards set in determining the
justifiability of financial losses under Article 283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the
Labor Code were to be considered, petitioners would end up failing to meet the standards. On the one hand, Article
286 applies only when there is a bona fide suspension of the employer's operation of a business or undertaking for a
period not exceeding six (6) months.
Records show that Linton continued its business operations during the effectivity of the compressed workweek,
which spanned more than the maximum period. On the other hand, for retrenchment to be justified, any claim of
actual or potential business losses must satisfy the following standards: (1) the losses incurred are substantial and not
de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is
likely to be effective in preventing the expected losses; and (4) the alleged losses, if already incurred, or the ex-
pected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence. Linton failed to
comply with these standards.
CONCLUSION:
All taken into account, the compressed workweek arrangement was unjustified and illegal. Thus, petitioners
committed illegal reduction of work hours.
BisigManggagawasaTryco, petitionersvs. NLRC, respondents.

G.R. No. 151309, October 15, 2008
FACTS:
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located
in Caloocan City. Petitioners JoselitoLariño, VivencioBarte, SaturninoEgera and SimplicioAya-ay are its regular
employees.
Tryco and the petitioners signed separate Memorand[a] of Agreement (MOA), providing for a compressed
workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered into pursuant
to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Im-
plementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday,
shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for
work rendered during those hours. The MOA specifically stated that the employee waives the right to claim over-
time pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed
workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However,
should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime
pay.
Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of the De-
partment of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloo-
can City:
MR. WILFREDO C. RIVERA

President, Tryco Pharma Corporation
San Rafael, Bulacan
Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan
Dear Mr. Rivera:
This is to remind you that your License to Operate as Veterinary Drug and Product Manufacturer is ad-
dressed at San Rafael, Bulacan, and so, therefore, your production should be done at the above mentioned
address
Accordingly, Tryco issued a Memorandumdated April 7, 1997 which directed petitioner Aya-ay to report to the
company's plant site in Bulacan. When petitioner Aya-ay refused to obey,BMT opposed the transfer of its members
to San Rafael, Bulacan, contending that it constitutes unfair labor practice. In protest, BMT declared a strike on May
26, 1997.
In August 1997, petitioners filed their separate complaints for illegal dismissal, underpayment of wages, non-
payment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President, Wilfre-
do C. Rivera.
a) Petitioner’s Arguments (Bisigmanggagawasatryco– LOST)

In their Position Paper,petitioners alleged that the company acted in bad faith during the CBA negotiations
because it sent representatives without authority to bind the company, and this was the reason why the nego-
tiations failed. They added that the management transferred petitioners Lariño, Barte, Egera and Aya-ay from
Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their salaries
from May 26 to 31, 1997, service incentive leave, and overtime pay, and to implement Wage Order No. 4.
b) Respondent’s Argument’s (Tryco Pharma Corp - WON)

Respondents averred that the petitioners were not dismissed but they refused to comply with the manage-
ment's directive for them to report to the company's plant in San Rafael, Bulacan. They denied the allegation
that they negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President and Legal Counsel as
the company's representatives to the CBA negotiations. They claim that the failure to arrive at an agreement was due
to the stubbornness of the union panel.
Respondents further averred that, long before the start of the negotiations, the company had already been
planning to decongest the Caloocan office to comply with the government policy to shift the concentration of
manufacturing activities from the metropolis to the countryside. The decision to transfer the company's produc-
tion activities to San Rafael, Bulacan was precipitated by the letter-reminder of the Bureau of Animal Industry.
ISSUE:
Whether or not there was illegal dismissal.
Whether or not respondents committed labor violation.
Whether or not petitioners are entitled to damages.
RULING:
The petition has no merit.
Rule:
We refuse to accept the petitioners' wild and reckless imputation that the Bureau of Animal Industry conspired
with the respondents just to effect the transfer of the petitioners. There is not an iota of proof to support this outlan-
dish claim. Absent any evidence, the allegation is not only highly irresponsible but is grossly unfair to the govern-
ment agency concerned. Even as this Court has given litigants and counsel a relatively wide latitude to present ar-
guments in support of their cause, we will not tolerate outright misrepresentation or baseless accusation. Let this be
fair warning to counsel for the petitioners.
Furthermore, Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether
it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to con-
trol and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also pro-
tect the right of an employer to exercise what are clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be denied.
Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department was well within the
scope of its management prerogative.
Application:
Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries,
benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that
it would cause them great inconvenience since they are all residents of Metro Manila and they would incur addition-
al expenses to travel daily from Manila to Bulacan.
Petitioners, however, went further and argued that the transfer orders amounted to unfair labor practice because
it would paralyze and render the union ineffective.To begin with, we cannot see how the mere transfer of its mem-
bers can paralyze the union. The union was not deprived of the membership of the petitioners whose work assign-
ments were only transferred to another location.
More importantly, there was no showing or any indication that the transfer orders were motivated by an inten-
tion to interfere with the petitioners' right to organize. Unfair labor practice refers to acts that violate the workers'
right to organize. With the exception of Article 248(f) of the Labor Code of the Philippines, the prohibited acts are
related to the workers' right to self-organization and to the observance of a CBA. Without that element, the acts, no
matter how unfair, are not unfair labor practices.
Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience
that will be caused the petitioners by their transfer to a farther workplace.
Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the
interest of the employees in the implementation of a compressed workweek scheme.
Conclusion:
Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of
a five-day workweek, there is no room for interpretation and its terms should be implemented as they are written.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 24, 2001 and Resolution
dated December 20, 2001 are AFFIRMED.
HILARIO DASCO, et al., petitioner vs. PHILTRANCO SERVICE ENTERPRISES, INC.,respondents

G.R. No. 211141. June 29, 2016
FACTS:
Petitioners are bus drivers and conductors of Philtranco Service Enterprises, employed by the respondent from 2006-
2010. This case stemmed from a complaint by the employees (petitioners) for regularization, underpayment of wag-
es , non-payment of service incentive leave (SIL) pay and attorney’s fees.
(a) Petitioner’s Argument/s (Dasco, et al – WIN)

(1) Petitioners are already qualified for regular employment status since they have been working with the
respondents for several years;
(2) They were paid only P404.00 per round trip, wherein one trip could last from 2-5 days, without over-
time pay and below the minimum wage rate;
(3) They cannot be considered as field personnel because their working hours are controlled by the res-
pondents from dispatching to end point;
(4) They had not been given their yearly five-day SIL since the time they were hired by the respondents.
(b) Respondent’s Argument/s (PHILTRANCO – LOST)

(1) The petitioners were paid on a fixed salary rate of P0.49 centavos per kilometer run, or minimum wage,
whichever is higher;
(2) Petitioners are seasonal employees;
(3) Petitioners are not entitled to overtime pay and SIL pay because they are field personnel whose time
outside the company premises cannot be determined with reasonable certainty since they ply provincial
routes and are left alone in the field unseupervised.
ISSUE:
Whether the petitioners as bus drivers and/or conductors are considered field personnel, and thus entitled to overtime
pay and SIL.
RULING:
PETITION TO REVIEW ON CERTIORARI IS GRANTED.
Rule:
“Field personnel” is not merely concerned with the location where the employee regularly performs his duties but
also with the fact that the employer’s performance is unsupervised by the employer. Field personnel are those who
regularly perform their duties away from the principal place of business of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty (Auto Bus Transport Inc. v. Bautista) while Regu-
lar Employees are those who perform tasks usually necessary and desirable to the respondent’s business.
Application:
The petitioners cannot be regarded as “field personnel” because (1) the petitioners, as drivers/conductors are specifi-
cally directed to transport their passengers at a specified time and place; (2) they are not given the discretion to se-
lect and contract with prospective passengers; (3) their actual work hours could be determined with reasonable cer-
tainty, as well as their average trips per month; and (4) the respondents supervised their time and performance of
duties.
Conclusion:
Petitioners/conductors should be considered as regular employees of the respondent because they perform tasks
which are directly and necessarily connected with the respondent’s business (public utility business). Thus, they
should be entitled to the benefits accorded to regular employees of the respondent, including overtime pay and SIL
pay.
HSY MARKETING LTD., CO.,petitioner, vs. VIRGILIO O. VILLASTIQUE,respondent
FACTS:
On January 23, 2003, HSY Marketing(petitioner) hired Virgilio Villastique(respondent) as a field driver for Fa-
bulous Jeans & Shirt & General Merchandise (Fabulous Jeans), tasked to deliver ready-to wear items and/or general
merchandise for a daily compensation of P370.00. Sometime in January 2011, respondent figured in an accident
when the service vehicle he was driving in Iligan City bumped a pedestrian, Ryan Dorataryo. Fabulous Jeans shoul-
dered the hospitalization and medical expenses of Dorataryo in the amount of P64,157.15, which respondent was
asked to reimburse, but to no avail. A month after the accident, respondent was allegedly required to sign a resigna-
tion letter, which he refused to do. A couple of days later, he tried to collect his salary for that week but was told that
it was withheld because of his refusal to resign. Convinced that he was already terminated, he lost no time in filing a
complaint for illegal dismissal with money claims against petitioner, Fabulous Jeans, and its owner, Alexander G.
Arqueza(petitioner, et.al) before the NLRC.
Petitioner, et.al's contention:

 Respondent had committed several violations in the course of his employment, and had been found by his
superior and fellow employees to be a negligent and reckless driver.
 After they paid for Dorataryo's hospitalization and medical expenses, respondent went on absence without
leave.
 Since respondent was the one who refused to report for work, he should be considered as having
voluntarily severed his own employment. Thus, his money claims cannot prosper as he was not terminated.
Labor Arbiter Ruling: (dismissed the charge of illegal dismissal made by petitioner)
The LA declared that neither was there a notice of termination issued to him, nor was he prevented from show-
ing up in petitioner's place of business. There was no evidence submitted by petitioner that respondent had indeed
voluntarily resigned, mere absence or failure to report for work, even after a notice to return, is not tantamount to
abandonment. However, it was not even shown that respondent was notified in writing to report for work, or warned
that his continued failure to report would be construed as abandonment or resignation. Thus, the LA ruled that the
employer-employee relationship between the parties should be maintained. Nonetheless, petitioner was directed to
pay the latter the amount of 86,580.00 pesos as separation pay and 16,418.75 pesos as service incentive leave pay,
pointing out that respondent was a field driver who regularly performed work outside petitioner's place of business
and whose hours of work could not be ascertained with reasonable certainty.
Aggrieved, petitioner, et al. appealed the case to the NLRC.
NLRC Ruling: (affirmed the finding of the LA)

The NLRC found no evidence of deliberate or unjustified refusal on the part of respondent to resume his em-
ployment, or of overt acts unerringly pointing to the fact that respondent did not want to work anymore.
Petitioner, et.al elevated the case to the CA by way of certiorari.
CA Ruling: (affirmed in toto the NLRC decision)

The CA held that the failure of petitioner, et al. to present the alleged resignation letter of respondent belied
their claim that he voluntarily resigned; and the fact of filing by respondent of the labor complaint was inconsistent
with the charge of abandonment. Thus, there was no grave abuse of discretion on the part of the NLRC in sustaining
the award of separation pay. On the issue of respondent's entitlement to service incentive leave pay, the CA declared
that respondent was not a field personnel but a regular employee whose task was necessary and desirable to the
usual trade and business of his employer, thus, entitled him to the benefit in question.
Petitioner, et.al filed a petition for review on certiorari to SC.
ISSUES:
 Whether or not the CA correctly affirmed the findings of the NLRC that respondent did not voluntarily
resign from work and petitioner did not dismiss him from employment, and consequently, awarded
respondent separation pay.
 Whether or not the CA correctly declared respondent to be a regular employee and thus, awarded him
service incentive leave pay.
RULING:
The petition is partly granted. The Decision and Resolution of the Court of Appeals are hereby affirmed with
modification deleting the award of separation pay in the amount of P86,580.00. Instead, petitioner HSY Marketing
Ltd., Co. is ordered to reinstate respondent Virgilio O. Villastique to his former position without payment of back-
wages in accordance with this Decision. Furthermore, petitioner is ordered to pay respondent his unpaid service in-
centive leave pay in the amount of P16,418.75.
RULE:
On the first issue, the Court likewise upholds the unanimous conclusion of the lower tribunals that respondent
had not been dismissed at all. In the absence of any showing of an overt or positive act proving that petitioner had
dismissed respondent, the latter's claim of illegal dismissal cannot be sustained, as such supposition would be self
serving, conjectural, and of no probative value. Similarly, petitioner's claims of respondent's voluntary resignation
and/or abandonment deserve scant consideration, considering petitioner's failure to discharge the burden of proving
the deliberate and unjustified refusal of respondent to resume his employment without any intention of returning.
However, the Court agrees with petitioner that LA, NLRC, and CA erred in awarding separation pay in spite of the
finding that respondent had not been dismissed. It cited the case of Capili v. NLRC, which explained that the award
of separation pay cannot be justified solely because of the existence of "strained relations" between the employer
and the employee. It must be given to the employee only as an alternative to reinstatement emanating from illegal
dismissal. When there is no illegal dismissal, even if the relations are strained, separation pay has no legal basis.
Hence, since there is no dismissal or abandonment to speak of, the appropriate course of action is to reinstate the
respondent without payment of backwages.
For the second issue, the Court sustains the award of service incentive leave pay in favor of respondent, in ac-
cordance with the finding of the CA that “respondent is not a field personnel because of the nature of his job as a
company driver. Expectedly, respondent is directed to deliver the goods at a specified time and place and he is not
given the discretion to solicit, select, and contact prospective clients”. In addition, respondent admitted in his Posi-
tion Paper that he “was required to report for work from 8:00 a.m. to 8:00 p.m. at the company's store located at
Velez-Gomez Street, Cagayan de Oro City”. The Court held that company drivers who are under the control and
supervision of management officers - like respondent – are regular employees entitled to benefits including service
incentive leave pay. Art. 95 of the Labor Code states that “Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay.” Petitioner as an employer of res-
pondent could have easily rebutted the said monetary claim against it by presenting the payrolls showing payment of
the same. However, he opted not to present the required documentary evidence, in which the court concluded that it
never paid said benefit and must, be ordered to settle its obligation to respondent.
APPLICATION:
In the case at bar, there is no proof that respondent voluntarily resigned from his work, mere absence or failure
to report to work does not constitute resignation, in this reason, petitioner is not obligated to award respondent for
the separation pay. And for the service incentive leave, respondent as a regular employee and who rendered service
in Fabulous Jeans at least one year shall be entitled to a yearly service incentive leave of five days with pay as what
Article 95 of the Labor Code of the Philippines provided.
CONCLUSION:
Thus, petitioner Fabulous Jeans and its owner Alexander Arqueza was not correct in saying that respondent
Virgilio Villastique voluntarily resigned since he did not report to work after the accident happened and likewise
ordered to reward respondent for his Service Incentive Leave for being a regular employee.
NATE CASKET MAKER AND/OR ARMANDO AND ANELY NATE, petitioners v. ELIAS V. ARANGO,
EDWIN M. MAPUSAO, JORGE C. CARIÑO, JERMIE MAPUSAO, WILSON A. NATE, EDGAR A.
NATE, MICHAEL A. MONTALES, CELSO A. NATE, BENJES A. LLONA AND ALLAN A. MONTALES,
respondents
FACTS:
Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket Maker. They employed re-
spondents on various dates as carpenters, mascilladors and painters in their casket-making business from 1998 until
their alleged termination in March 2007.
Petitioners alleged in their Position Paper that respondents are pakyaw workers who are paid per job order.
They claimed that they met with respondents in order to present a proposed employment agreement which would
change the existing pakyaw system to "contractual basis" and would provide for vacation leave and sick leave pay
and other benefits given to regular employees.
Respondents then alleged that when they were adamant and eventually refused to sign the contract, petitioners
told them to go home because their employment has been terminated. The respondents filed a Complaint for illegal
dismissal and non-payment of separation pay against petitioners.
ISSUES:
Whether respondents' employment was terminated, and
Whether respondents who are pakyaw workers and considered regular workers are entitled to overtime pay,
holiday pay, service incentive leave pay and 13th month pay.
RULING:
There is no dispute that the tasks performed by respondents as carpenters, painters, and mascilladorswere nec-
essary and desirable in the usual business of petitioners who are engaged in the manufacture and selling of caskets.
The length of time that respondents worked for petitioners, which commenced on various dates from 1998 to 2007
also has to be considered. In addition, the power of control of petitioners over respondents is clearly present in this
case. Respondents follow the steps in making a casket, as instructed by the petitioners, like carpentry, mascilla, rub-
bing and painting. They had their own notebooks where they listed the work completed with their signature and the
date finished. The same would be checked by petitioners as basis for the compensation for the day. Thus, petitioners
wielded control over the respondents in the discharge of their work.
In view of this, they can be considered as regular employees. As regular employees, respondents were entitled
to security of tenure and could be dismissed only for just or authorized causes and after the observance of due proc-
ess.
Petitioners violated respondents' rights to security of tenure and constitutional right to due process in not even
serving them with a written notice of termination which would recite any valid or just cause for their dismissal. Re-
spondents were merely told that their services are terminated.
That being said, the amount of backwages to which each respondent is entitled, however, cannot be fully set-
tled at this time. As respondents are piece-rate workers being paid by the piece, there is need to determine the vary-
ing degrees of production and days worked by each worker. Clearly, this issue is best left to the NLRC.
As to the other benefits, namely, holiday pay, 13th month pay, service incentive leave pay and overtime pay
which respondents prayed for in their complaint, respondents are entitled to these benefits.
Workers engaged on pakyaw or "task basis" are entitled to holiday and service incentive leave pay (SIL) pro-
vided they are not field personnel:
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 worker's time and per-
formance 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 pro-
vided under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the
worker engaged on pakyaw or task basis also falls within the meaning of "field personnel" under the
law, then he is not entitled to these monetary benefits.
With respect to the payment of 13th month pay, however, respondents are not entitled to such benefit. in the
case of David v. Macasio:
The governing law on 13th month pay is Presidential Decree No. 851.45 As with holiday and SIL
pay, 13th month pay benefits generally cover all employees; an employee must be one of those ex-
pressly enumerated to be exempted. Section 3 of the Rules and Regulations Implementing P.D. No. 851
enumerates the exemptions from the coverage of 13th month pay benefits. Under Section 3(e), "em-
ployers of those who are paid on xxx task basis, and those who are paid a fixed amount for performing
a specific work, irrespective of the time consumed in the performance thereof' are exempted.
MINIMUM LABOR STANDARDS BENEFITS 124
SAN MIGUEL CORP VS. CA

G.R. NO. 146775, JAN. 30, 2002
Facts:
On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District Office, conducted a
routine inspection in the premises of San Miguel Corporation (SMC) in Sta. Filomena, Iligan City. It was discovered
that there was underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of the
inspection result to SMC and it was received by and explained to its personnel officer Elena delaPuerta. SMC con-
tested the findings and DOLE conducted summary hearings on 19 November 1992, 28 May 1993 and 4 and 5 Octo-
ber 1993. Still, SMC failed to submit proof that it was paying regular Muslim holiday pay to its employees. Hence,
Alan M. Macaraya, Director IV of DOLE Iligan District Office issued a compliance order, dated 17 December 1993,
directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim em-
ployees holiday pay within thirty (30) days from the receipt of the order.
SMC appealed to the DOLE main office in Manila. However, the appeal was dismissed for lack of merit and the
order of Director Macaraya was affirmed. SMC went to SC for relief via a petition for certiorari, which the Court
referred to the Court of Appeals. The appellate court modified the order with regards the payment of Muslim holiday
pay from 200% to 150% of the employee's basic salary. Its motion for reconsideration having been denied for lack
of merit, SMC filed a petition for certiorari before the SC
Issues:
1. Whether or not public respondents seriously erred and committed grave abuse of discretion when they
granted Muslim Holiday Pay to non-Muslim employees of SMC.
2. Whether or not SMC was not accorded with due process of law in the issuance of the compliance order.
3. Whether or not regional director Macaraya, undersecretary Trajano and undersecretary Espanol have juris-
diction in issuing the assailed compliance orders.
Ruling:
The court ruled the issues in negative.Muslim holidays are provided under Articles 169 and 170, Title I, Book
V, of Presidential Decree No. 1083, otherwise known as the Code of Muslim Personal Laws, which states:
Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim holidays:
a) ‘AmunJadīd (New Year), which falls on the first day of the first lunar month of Muharram;
b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar
month of Rabi-ul-Awwal;
c) LailatulIsrāWalMi’rāj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on
the twenty-seventh day of the seventh lunar month of Rajab;
d) ‘Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal, com-
memorating the end of the fasting season; and
e) ‘Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of Dhū’l-Hijja.
Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially observed in the
Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and
Zamboanga and in such other Muslim provinces and cities as may hereafter be created; (2) Upon proclamation by
the President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the Labor Code, which provides:
Art. 94. Right to holiday pay. –

a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service es-
tablishments regularly employing less than ten (10) workers;
b) The employer may require an employee to work on any holiday but such employee shall be paid a compen-
sation equivalent to twice his regular rate.
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "the provisions of this Code
shall be applicable only to Muslims." However, there should be no distinction between Muslims and non-Muslims
as regards payment of benefits for Muslim holidays. Wages and other emoluments granted by law to the working
man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker’s faith
or religion. In addition, the 1999 Handbook on Workers’ Statutory Benefits, categorically stated: Considering that
all private corporations, offices, agencies, and entities or establishments operating within the designated Muslim
provinces and cities are required to observe Muslim holidays, both Muslim and Christians working within the Mus-
lim areas may not report for work on the days designated by law as Muslim holidays.
On the question regarding the jurisdiction of the Regional Director Allan M. Macaraya, Article 128, Section B
of the Labor Code, as amended by Republic Act No. 7730, provides: Article 128. Visitorial and enforcement power.
-
(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized repre-
sentatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this
Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial
safety engineers made in the course of the inspection. The Secretary or his duly authorized representative shall issue
writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employ-
er contests the findings of the labor employment and enforcement officer and raises issues supported by documenta-
ry proofs which were not considered in the course of inspection.
In the case before us, Regional Director Macaraya acted as the duly authorized representative of the Secretary
of Labor and Employment and it was within his power to issue the compliance order to SMC. In addition, the Court
agrees with the Solicitor General that the petitioner did not deny that it was not paying Muslim holiday pay to its
non-Muslim employees. Indeed, petitioner merely contends that its non-Muslim employees are not entitled to Mus-
lim holiday pay. Hence, the issue could be resolved even without documentary proofs. In any case, there was no
indication that Regional Director Macaraya failed to consider any documentary proof presented by SMC in the
course of the inspection.
Anent the allegation that petitioner was not accorded due process, the court finds that SMC was furnished a
copy of the inspection order and it was received by and explained to its Personnel Officer. Further, a series of sum-
mary hearings were conducted by DOLE on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Thus,
SMC could not claim that it was not given an opportunity to defend itself.
WHEREFORE, in view of the foregoing, the petition is DISMISSED.

ROLANDO Y. TAN, petitioner, vs LEOVIGILDO LAGRAMA and THE HONORABLE COURT OF AP-
PEALS, respondents
G.R. No. 151228 August 12, 2002
FACTS:
Petitioner Rolando Tan is the president of Supreme Theater Corporation and the generalmanager of Crown and
Empire Theaters in Butuan City. Private respondent LeovigildoLagrama is a painter, making ad billboards and mur-
als for the motion pictures shown atthe Empress, Supreme, and Crown Theaters for more than 10 years, from Sep-
tember 1,1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided:"Nangihi na naman ka
sulod sa imong drawinganan." ("You again urinated inside your workarea.") When Lagrama asked what Tan was
saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon, wala nay draw-
ing. Gawas." ("Don't sayanything further. I don't want you to draw anymore. From now on, no more drawing. Ge-
tout.")
RESPONDENT’S ARGUMENTS: (Lagrama – won)

Lagrama denied the charge against him. He claimed that he was not the only one whoentered the drawing area
and that, even if the charge was true, it was a minor infraction towarrant his dismissal. However, everytime he
spoke, Tan shouted "Gawas" ("Get out"),leaving him with no other choice but to leave the premises.
Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the NationalLabor Relations
Commission (NLRC) in Butuan City. He alleged that he had been illegallydismissed and sought reinvestigation and
payment of 13th month pay, service incentiveleave pay, salary differential, and damages.
PETITIONER’S ARGUMENTS: (Tan – lost)

Petitioner Tan denied that Lagrama was his employee. He asserted that Lagrama was anindependent contractor
who did his work according to his methods, while he (petitioner)was only interested in the result thereof. He cited
the admission of Lagrama during theconferences before the Labor Arbiter that he was paid on a fixed piece-work
basis, i.e., thathe was paid for every painting turned out as ad billboard or mural for the pictures shown inthe three
theaters, on the basis of a "no mural/billboard drawn, no pay" policy. Hesubmitted the affidavits of other cinema
owners, an amusement park owner, and thosesupervising the construction of a church to prove that the services of
Lagrama werecontracted by them. He denied having dismissed Lagrama and alleged that it was thelatter who re-
fused to paint for him after he was scolded for his habits.
LABOR ARBITER:
Declared that respondent’s dismissal is illegal and ordered the petitioners to pay the former a total of Php
136,849.99.
NLRC:
Declared that respondent is an independent contractor and reversed the LA’s decision.
COURT OF APPEALS:
Petitioner exercised control over Lagrama's work bydictating the time when Lagrama should submit his bill-
boards and murals and setting ruleson the use of the work area and rest room. Although it found that Lagrama did
work forother cinema owners, the appeals court held it to be a mere sideline insufficient to provethat he was not an
employee of Tan. It also found no evidence of anyintention on the part of Lagrama to leave his job or sever his em-
ployment relationship withTan. It, therefore, reinstated the decision of the labor arbiter.
ISSUE: Whether or not the respondent was illegally dismissed and thus entitled to the benefits provided by law
RULING:
Yes, the respondent was illegally dismissed. Tobegin, the employer has the burden of proving the lawfulness of
his employee's dismissal.The validity of the charge must be clearly established in a manner consistent with duepro-
cess.
Rule:
The Implementing Rules of the Labor Code provide that no worker shall bedismissed except for a just or autho-
rized cause provided by law and after due process.This provision has two aspects: (1) the legality of the act of dis-
missal, that is, dismissalunder the grounds provided for under Article 282 of the Labor Code and (2) the legality
inthe manner of dismissal. The illegality of the act of dismissal constitutes dischargewithout just cause, while ille-
gality in the manner of dismissal is dismissal without dueprocess.
Application:
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out ofhis sight as the latter
tried to explain his side, petitioner made it plain that Lagrama wasdismissed. Urinating in a work place other than
the one designated for the purpose by theemployer constitutes violation of reasonable regulations intended to pro-
mote a healthyenvironment under Art. 282(1) of the Labor Code for purposes of terminating employment,but the
same must be shown by evidence. Here there is no evidence that Lagrama didurinate in a place other than a rest
room in the premises of his work.
Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the LaborArbiter found that the
relationship between the employer and the employee has been sostrained that the latter's reinstatement would no
longer serve any purpose. The parties donot dispute this finding. Hence, the grant of separation pay in lieu of reins-
tatement is appropriate. This is of course in addition to the payment of backwages which, inaccordance with the rul-
ing in Bustamante v. NLRC, should be computed from the time ofLagrama's dismissal up to the time of the finality
of this decision, without any deduction orqualification.
The Bureau of Working Conditions classifies workers paid by results into two groups,namely; (1) those whose
time and performance is supervised by the employer, and (2)those whose time and performance is unsupervised by
the employer. The first involves anelement of control and supervision over the manner the work is to be performed,
while thesecond does not. If a piece worker is supervised, there is an employer-employeerelationship, as in this case.
However, such an employee is not entitled to service incentiveleave pay since, as pointed out in Makati Haberda-
shery v. NLRC and Mark Roche International v. NLRC, he is paid a fixed amount for work done, regardless of the
time hespent in accomplishing such work.
CONCLUSION:
The burden of proving the lawfulness of the dismissal rests upon the employers. Since there was no evidence that
Lagrama (respondent) did actually uriniate in the place other than the restroom in the premises of his work, the res-
pondent was illegally dismissed. He is therefore entitled to separation pay in lieu of reinstatement.
AVELINO LAMBO, petitioner vs. NATIONAL LABOR RELATIONS COMMISSION and/or JOHNNY
CO, respondent
G.R. No. 111042. October 26, 1999
FACTS:
Petitioners AvelinoLambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor
Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to
7:00 p.m. daily, including Sundays and holidays and were paid on a piece-work basis, according to the style of suits
they made, as in the case of the other 100 employees. Regardless of the number of pieces they finished in a day, they
were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought
recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation
pay, 13th month pay, and attorney’s fees. After hearing, Labor Arbiter found private respondents guilty of illegal
dismissal and accordingly ordered them to pay petitioners’ claims.
a) Petitioner’s Arguments (AVELINO LAMBO and VICENTE BELOCURA-won)
Petitioners allege that they were dismissed by private respondents as they were about to file a petition with the
Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS)
coverage, sick leave and vacation leave. They deny that they abandoned their work.
b) Respondent’s Arguments (NLRC and J.C. TAILOR SHOP and/or JOHNNY CO-lost)
Private respondents contended that petitioners had not been dismissed from employment but merely threatened
with a closure of the business if they insisted on their demand for a straight payment of their minimum wage and
then walked out of the meeting.
Private respondents contended, that petitioners refused to report for work after learning that the J.C. Tailoring
and Dress Shop Employees Union had demanded their (petitioners) dismissal for conduct unbecoming of em-
ployees.
ISSUE
Whether or not the petitioners are entitled to the minimum benefits provided by law.
RULING
The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for
13th month pay, and other monetary awards were deleted.
Rule:
First. There is no dispute that petitioners were employees of private respondents although they were paid not on
the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are
two categories of employees paid by results: (1) those whose time and performance are supervised by the employer.
(Here, there is an element of control and supervision over the manner as to how the work is to be performed. A
piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2)
those whose time and performance are unsupervised. (Here, the employers control is over the result of the work.
Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished.
In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the
companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays.The mere fact that they were
paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term wage is
broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a me-
thod of compensation and does not define the essence of the relations. Nor does the fact that petitioners are not cov-
ered by the SSS affect the employer-employee relationship.
Second. To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal
on the part of an employee to resume his employment. The burden of proof is on the employer to show an unequi-
vocal intent on the part of the employee to discontinue employment. Private respondents failed to discharge this
burden.
Third.Not all quitclaims are per se invalid or against public policy. But those (1) where there is clear proof that
the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of settlement are uncons-
cionable on their face are invalid. In these cases, the law will step in to annul the questionable transaction.
Fourth. As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The Labor
Arbiter correctly ordered private respondents to give separation pay. Considerable time has lapsed since petitioner’s
dismissal, so that reinstatement would now be impractical and hardly in the best interest of the parties. In lieu of
reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year of ser-
vice, with a fraction of at least six (6) months of service being considered as one (1) year.
Application:
In this case, there is an element of control by the respondent-employee as to the result of the work and supervi-
sion over the manner as to how the work is to be performed. So, the petitioners as piece-rate workers belong to this
category as they perform their work in the company premises, thus, they are entitled to the 13th-month pay.
Also, the burden of proof in the abandonment of work must be justified by the employer as mere absence is not suf-
ficient. It must be accompanied by manifest acts unerringly pointing to the fact that the employee simply does not
want to work anymore. Here, the employers failed to discharge this burden of proof.
Since the petitioners/employees were also illegally dismissed, they should be reinstated, but due to considerable time
that has lapsed, they were awarded a separation pay at the rate of one month salary for every year of service, with a
fraction of at least six (6) months of service being considered as one (1) year.
Conclusion:
Thus, the private respondents were ordered to pay petitioners the total amount of One Hundred Eighty-One
Thousand One Hundred Two Pesos and 40/100 (P181,102.40).
R & E TRANSPORT, INC., and HONORIO ENRIQUEZ, petitioners, vs. AVELINA P. LATAG, representing
her deceased husband, PEDRO M. LATAG, respondents.
G.R. No. 155214. February 13, 2004
FACTS:
Since March 1, 1961, Pedro M. Latag was a regular employee of La Mallorca Taxi which adapts boundary sys-
tem. However, he was transferred to the petitioner R & E Transport, Inc. upon cessation of La Mallorca’s business
operations. In January 1995, he got sick and was forced to apply for partial disability with the SSS, which was then
granted. Upon recovery, he reported back to work in September 1998 but was no longer allowed on account of his
old age. Latag asked the petitioner, through its administrative officer for his retirement pay pursuant to Republic Act
7641 but he was ignored. Latag filed a case for payment of his retirement pay before the NLRC.
Upon Pedro Latag’s death on April 30, 1999, he was substituted by his wife, the respondent Avelina Latag. La-
bor Arbiter rendered a decision in favour of Latag. Petitioner filed the quitclaim and motion to dismiss where the
Labor Arbiter issued an order for Writ of Execution. Petitioners interposed an appeal before NLRC. Appeal was
dismissed for failure to post a cash or surety bond, as mandated by law.
On January 21, 2000, Respondent Avelina Latag, with her then counsel, was invited to the office of peti-
tioner’s counsel and was offered the amount of P38,500.00, which she accepted. She was also asked to sign
an already prepared quitclaim and release and a joint motion to dismiss the case. Pedro must be credited on-
ly with his service to R & E Transport, Inc., because the evidence shows that the aforementioned compa-
nies are two different entities. Petitioners do not dispute the fact that the late Pedro M. Latag is entitled to
retirement benefits. Rather, the bone of contention is the number of years that he should be credited with in
computing those benefits.
The 23 years of employment of Pedro with La Mallorca Taxi must be added to his 14 years with R & E
Transport, Inc., for a total of 37 years. Other Respondents appealed to the CA, contending that under Ar-
ticle 223 of the Labor Code and Section 3, Rule VI of the New Rules of Procedure of the NLRC, an em-
ployers appeal of a decision involving monetary awards may be perfected only upon the posting of an ade-
quate cash or surety bond.
ISSUE:
Whether or not Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.
RULING:
The Petition is partly meritorious.
RULE:
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of
the Labor Code, as amended by Republic Act No. 7641,provides:
Art. 287. Retirement. - x x x
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the estab-
lishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which
is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may
retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of ser-
vice, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incen-
tive leaves.
APPLICATION:
As to the Quitclaim and Waiver signed by Respondent Avelina Latag, the appellate court committed no error
when it ruled that the document was invalid and could not bar her from demanding the benefits legally due her hus-
band. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate work-
ers’ rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away. Courts have
stepped in to annul questionable transactions, especially where there is clear proof that a waiver, for instance, was
wangled from an unsuspecting or a gullible person; or where the agreement or settlement was unconscionable on its
face.
The rules implementing the New Retirement Law similarly provide the above-mentioned formula for compu-
ting the one-half month salary. Since Pedro was paid according to the boundary system, he is not entitled to the 13th
month and the service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary.
In this case, the CA found that Pedro was earning an average of five hundred pesos (P500) per day. We thus
compute his retirement pay as follows: P500 x 15 days x 14 years of service equals P105,000. Compared with this
amount, the P38,850 he received, which represented just over one third of what was legally due him, was uncons-
cionable.
CONCLUSION:
A quitclaim is ineffective in barring recovery of the full measure of a workers rights, and the acceptance of benefits the-
refrom does not amount to estoppel. Moreover, a quitclaim in which the consideration is scandalously low and ine-
quitable cannot be an obstacle to the pursuit of a workers legitimate claim.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the boundary
or fee they pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be
the average daily income.
ASIA TRANSMISSION CORPORATION, petitioner vs. COURT OF APPEALS et. al., respondent
GR. No. 144664. March 15, 2004.
FACTS:
The DOLE through the Undersecretary issued a Explanatory Bulletin dated March 11, 1993 wherein it clarified,
inter alia, that employees are entitled to 200% of their basic wage on April 9, 1993, whether unworked, which[,]
apart from being Good Friday [and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal
holiday].
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw ng
Kagitingan.
Despite the explanatory bulletin, petitioner [Asian Transmission Corporation] opted to pay its daily paid employees
only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union (BATLU)
protested.
The Voluntary Arbiter found for the employees which the CA affirmed.
Hence, this petition.
a.) Petitioner’s Arguments (Asia Transmission Corporation – Lose)

Invoked the ruling on Wellington v. Trajano where the SC denied the 200% rate thereby overruling the Explanatory
Bulletin.
b.) Respondent’s Arguments (Cynthia F. Rey – Win)

Relied on the strength of the Explanatory Bulletin and the provisions of the CBA where the petitioner obligated
himself to pay the legal holidays as required by law.
ISSUE:
Whether or not the employees are entitled to 200% rate on two regular holidays falling on the same day?
RULING:
The petition was denied
Rule:
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford protec-
tion to labor. Its purpose is not merely "to prevent diminution of the monthly income of the workers on account of
work interruptions. In other words, although the worker is forced to take a rest, he earns what he should earn, that is,
his holiday pay." It is also intended to enable the worker to participate in the national celebrations held during the
days identified as with great historical and cultural significance.
Art. 94 of the Labor Code, as amended, affords a worker the enjoyment of ten paid regular holidays. 9 The provision
is mandatory, 10 regardless of whether an employee is paid on a monthly or daily basis.
Application:
In fixing the monthly salary of its employees, Wellington took into account "every working day of the year includ-
ing the holidays specified by law and excluding only Sunday." In the instant case, the issue is whether daily-paid
employees are entitled to be paid for two regular holidays which fall on the same day.
Since a worker is entitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall on the same
date should not operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive.
Conclusion:
Asia Transmission Corporation is obliged to pay the 200% rate for the two holidays falling on the same day because
paying only 100% would amount to the diminution of benefits.
AUTO BUS TRANSPORT SYSTEMS,INC.,petitioner vs ANTONIO BAUTISTA,respondent

G.R. No. 156367, May 16 2005
FACTS:
Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-Tuguegarao
via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the
total gross income per travel, on a twice a month basis.
On 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. Respondent averred that the accident happened because he was compelled
by the management to go back to Roxas, Isabela, although he had not slept for almost twenty four (24) hours, as he
had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50,
representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent's pleas for
reconsideration, the same was ignored by management. After a month, management sent him a letter of termination.
.
Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for
nonpayment of 13th month pay and service incentive leave pay against Autobus.
On 29 September 2000, Labor Arbiter Monroe Tabingan dismissed Bautista’s petition but ruled that Bautista is
entitled to P78,1117.87 for his 13th month pay and P13,788.05 for his unpaid service incentive leave pay.
The case was appealed before the National Labor Relations Commission which modified the LA’s ruling. It deleted
the award for 13th Month pay. The Court of Appeals affirmed the NLRC.
PETITIONER’S CONTENTION:
Autobus maintained that respondent's employment was replete with offenses involving reckless imprudence,
gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, irregularity
reports, and warrants of arrest pertaining to several incidents wherein respondent was involved.
Also, Auto Bus averred that Bautista is a commissioned employee and if that reason is not enough, it claims that
Bautista is also a field personnel hence, he is not entitled to a service incentive leave. They invoke:
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.
Petitioner further argues that the only criterion in determining if one is a field personnel that should be
considered is the nature of work of the employee in that, if the employee's 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.
ISSUES:
Whether or not Bautista is entitled to Service Incentive Leave Pay?
If he is, Whether or not the three (3)-year prescriptive period provided under Article 291 (now Artcile 306) of the
Labor Code, as amended, is applicable to respondent's claim of service incentive leave pay?RULING: Instant
petition denied and Court of Appeals affirmed.
Rule:
 RIGHT TO SERVICE INCENTIVE LEAVE
The disposition of the issue revolves around the proper interpretation of Article 95 of the Labor Code vis-à-vis
Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides:
RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days with pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE states that this rule shall apply to all
employees except: (d) Field personnel and other employees whose performance is unsupervised by the employer
including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed
amount for performing work irrespective of the time consumed in the performance thereof;
These 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.
What must then 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, a 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.
Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial

Employees Association 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.
Moreover,definition of a "field personnel" is not merely concerned with the location where the employee
regularly performs his duties but also with the fact that the employee's performance is unsupervised by the
employer. Thus, in order to conclude whether an employee is a field employee, it is then necessary to ascertain if
actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an
inquiry must be made as to whether or not the employee's time and performance are constantly supervised by the
employer.
APPLICATION:
Bautista is not a field employee. He has a specific route to traverse as a bus driver and that is a specific place
that he needs to be at work. There are inspectors hired by Auto Bus to constantly check him. There are inspectors in
bus stops who inspect the passengers, the punched tickets, and the driver. Therefore he is definitely supervised
though he is away from the Auto Bus main office. Furthermore, he can be regarded as a regular employee who
performs tasks usually necessary and desirable to the usual trade of petitioner's business. Accordingly, respondent is
entitled to the grant of service incentive leave.
 3-YEAR PRESCRIPTION ON MONEY CLAIMS
Article 291 (now Article 306) of the Labor Code states that all money claims arising from employer-employee
relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be
forever barred. Thus, in claiming for the service incentive this must be considered.
However, it is essential to recognize that the service incentive leave is a curious animal in relation to other
benefits granted by the law to employees. Fernandez v. NLRC highlighted that: The clear policy of the Labor Code
is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule
V, Book III of the Implementing Rules and Regulations provides that "every employee who has rendered at least
one year of service shall be entitled to a yearly service incentive leave of five days with pay." Service incentive
leave is a right that accrues to every employee who has served "within 12 months, whether continuous or broken
reckoned from the date the employee started working, including authorized absences and paid regular holidays
unless the working days in the establishment as a matter of practice or policy, or that provided in the employment
contracts, is less than 12 months, in which case said period shall be considered as one year." It is also "commutable
to its money equivalent if not used or exhausted at the end of the year." In other words, an employee who has served
for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to
three years, as the solicitor general recommends, is to unduly restrict such right.
Correspondingly, it can be deduced that the cause of action of an entitled employee to claim his service incen-
tive leave pay accrues from date “the employer fails to pay such amount at the time of his resignation or separation
from employment.”The case provided for the following rules:
1. If the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his res-
ignation or separation from work to the commutation of his accrued service incentive leave.
2. SIL is also commutable to its money equivalent if not used or exhausted at the end of the year. In other words, an
employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary
value.
3. If the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or sepa-
ration from employment, his cause of action to claim the whole amount of his accumulated service incentive leave
shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment.
4. Thus, the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes
entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its
monetary equivalent after demand of commutation or upon termination of the employee’s services, as the case may
be.
This interpretation is in keeping with the rudimentary principle that in the implementation and interpretation of
the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be the
paramount consideration. The policy is to extend the applicability of the decree to a greater number of employees
who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give
maximum aid and protection to labor. .
APPLICATION:
The prescriptive period with respect to respondent’s claim for service incentive leave pay only commenced
from the time the employer failed to compensate his accumulated service incentive leave pay at the time of his
dismissal. Since Bautista had only filed his money claimafter one month from the time of his dismissal, necessarily,
his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code.
CONCLUSION:
Therefore, respondent’s money claim has not yet prescribed thus, respondentbus driver Bautista, not being a
field personnel, is entitled to the payment of the monetary equivalent of his service incentive leave after his dismis-
sal and that petitioner Auto Bus must pay him accordingly for all the years he had been in service to them presently
computed at P13, 788.05.
San Miguel Corporation, petitioner, vs. Caroline C. Del Rosario, respondent

G.R. No. 168194, December 13, 2005.
Facts:
On April 17, 2000, respondent was employed by petitioner as key account specialist. On March 9, 2001, peti-
tioner informed respondent that her probationary employment will be severed at the close of business hours of
March 12, 2001. On March 13, 2001, respondent was refused entry to petitioner’s premises. On June 24, 2002, res-
pondent filed a complaint against petitioner for illegal dismissal and underpayment/non-payment of monetary bene-
fits.
Petitioner’s Arguments (San Miguel Corporation – Lost):

Respondent was a temporary reliever of another key account specialist who met an accident. Petitioner consi-
dered respondent as a probationary employee whose services were terminated as a result of the excess manpower
that could no longer be accommodated by the petitioner after realizing that expected business growth did not mate-
rialize.
Respondent’s Arguments (Del Rosario – Won):

Respondent alleged that petitioner feigned an excess in manpower because after her dismissal, it hired new re-
cruits.
Issue: Whether or not respondent is a regular employee of petitioner.
Ruling:Petition is denied.
Rule:
Article 279. Security of tenure.In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compen-
sation was withheld from him up to the time of his actual reinstatement.
Application:
In termination cases, the burden of proving the circumstances that would justify the employee's dismissal rests
with the employer. The best proof that petitioner should have presented to prove the probationary status of respon-
dent is her employment contract. None, having been presented, the continuous employment of respondent as an ac-
count specialist for almost 11 months, from April 17, 2000 to March 12, 2001, means that she was a regular em-
ployee and not a temporary reliever or a probationary employee. And while it is true that by way of exception, the
period of probationary employment may exceed six months when the parties so agree, such as when the same is es-
tablished by company policy, or when it is required by the nature of the work, none of these exceptional circums-
tance were proven in the present case. Thus, respondent whose employment exceeded six months is undoubtedly a
regular employee of petitioner.
Her termination from employment must be for a just or authorized cause, otherwise, her dismissal would be il-
legal. Petitioner tried to justify the dismissal of respondent under the authorized cause of redundancy. It thus argued
in the alternative that even assuming that respondent qualified for regular employment, her services still had to be
terminated because there are no more regular positions in the company. Undoubtedly, petitioner is invoking a re-
dundancy which allegedly resulted in the termination not only of the trainees, probationers but also of some of its
regular employees.
Redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is
superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring
of workers, decreased volume of business, or dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise. The criteria in implementing a redundancy are: (a) less preferred sta-
tus, e.g. temporary employee; (b) efficiency; and (c) seniority. What further militated against the alleged redundancy
advanced by petitioner is their failure to refute respondent's assertion that after her dismissal, it hired new recruits
and re-employed two of her batch mates. The Court finds that petitioner was not able to discharge the burden of
proving that the dismissal of respondent was valid.
Conclusion:
Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also to pay-
ment of full back wages, computed from the time her compensation was actually withheld from up to her actual
reinstatement. She is likewise entitled to other benefits. Respondent is not entitled to holiday pay because the
records reveal that she is a monthly paid regular employee. Under Section 2, Rule IV, Book III of the Omnibus
Rules Implementing the Labor Code, employees who are uniformly paid by the month, irrespective of the number of
working days therein, shall be presumed to be paid for all the days in the month whether worked or not.
CHARLITO PEÑARANDA, petitioner vs. BAGANGA PLYWOOD CORPORATION [BPC] and HUDSON
CHUA, respondent
G.R. No. 159577. May 3, 2006
FACTS:
Sometime in June 1999, Petitioner CharlitoPeñaranda was hired as an employee of Baganga Plywood Corporation
(BPC) to take charge of the operations and maintenance of its steam plant boiler.
a) Petitioner’s Argument (CharlitoPenaranda – LOST)
Peñaranda alleges that he was employed by respondent [BPC] on March 15, 1999 with a monthly salary of
P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. Fur-
ther, the petitioner alleges that his services were terminated without the benefit of due process and valid grounds
in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during holi-
days/rest days, night shift differentials and finally claimed for payment of damages and attorney's fees having
been forced to litigate the present complaint.
b) Respondent’s Argument (Baganga Plywood Corporation – WON)
Respondents allege that complainant's separation from service was done pursuant to Article 283 of the Labor Code.
The respondent [BPC] was on temporary closure due to repair and general maintenance and it applied for clear-
ance with the Department of Labor and Employment, Regional Office No. 11 to shut down and to dismiss em-
ployees.
And due to the insistence of herein complainant he was paid his separation benefits Consequently, when BPC par-
tially reopened in January 2001, petitioner failed to reapply. Hence, he was, not terminated from employment
much less illegally. He opted to severe employment when he insisted payment of his separation benefits. Fur-
thermore, being a managerial employee he is not entitled to overtime pay and if ever he rendered services
beyond the normal hours of work, there was no office order/or authorization for him to do so.
ISSUE:
Whether or not the petitioner is a regular employee entitled to the monetary benefits under Article 82, of the La-
bor Code.
RULING:
No. Although petitioner was not within those considered as managerial employee, he was a member of the mana-
gerial staff, which also takes him out of the coverage of labor standards. Like managerial employees, officers and
member of the managerial staff are not entitled to the provisions of law on labor standards.
Rule:
Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor standards
provide the working conditions of employees, including entitlement to overtime pay and premium pay for work-
ing on rest days.Under this provision, managerial employees are "those whose primary duty consists of the man-
agement of the establishment in which they are employed or of a department or subdivision."
The Implementing Rules of the Labor Code state that managerial employees are those who meet the following con-
ditions:
(1) Their primary duty consists of the management of the establishment in which they are employed or
of a department or subdivision thereof;
(2) They customarily and regularly direct the work of two or more employees therein;
(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and rec-
ommendations as to the hiring and firing and as to the promotion or any other change of status of
other employees are given particular weight."
The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties
and responsibilities:
"(1) The primary duty consists of the performance of work directly related to management policies of
the employer;
"(2) Customarily and regularly exercise discretion and independent judgment;
"(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists
of the management of the establishment in which he is employed or subdivision thereof; or (ii) ex-
ecute under general supervision work along specialized or technical lines requiring special training,
experience, or knowledge; or (iii) execute under general supervision special assignments and tasks;
and
"(4) Who do not devote more than 20 percent of their hours worked in a workweek to activities which
are not directly and closely related to the performance of the work described in paragraphs (1), (2),
and (3) above."
"1. To supply the required and continuous steam to all consuming units at minimum cost.
"2. To supervise, check and monitor manpower workmanship as well as operation of boiler and acces-
sories.
"3. To evaluate performance of machinery and manpower.
"4. To follow-up supply of waste and other materials for fuel.
"5. To train new employees for effective and safety white working.
"6. Recommend parts and suppliers purchases.
"7. To recommend personnel actions such as: promotion, or disciplinary action.
"8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit.
"9. Implement Chemical Dosing.
"10. Perform other task as required by the superior from time to time."
Application:
From the foregoing enumeration above, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a member of
the managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff
under the Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation
of the machines and the performance of the workers in the engineering section. This work necessarily required
the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As su-
pervisor, petitioner is deemed a member of the managerial staff.
Conclusion:
The petitioner being a member of the managerial staff, the Court finds no justification to award him overtime pay
and premium pay for rest days to petitioner.
Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU,

G.R. No. 1577745, October 19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango
vs. NLRC, G.R. No. 147420, June 10, 2004
Facts:
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and LEYECO IV Employees Union-ALU (res-
pondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and-file employees, for a
period of five (5) years effective January 1, 1998. On June 7, 2000, respondent, through its Regional Vice-President,
Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all employees, as provided for in the CBA.
Petitioner, on the other hand, in its Position Paper, insisted payment of the holiday pay in compliance with the CBA
provisions, stating that payment was presumed since the formula used in determining the daily rate of pay of the
covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by
360 days, thus with said formula, the employees are already paid their regular and special days, the days when no
work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
Issue:
Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay.
Held:
No.
Leyte IV Electric Cooperative is not liable for underpayment of holiday pay. The Voluntary Arbitrator gravely
abused its discretion in giving a strict or literal interpretation of the CBA provisions that the holiday pay be reflected
in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position Paper that the em-
ployees were paid all the days of the month even if not worked. In light of such admission, petitioner's submission of
its 360 divisor in the computation of employees' salaries gains significance.
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43 Producers Bank of
the Philippines v. National Labor Relations Commission. In this case, the monthly salary was fixed by Wellington to
provide for compensation for every working day of the year including the holidays specified by law — and exclud-
ing only Sundays. In fixing the salary, Wellington used what it called the "314 factor"; that is, it simply deducted 51
Sundays from the 365 days normally comprising a year and used the difference, 314, as basis for determining the
monthly salary. The monthly salary thus fixed actually covered payment for 314 days of the year, including regular
and special holidays, as well as days when no work was done by reason of fortuitous cause, such as transportation
strike, riot, or typhoon or other natural calamity, or cause not attributable to the employees.
It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use of a divisor
that was less than 365 days cannot make the employer automatically liable for underpayment of holiday pay. In said
case, the employees were required to work only from Monday to Friday and half of Saturday. Thus, the minimum
allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or 52 half Satur-
days). Any divisor below 287 days meant that the employees were deprived of their holiday pay for some or all of
the ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum of 287 days.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum allowable divisor
is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365 days. Consi-
dering that petitioner used the 360-day divisor, which is clearly above the minimum, indubitably, petitioner's em-
ployees are being given their holiday pay.
Thus, the Voluntary Arbitrator should not have simply brushed aside petitioner's divisor formula. In granting res-
pondent's claim of non-payment of holiday pay, a "double burden" was imposed upon petitioner because it was be-
ing made to pay twice for its employees' holiday pay when payment thereof had already been included in the com-
putation of their monthly salaries.
BAHIA SHIPPING SERVICES, INC., petitioner vs.REYNALDO CHUA, defendant.

G.R. No. 162195. April 8, 2008.
FACTS:
Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping Services, Inc., as a restaurant
waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a Philippine Overseas Employment Admin-
istration (POEA) approved employment contract dated October 9, 1996 for a period of nine (9) months from Octo-
ber 18, 1996 to July 17, 1997. On October 18, 1996, the private respondent left Manila for Heathrow, England to
board the said sea vessel where he will be assigned to work.
On February 15, 1997, the private respondent reported for his working station one and one-half hours late. On
February 17, 1997, the master of the vessel served to the private respondent an official warning-termination form
pertaining to the said incident. On March 8, 1997, the vessel's master, ship captain Thor Fleten conducted an inquisi-
torial hearing to investigate the said incident. Thereafter, on March 9, 1997, private respondent was dismissed from
the service on the strength of an unsigned and undated notice of dismissal. An alleged record or minutes of the said
investigation was attached to the said dismissal notice. On March 24, 1997, the private respondent filed a complaint
for illegal dismissal and other monetary claims.
The petitioner disputed the said allegations of the private respondent by arguing that it received a copy of ad-
dendum to the collective bargaining agreement (CBA) from the petitioner’s principal, Blackfriars Shipping Com-
pany, Ltd.Consequently, the petitioner requested permission from the POEA through a letterdated March 17, 1997 to
amend the salary scale of the private respondent toUS$300.00 per month. The petitioner justified its monthly deduc-
tion made forunion dues against the private respondent's salary in view of an alleged existingCBA between the
Norwegian Seaman's Union (NSU, for brevity) and thepetitioner's principal, Blackfriars Shipping Co., Ltd. The peti-
tioner further asseverated that the private respondent has violated the terms and conditions ofhis contract as mani-
fested in the said official warning-termination form byalways coming late when reporting for duty even prior to the
February 15, 1997incident.
As to the second issue, the petitioner contends that there is no factual or legal basis for the inclusion of said
amount because, after respondent's repatriation, he couldnot have rendered any overtime work.
The private respondent alleged that he was paid only US$300.00 per month as monthly salary for five (5)
months instead of US$410.00 as stipulated in his employment contract. Thus, he claimed that he was underpaid in
the amount of US$110.00 per month for that same period of five (5) months. He further asserted that his salaries
were also deducted US$20.00 per month by the petitioner for alleged union dues. Private respondent argued that it
was his first offense committed on board the vessel. He adverted further that the petitioner has no proof of being a
member of the AMOSUP or the ITF to justify its claim to deduct the said union dues [from] his monthly salary.
ISSUE:
 Whether or not reporting for work one and one-half hours late and abandoning his work are valid grounds for
dismissal.
 Whether or not the “guaranteed overtime” pay per month be included as part of his salary in the computation
of the award.
RULING:
The petition for review is partly granted.
Rule:
The dismissal of respondent was illegal, it follows that the latter is entitled to payment of his salary for the un-
expired portion of his contract, as provided under Republic Act (R.A.) No. 8042, considering that his employment
was pre-terminated on March 9, 1997 or four months prior to the expiration of his employment contract on July 17,
1997.
Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee is entitled to the
twin reliefs of (a) either reinstatement or separation pay, if reinstatement is no longer viable, and (b) backwages.
Both are distinct reliefs given to alleviate the economic damage suffered by an illegally dismissed employee and,
thus, the award of one does not bar the other. Both reliefs are rights granted by substantive law which cannot be de-
feated by mere procedural lapses. Substantive rights like the award of backwages resulting from illegal dismissal
must not be prejudiced by a rigid and technical application of the rules.
The order of the Court of Appeals to award backwages being a mere legal consequence of the finding that res-
pondents were illegally dismissed by petitioners, there was no error in awarding the same.
The Court has consistently applied the foregoing exception to the general rule. It does so yet again in the present
case. Section 10 of R.A. No. 8042, entitles an overseas worker who has been illegally dismissed to "his salaries for
the unexpired portion of the employment contract or for three (3) months for every year of the unexpired term, whi-
chever is less." The CA correctly applied the interpretation of the Court in Marsaman Manning Agency, Inc. v. Na-
tional Labor Relations Commission that the second option which imposes a three months salary cap applies only
when the term of the overseas contract is fixed at one year or longer; otherwise, the first option applies in that the
overseas worker shall be entitled payment of all his salaries for the entire unexpired period of his contract.
As to the second issue, since there is no factual or legal basis in the inclusion of his "guaranteed overtime" pay
into his monthly salary computation for the entire unexpired period of his contract. Following the court ruling in
Cagampan v. National Labor Relations Commission, that although an overseas employment contract may guarantee
the right to overtime pay, entitlement to such benefit must first be established, otherwise the same cannot be al-
lowed.
Application:
Since it is improbable that respondent rendered overtime work during the unexpired term of his
contract, the inclusion of his "guaranteed overtime" pay into his monthly salaryas basis in the computation of his
salaries for the entire unexpired period of his contracthas no factual or legal basis and the same should have been
disallowed.
Conclusion:
Thus, the computation of the payment to respondent Reynaldo Chua of his salaries for the entire unexpired por-
tion of his contract, his basic monthly salary ofUS$213.00 shall be used as the sole basis.
PNCC CSKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS ORGANZA-

TION (PSTMSDWO), petitioner vs. PNCC SKYWAY CORPORATION,respondents
G.R. No. 171231. February 17, 2010.
FACTS:
Petitioner PNCC Skyway Corporation Traffic Management and Security Division Workers' Organiza-
tion (PSTMSDWO) is a labor union duly registered with the Department of Labor and Employment (DOLE).
Respondent PNCC Skyway Corporation is a corporation duly organized and operating under and by virtue of
the laws of the Philippines.
On November 15, 2002, petitioner and respondent entered into a Collective Bargaining Agreement
(CBA) incorporating the terms and conditions of their agreement which included vacation leave and expenses
for security license provisions.
In a Memorandum dated December 29, 2003, 3 respondent's Head of the Traffic Management and Se-
curity Department (TMSD) published the scheduled vacation leave of its TMSD personnel for the year 2004.
Petitioner objected to the implementation of the said memorandum. It insisted that the individual
members of the union have the right to schedule their vacation leave. It opined that the unilateral scheduling of
the employees' vacation leave was done to avoid the monetization of their vacation leave in December 2004.
This was allegedly apparent in a memorandum issued by the Head HRD, 5 addressed to all department heads.
Petitioner also demanded that the expenses for the required in-service training of its member security
guards, as a requirement for the renewal of their license, be shouldered by the respondent. However, the res-
pondent did not accede to petitioner's demands and stood firm on its decision to schedule all the vacation leave
of petitioner's members.
Due to the disagreement between the parties, petitioner elevated the matter to the DOLE-NCMB for
preventive mediation. For failure to settle the issue amicably, the parties agreed to submit the issue before the
voluntary arbitrator who issued a Decision dated July 12, 2004 in favor of the petitioners.Respondent filed a
motion for reconsideration, which the voluntary arbitrator denied in the Order dated August 11, 2004.
Aggrieved, on October 22, 2004, respondent filed a Petition for Certiorari with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction with the CA, and the CA rendered a Decision dated
October 4, 2005, annulling and setting aside the decision and order of the voluntary arbitrator. The CA ruled
that since the provisions of the CBA were clear, the voluntary arbitrator has no authority to interpret the same
beyond what was expressly written.
Petitioner filed a motion for reconsideration, which the CA denied through a Resolution dated January
23, 2006. Hence, the instant petition.
(a) Petitioner’s Argument/s

(1) Union members must have the preference in scheduling their vacation leave.
(2) Labor contracts should be construed in favor of the laborer.
(b) Respondent’s Argument/s
(1) Article III, Section 1 (b) of the CBA between the petitioner and respondents gives management the fi-
nal say regarding the vacation leave schedule of its employees.
(2) With regard to the in-service training of personnel, respondent invoked the CBA provision which
states that all expenses of security guards in securing/renewing their license shall be for their personal
ISSUE:
(1) WON CA erred in holding that the management has the sole discretion to schedule the vacation leave of
herein petitioner.
(2) WON CA erred in holding that the management is not liable for the in-service training of the security
guards.
RULING:
THE PETITION IS PARTLY GRANTED. The Decision and Resolution of the CA is MODIFIED. The issue re the
vacation leave was upheld by SC. However, the cost of in-service training of the respondent company’s security
guards shall be at the expense of the respondent company.
Rule:
(1) Where the language of a contract is plain and unambiguous, its meaning should be determined without ref-
erence to extrinsic facts or aids. The intention of the parties must be gathered from that language, and from
that language alone. Stated differently, where the language of a written contract is clear and unambiguous,
the contract must be taken to mean that which, on its face, it purports to mean, unless some good reason can
be assigned to show that the words used should be understood in a different sense.
(2) Although it is a rule that a contract freely entered into between the parties should be respected, since a con-
tract is the law between the parties, there are, however, certain exceptions to the rule, specifically Article
1306 of the Civil Code, which provides:
“The contracting parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public or-
der, or public policy.”
Application:
(1) In the case at bar, the contested provision of the CBA is clear and unequivocal. Article VIII, Section 1 (b)
of the CBA categorically provides that the scheduling of vacation leave shall be under the option of the
employer. The preference requested by the employees is not controlling because respondent retains its
power and prerogative to consider or to ignore said request.
(2) In the present case, Article XXI, Section 6 of the CBA provides that "All expenses of security guards in
securing/renewing their licenses shall be for their personal account." A reading of the provision would
reveal that it encompasses all possible expenses a security guard would pay or incur in order to secure or
renew his license. In-service training is a requirement for the renewal of a security guard's li-
cense. 24 Hence, following the aforementioned CBA provision, the expenses for the same must be on the
personal account of the employee. However, the 1994 Revised Rules and Regulations Implement-
ing Republic Act No. 5487 provides the following:
Section 17. Responsibility for Training and Progressive Development. — It is the primary responsibility of
all operators private security agency and company security forces to maintain and upgrade the standards of
efficiency, discipline, performance and competence of their personnel. To attain this end, each duly li-
censed private security agency and company security force shall establish a staff position for training and
appoint a training officer whose primary functions are to determine the training needs of the agency/guards
in relation to the needs of the client/market/industry, and to supervise and conduct appropriate training re-
quirements. All private security personnel shall be re-trained at least once very two years.
Section 12. In service training. — a. To maintain and/or upgrade the standard of efficiency, discipline and
competence of security guards and detectives, company security force and private security agencies upon
prior authority shall conduct-in-service training at least two (2) weeks duration for their organic members
by increments of at least two percent (2%) of their total strength. Where the quality of training is better
served by centralization, the CSFD Directors may activate a training staff from local talents to assist.
The cost of training shall be pro-rated among the participating agencies/private companies. All security
officer must undergo in-service training at least once every two (2) years preferably two months before his
or her birth month.
Since it is the primary responsibility of operators of company security forces to maintain and up-
grade the standards of efficiency, discipline, performance and competence of their personnel, it follows that
the expenses to be incurred therein shall be for the personal account of the company
Conclusion:
(1) Thus, if the terms of a CBA are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulation shall prevail. In fine, the CBA must be strictly adhered to and respected if
its ends have to be achieved, being the law between the parties
(2) Thus, If the provisions in the CBA run contrary to law, public morals, or public policy, such provisions
may very well be voided.
RADIO MINDANAO NETWORK v. YBAROLA

G.R. No. 198662, September 12, 2012
FACTS:
Respondents Ybarola and Rivera were hired as account managers to solicit advertisements of RMN in 1977 and
1983, respectively. In 2002, respondents’ services were terminated due to restructuring. They were given their re-
spective separation payments. Dissatisfied with the payments, respondents lodged a complaint against RMN for il-
legal dismissal and for several money claims. Respondents cited that their monthly salary is 60,000 (Ybarola) and
40,000 (Rivera).
Petitioners contended that respondents received fair and reasonable settlement for their claims attested by the
quitclaim affidavits they signed. Further they argued that respondents’ salary is P 9,177.00 monthly, as shown in the
payrolls.

On July 18, 2007, Labor Arbiter PatricioLibo-on dismissed the illegal dismissal complaint, but ordered the
payment of additional separation pay to the respondents — P490, 066.00 for Ybarola and P429, 517.55 for Rivera. 5
The labor arbiter adjusted the separation pay award based on the respondents' Certificates of Compensation Pay-
ment/Tax Withheld showing that Ybarola and Rivera were receiving an annual salary of P482, 477.61 and P697,
303.00, respectively.
Petitioners appealed the LA decision in the NLRC.
NLRC DECISION
NLRC set aside the LA decision, citing that a withholding tax certificate is not a basis for the computation of
respondents’ separation pay. The NLRC upheld the validity of the respondents' quitclaim affidavits as they failed to
show that they were forced to execute the documents.
The respondents sought relief from the Court of Appeals.

The CA granted the appeal of the respondents. It reinstated the awards given by the LA and rejected the
NLRC’s ruling. It pointed out that in the present case, the respondents earned their commissions through actual mar-
ket transactions attributable to them; these commissions, therefore, were part of their salary. The quitclaim affidavits
were declared invalid since it goes against public policy, for two reasons: (1) the terms of the settlement are uncons-
cionable; the separation pay the respondents received was deficient by at least P400,000.00 for each of them; and (2)
the absence of voluntariness when the respondents signed the document, it was their dire circumstances and inability
to support their families that finally drove them to accept the amount the petitioners offered. Significantly, they dal-
lied and it took them three months to sign the release/quitclaim affidavits.
The petitioners filed a motion for reconsideration in the Supreme Court.
ISSUE
 Whether or not commissions form part of an employee’s wage.
RULING
The motion for reconsideration was without merit. Petitioners’ insistence that respondents’ commissions were
no part of their salaries cannot be sustained, just because they failed to present proof of actual market transactions
attributable to them. If these were really profit-sharing bonuses, then the two employees should have received the
same amounts but NLRC noted that this was not the case.
It supports the finding that both respondents received minimum amount as wages and a greater part of their in-
come was derived from commissions they get from soliciting advertisements. The advertisements are the products
they sell and this kind of salary structure does not detract the fact that commissions form part of their salary.
The Ca correctly opined when it said that the quitclaim agreements were signed when both respondents are in
dire straits, hence invalid. Their reliance in the Talam case cannot be sustained since in that case. Talam received
valuable consideration for his services while in case at bar, the respondents received far less form what they are due.
APPLICATION
Advertisements, being the products sold, comes with commissions that are received by account managers. Such
commissions, which form part of their income, is considered to be included in the salary. Hence, their separation pay
computation should include the commissions they got in their work.
CONCLUSION
The computation of the LA on their separation pay is sustained and the respondents’ salary includes the com-
missions earned through the advertisements.
ROBINA FARMS CEBU, petitioner vs. ELIZABETH VILLA, respondent.

G.R. No. 175869. April 18, 2016.
FACTS:
Respondent 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.
In the verified complaint, 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 ex-
plained 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; that she had been subsequently informed that her application had been disapproved, and had then
been advised to tender her resignation with a request for financial assistance; 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 en-
tering the company premises and had been replaced by another employee.
The petitioner admitted that Villa had been its sales clerk at Robina Farms and that she applied on December 12,
2001, she had applied for retirement under the special privilege program offered to its employees in Bulacan and
Antipolo who had served for at least 10 years. That in 2002, after 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 benefitts 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.
a) Petitioner’s Arguments (Robina Farms – Lost)

1) The petitioner submits that Villa was not illegally dismissed and had no intention to sever the employer-employee
relationship; it had no intention to terminate her. De Guzman had merely suggested to respondent that she should be
filing the letter of resignation with the request for financial assistance because the management had disapproved her
application for the 86% salary rate as basis for her retirement benefits and that it was Villa who had the intention
to sever the employer-employee relationship because she had kept on following up her application for retirement;
that she had prematurely filed the complaint for illegal dismissal; that she had voluntarily opted not to report to her
work; and that she had not presented proof showing that it had prevented her from working and entering its premis-
es.
2) The petitioner posits that no overtime pay and service incentive leave pay should be awarded to Villa since she
did not adduce proof of her having rendered actual overtime work; that she had not been authorized to render over-
time work; and that her availment of vacation and sick leaves that had been paid precluded her claiming the service
incentive leave pay.
b) Respondent’s Argument’s (Villa - Won)

Respondent claims that she was illegally suspended, illegal dismissed and there was nonpayment of her overtime
pay, and nonpayment of service incentive leave pay.
Labor Arbiter ruled in favor of Villa, ordering Robina Farms to reinstate Villa to her former position without loss of
seniority rights and privileges but without payment of backwages; ordered to pay service incentive leave pay bene-
fits.
Upon appeal, the NLRC rendered its judgment dismissing the appeal by the petitioner but granting that of Villa. Its
motion for reconsideration was also denied.
The petitioner’s petition for certiorariand motion for reconsiderationin the CA was dismissed.
Hence, the present appeal.
ISSUE:
Whether or not Villa was illegally dismissed.
Whether or not Villa is entitled to overtime pay and service incentive leave.
RULING:
The appeal lacks merit.
Rule:
1). Retirement is the result of a bilateral act of both the employer and the employee based on their voluntary
agreement that upon reaching a certain age, the employee agrees to sever his employment.
Voluntary retirement cuts the employment ties leaving no residual employer liability; on the other, involuntary re-
tirement amounts to a discharge, rendering the employer liable for termination without cause. The employee's intent
is decisive. In determining such intent, the relevant parameters to consider are the fairness of the process governing
the retirement decision, the payment of stipulated benefits, and the absence of badges of intimidation or coercion.
In case of early retirement programs, the offer of benefits must be certain while the acceptance to be retired should
be absolute. The acceptance by the employees contemplated herein must be explicit, voluntary, free and uncom-
pelled.
2). 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 perfor-
mance transgresses the principles of fair play and equity.
3). The grant of vacation or sick leave with pay of at least five days could be credited as compliance with the duty to
pay service incentive leave, however, the employer is still obliged to prove that it fully paid the accrued service in-
centive leave pay to the employee.
Application:
1) Illegal Dismissal
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. Ordinarily, after an employee has served her suspension, she should be admit-
ted back to work and to continue to receive compensation for her services.
In the case at bar, it is clear that private respondent was not admitted immediately after her suspension. Records
show that when private respondent reported back after her suspension, she was advised by Lucy de Guzman not to
report back anymore as her application was approved, which was latter on disapproved. It is at this point that, said
Lucy de Guzman had advised private respondent to tender a resignation letter with request for financial assistance.
Not only Lucy De Guzman has advised her to tender her resignation letter. The letter of petitioner Lily Ngochua
dated April 11, 2002 to private respondent has also advised private respondent to the same. These acts were strong
indication that petitioners wanted to severe the employer-employee relationship between them and that of private
respondent. This is further supported by the fact that when private respondent signified her intention to return back
to work after learning of the disapproval of her application, she was prevented to enter the petitioner's premises by
confiscating her ID and informing her that a new employee has already replaced her. This statement was not contest
by the petitioner when private respondent averred this statement in her position paper submitted before the Labor
Arbiter and in their Appeal Memorandum nor in their Motion for Reconsideration of the assailed decision of public
respondent.
Neither did Villa's application for early retirement manifest her intention to sever the employer-employee rela-
tionship. 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.
Thus, having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely
assented to by her, respondent was guilty of illegal dismissal (Jaculbev.SillimanUniversity).
2). Payment of Overtime Pay and Service Incentive Leave

2.1) Overtime Pay
The court agrees with petitioner’s claim that the respondent is not entitled to overtime pay as she did
not adduce proof of her having rendered actual overtime work and that she had not been authorized to
render overtime work.
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, there-
fore, Villa could not validly claim having performed work beyond the normal hours of work.
2.2) Service Incentive Leave

The respondent is entitled to service incentive leave.
The Labor Arbiter originally awarded the service incentive leave pay because the petitioner did not
present proof showing that Villa had been justly paid. The petitioner submitted the affidavits of Zanoria ex-
plaining the payment of service incentive leave after the Labor Arbiter had rendered her decision. But that
was not enough, for evidence should be presented in the proceedings before the Labor Arbiter, not after the
rendition of the adverse decision by the Labor Arbiter or during appeal. Such a practice of belated presenta-
tion cannot be tolerated because it defeats the speedy administration of justice in matters concerning the
poor workers.
Conclusion:
Thus, the petitioner are hereby directed to immediately reinstate complainant to her former position without loss of
seniority rights and other privileges except award of overtime pay.
DE LA SALLE ARANETA UNIVERSITY (DLS-AU) v. JUANITO C. BERNARDO

G.R. No. 190809, February 13, 2017
FACTS:
Bernardo taught as a part-time professional lecturer at DLS-AU since 1974. On November 8, 2003, DLS-AU
informed him that he could not teach anymore due to the retirement age limit. Bernardo was 75 years old at the time
and was being paid P246.50 per hour. DOLE informed him that he was entitled to receive benefits under RA 7641,
also known as the "New Retirement Law.”
a.) Petitioner’s Arguments
DLS-AU argued that Bernardo was not covered by the law since he was a part-time employeeand
that Bernardo was not entitled to any kind of separation pay or benefits. Dr. Bautista explained to Bernardo
that as mandated by the DLS-AU's policy and Collective Bargaining Agreement (CBA), only full-time
permanent faculty of DLS-AU for at least five years immediately preceeding the termination of their em-
ployment could avail themselves of the post-employment benefits. As part-time faculty member, Bernardo
did not acquire permanent employment under the Manual of Regulations for Private Schools, in relation to
the Labor Code, regardless of his length of service.The school further averred that Bernardo’s employment
bond was severed when he reached the mandatory retirement age of 65. 10 years have passed since then.
His claim for retirement benefits should have prescribed, because under Article 291 of the Labor Code, all
money claims shall be filed within three years from the time the cause of action accrues.
b.) Respondent’s Arguments
Bernardo alleged that he started working as a part-time professional lecturer at DLS-AU on June
1, 1974 for an hourly rate of P20.00. Bernardo taught for two semesters and the summer for the school year
1974-1975. Bernardo then took a leave of absence from June 1, 1975 to October 31, 1977 when he was as-
signed by the Philippine Government to work in Papua New Guinea. When Bernardo came back in 1977,
he resumed teaching at DLS-AU until October 12, 2003, the end of the first semester for school year 2003-
2004. Bernardo's teaching contract was renewed at the start of every semester and summer. However, on
November 8, 2003, DLS-AU informed Bernardo through a telephone call that he could not teach at the
school anymore as the school was implementing the retirement age limit for its faculty members. As he was
already 75 years old, Bernardo had no choice but to retire. At the time of his retirement, Bernardo was be-
ing paid P246.50 per hour.
NLRC: The Labor Arbiter dismissed Bernardo’s complaint on the ground of prescription. This was reversed by the
NLRC. It held that the school is estopped from claiming prescription because it permitted Bernardo to work beyond
the mandatory retirement age. Furthermore, part-time employees are covered under RA 7641.
Under Republic Act No. 7641, part-time workers are entitled to retirement pay of one-half month salary for
every years of service, provided that the following conditions are present: (a) there is no retirement plan between the
employer and employees; (b) the employee has reached the age of 60 years old for optional retirement or 65 years
old for compulsory retirement; and (c) the employee should have rendered at least five years of service with the em-
ployer. Bernardo avowed that all these conditions were extant in his case.
CA: The CA affirmed in toto the NLRC judgment.
ISSUE:
1. W/N part-time employees receive retirement benefits despite a lack of CBA
2. W/N Bernardo’s claim has prescribed
3. W/N the doctrine of equitable estoppel applies
RULING:
1. YES.
Based on RA 7641, its Implementing Rules, and the October 24, 1996 Labor Advisory, the only employees ex-
empted from retirement pay are: (1) those of the National Government and its political subdivisions, including go v-
ernment-owned and/or controlled corporations, if they are covered by the Civil Service Law and its regulations; and
(2) those of retail, service and agricultural establishments or operations regularly employing not more than 10 e m-
ployees. Under expressiouniusestexclusioalterius, Since part-time employees are not among those specifically ex-
empted, Bernardo’s claim stands. Being 75 years old at the time of his retirement, having served DLS-AU for a total
of 27 years, and not being covered by the grant of retirement benefits in the CBA - is unquestionably qualified to
avail himself of retirement benefits under said statutory provision, i.e., equivalent to one-half month salary for every
year of service, a fraction of at least six months being considered as one whole year.
2. NO.
Art. 306 [291]. Money claims. - All money claims arising from employer-employee relations accruing during
the effectivity of this Code shall be filed within three years from the time the cause of action accrued; otherwise they
shall be forever barred.
A cause of action has three elements: (a) a right in favor of the plaintiff; (b) an obligation on the part of the de-
fendant to respect or not to violate such right; and (c) an act or omission on the part of such defendant violative of
the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff. The third element
occurred when DLS-AU refused to pay Bernardo's retirement benefits. Only then did the period of prescription be-
gin to run.
Bernardo's right to retirement benefits and the obligation of DLS-AU to pay such benefits are already estab-
lished under Article 302 [287] of the Labor Code, as amended by Republic Act No. 7641. However, there was a
violation of Bernardo's right only after DLS-AU informed him on November 8, 2003 that the university no longer
intended to offer him another contract of employment, and already accepting his separation from service, Bernardo
sought his retirement benefits, but was denied by DLS AU. Therefore, the cause of action for Bernardo's retirement
benefits only accrued after the refusal of DLS-AU to pay him the same, clearly expressed in Dr. Bautista's letter
dated February 12, 2004. Hence, Bernardo's complaint, filed with the NLRC on February 26, 2004, was filed within
the three-year prescriptive period provided under Article 291 of the Labor Code.
Even granting arguendo that Bernardo's cause of action already accrued when he reached 65 years old, we can-
not simply overlook the fact that DLS-AU had repeatedly extended Bernardo's employment even when he already
reached 65 years old. DLS-AU still knowingly offered Bernardo, and Bernardo willingly accepted, contracts of em-
ployment to teach for semesters and summers in the succeeding 10 years. Since DLS-AU was still continuously en-
gaging his services even beyond his retirement age, Bernardo deemed himself still employed and deferred his claim
for retirement benefits, under the impression that he could avail himself of the same upon the actual termination of
his employment. The equitable doctrine of estoppel is thus applicable against DLS-AU.
3. YES.
For the principle of equitable estoppel to apply, there must be (a) conduct amounting to false representation or
concealment of material facts or at least calculated to convey the impression that the facts are otherwise than, and
inconsistent with, those which the party subsequently attempts to assert; (b) intent, or at least expectation that this
conduct shall be acted upon, or at least influenced by the other party; and (c) knowledge, actual or constructive, of
the actual facts.
In this case, DLS-AU, kept its silence that Bernardo had already reached the compulsory retirement age of 65
years old. It even continuously offered him contracts of employment for the next 10 years. It should not be allowed
to escape its obligation to pay Bernardo's retirement benefits.
Conclusion:
The instant Petition is DISMISSED for lack of merit. The Decision dated June 29, 2009 and Resolution
dated January 4, 2010 of the Court of Appeals in CA-G.R. SP No. 106399 are AFFIRMED.
OTHER SPECIAL BENEFITS 152
ROGELIO REYES, petitioner, VS NATIONAL LABOR RELATIONS COMMISSION, Fifth Division and
UNIVERSAL ROBINA CORPORATION GROCERY DIVISION, respondents
G.R. No. 160233 August 8, 2007
FACTS:
Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on August 12,
1977. He was eventually appointed as unit manager of Sales Department-South Mindanao District, a position he
held until his retirement on November 30, 1997. Thereafter, he received a letter regarding the computation of his
separation pay with a total of Php 200,322.21 pursuant to the company policy and practice.
PETITIONER’S ARGUMENTS: (Reyes – lost)

Insisting that his retirement benefits and 13th month pay must be based on the average monthly salary of
P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthly commission, petitioner re-
fused to accept the check issued by private respondent in the amount of P200,322.21. Instead, he filed a complaint
before the arbitration branch of the NLRC for retirement benefits, 13th month pay, tax refund, earned sick and vaca-
tion leaves, financial assistance, service incentive leave pay, damages and attorney's fees.
Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine Duplicators,
Inc. v. National Labor Relations Commission, wherein the Court held that commissions earned by salesmen form
part of their basic salary.
RESPONDENT: (NLRC – won)

Private respondent counters that petitioner knew that the overriding commission is not included in the basic sal-
ary because it had not been considered as such for a long time in the computation of the 13th month pay, leave
commissions, absences and tardiness. Petitioner himself stated in the complaint that his basic salary is P10,919.22,
thus, he is estopped from claiming otherwise.
ISSUE: Whether or not the average monthly sales commission of Php31,846.97 should be included in the computa-
tion of his retirement benefits and 13th month pay.
RULING:
No, the petitioner’s commissions should not be considered in the computation of his retirement benefits and 13th
month pay. In Boie-Takeda Chemicals, Inc. v. De la Serna, the Supreme Court held that the fixed or guaranteed
wage is patently "the basic salary" for this is what the employee receives for a standard work period, and that com-
missions are given for extra efforts exerted in consummating sales or other transactions. Also, in Soriano v. National
Labor Relations Commission, the Court clarified that overriding commission is not properly includible in the basic
salary as it must be earned by actual market transactions attributable to the claimant. Thus, as a unit manager who
supervised the salesmen under his control and did not enter into actual sale transactions, petitioner's overriding
commissions must not be considered in the computation of the retirement benefits and 13th month pay.
Rule:
Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known asThe New Retirement
Law, 22 provides:
Art. 287. Retirement. — Any employee may be retired upon reaching the retirementage established in the col-
lective bargaining agreement or other applicableemployment contract.
xxx xxx xxx
In the absence of a retirement plan or agreement providing for retirement benefit of employees in the establish-
ment, an employee upon reaching the age of sixty(60) years or more, but not beyond sixty-five (65) years which
is hereby declaredthe compulsory retirement age, who has served at least five (5) years in the saidestablishment,
may retire and shall be entitled to retirement pay equivalent to atleast one half (1/2) month salary for every year
of service, a fraction of at leastsix (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean fifteen
(15) days plus one twelfth (1/12) of the 13th month payand the cash equivalent of not more than five (5)
days of service incentive leaves.
And, Section 5 of Rule II of the Rules Implementing the New Retirement Law, provides:
xxx xxx xxx

Section 5. Retirement Benefits. —
5.1 In the absence of an applicable agreement or retirement plan, an employeewho retires pursuant to the Act
shall be entitled to retirement pay equivalent to atleast one-half (1/2) month salary for every year of service, a
fraction of at leastsix (6) months being considered as one whole year.
5.2 Components of One-half (1/2) Month Salary. –— For the purpose ofdetermining the minimum retirement
pay due an employee under this Rule, theterm "one-half-month salary" shall include all the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term "salary"
includes all remunerations paid by an employer to his employees for services rendered during normal
working days and hours, whether such payments are fixed or ascertained on a time, task, piece or com-
mission basis, or other method of calculating the same, and includes the fairand reasonable value, as de-
termined by the Secretary of Labor and Employment, of food, lodging, or other facilities customarily
furnished by the employer to his employees. The term does not include cost of living allowance, profit-
sharing payments and other monetary benefits which are not considered as part of or integrated into the
regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave.
(c) One-twelfth of the 13 month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should be included in the compu-
tation of the employee's retirement pay. (Emphasis supplied)
Application:
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his retire-
ment benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form of profit-sharing
payments specifically excluded by the foregoing rules. Case law has it that when these earnings and remuneration
are closely akin to fringe benefits, overtime pay or profit-sharing statements, they are properly excluded in compu-
ting retirement pay. However, sales commissions which are effectively an integral portion of the basic salary struc-
ture of an employee, shall be included in determining the retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding to his
position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the "overriding commissions" paid
to him by Universal Robina Corp. could not have been 'sales commissions' in the same sense that Philippine Dupli-
cators paid its salesmen sales commissions. Unit Managers are not salesmen; they do not effect any sale of article at
all. Therefore, any commission which they receive is certainly not the basic salary which measures the standard or
amount of work of complainant as Unit Manager. Accordingly, the additional payments made to petitioner were not
in fact sales commissions but rather partook of the nature of profit-sharing business. Certainly, from the foregoing,
the doctrine in Boie-Takeda Chemicals and Philippine Fuji Xerox Corporation, which pronounced that commissions
are additional pay that does not form part of the basic salary, applies to the present case. Aside from the fact that as
unit manager petitioner did not enter into actual sale transactions, but merely supervised the salesmen under his con-
trol, the disputed commissions were not regularly received by him. Only when the salesmen were able to collect
from the sale transactions can petitioner receive the commissions. Conversely, if no collections were made by the
salesmen, then petitioner would receive no commissions at all. In fine, the commissions which petitioner received
were not part of his salary structure but were profit-sharing payments and had no clear, direct or necessary relation
to the amount of work he actually performed. The collection made by the salesmen from the sale transactions was
the profit of private respondent from which petitioner had a share in the form of a commission..
CONCLUSION:
Petitioner’s commissions should not be considered in the computation of his retirement benefits and 13th month
pay as these commissions partook of the nature of profit-sharing business, which is specifically excluded in the term
“one-half month salary”.
ARCO METAL PRODUCTS, CO. INC., petitioners vs. SAMAHAN NG MANGGAGAWA SA ARCO MET-
AL – NAFLU, respondents.
G.R. No. 170734. May 14, 2008.
FACTS:
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of
petitioner’s rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay, bonus, and
leave encashment of three (3) union members in amounts proportional to the services they actually rendered in a
year, which is less than twelve (12) months.
a) Petitioner’s Arguments (Arco Metal Products, Co. Inc. – Lost)

Petitioner asserts that the giving of the contested benefits in full, irrespective of the actual service rendered
within one year has not ripened into a practice. The seven (7) employees who had not served the full twelve (12)
months, who were not paid pro-rata, was erroneous on petitioner’s part. Also, the phrase “for each year of service”
found in the pertinent Collective Bargaining Agreement provisions to mean that an employee must have rendered
one year of service in order to be entitled to the full benefits provided in the CBA.
b) Respondent’s Arguments (Samahan ng Manggagawasa Arco Metal – Won)

Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the
payment of the same benefits to seven (7) employees who had not served for the full twelve (12) months for the
years 1992, 1993, 1994, 1999, 2002 and 2003. According to respondent, the prorated payment violates the rule
against diminution of benefits under Article 100 of the Labor Code.
ISSUE:
Whether or not the prorated scheme ripened into a practice and thus, the prorated computation of payment is
violative of Article 100 of the Labor Code.
RULING:
The petition is DENIED – The prorated computation of payment is in violation of the Labor Code.
Rule:
Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or elimi-
nated by the employer. The principle of non-diminution of benefits is founded on the Constitutional mandate to
“protect the rights of the workers and promote their welfare,” and “to afford labor full protection.”
In cases involving money claims of employees, the employer has the burden of proving that the employees did re-
ceive the wages and benefits and that the same were paid in accordance with law.
Application:
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and
consistently granting full benefits to its employees regardless of the length of service rendered. True, there were only
a total of seven (7) employees benefited from such practice, but it was an established practice nonetheless. Petitioner
cannot shirk away from its responsibility by merely claiming that it was a mistake or error, supported only by an
affidavit of its manufacturing ground head.
Conclusion:
Thus, the petitioner is hereby directed to pay the three (3) union members the monetary benefits due them re-
gardless of their actual length of service – this now being a company policy.
Universal Robina Sugar Milling Corp. vs. AGRIPINO CABALLEDA and

ALEJANDRO CADALIN,
G.R. No. 156644, July 28, 2008
TOPIC:OTHER SPECIAL BENEFITS
FACTS:
Caballeda worked as welder for URS from March 1989 until June 23, 1997 with a salary of P124.00 a day,
while Cadalin worked as crane operator from 1976 up to June 15, 1997 with a salary of P209.30 per day.
In 1991, the company president, issued a Memorandum establishing the company policy on “Compulsory Re-
tirement” of its employees at 60. In 1992, RA 7641 (retirement law) was enacted and it took effect on January 7,
1993, amending Article 287 of the Labor Code.
In 1993, the company and NFL (bargaining agent) entered into a CBA, under which the retirement benefits of
the members of the collective bargaining unit shall be in accordance with law. Meanwhile, Caballeda and Cadalin,
having reached the age of 60, were allegedly forced to retire pursuant to the company Memorandum earlier issued.
a) Petitioner’s Arguments (URSMCo. – LOSE)

Petitioners postulate that respondents voluntarily retired particularly when Alejandro filed his application
for retirement, submitted all the documentary requirements, accepted the retirement benefits and executed a
quitclaim in favor of URSUMCO.
b) Respondent’s Arguments (Agripino – WIN)
Respondents claim otherwise, contending that they were merely forced to comply as they werenolonger
given any work assignment and considering that the severance of their employment with URSUMCO is a
condition precedent for them to receive their retirement benefits.
ISSUE:
1. Whether R.A.7641 can be given retroactive effect
2. Whether respondents were illegally terminated on account of compulsory retirement
RULING:
Petition is DENIED. The Decision dated September 11, 2002 and the Resolution dated January 8, 2003 of
the Court of Appeals in CA-G.R. SP No. 59552 are hereby AFFIRMED. Costs against the petitioners.
Rule:
1) RA 7641, as a social legislation, has retroactive effect The issue of the retroactive effect of R.A. 7641 on
prior existing employment contracts has long been settled. In Enriquez Security Services, Inc. v. Cabotaje,
RA 7641 is undoubtedly a social legislation. The law has been enacted as a labor protection measure and as
a curative statute that — absent a retirement plan devised by, an agreement with, or a voluntary grant from,
an employer — can respond, in part at least, to the financial well-being of workers during their twilight
years soon following their life of labor. we held: There should be little doubt about the fact that the law can
apply to labor contracts still existing at the time the statute has taken effect, and that its benefits can be
reckoned not only from the date of the law's enactment but retroactively to the time said employment con-
tracts have started.
Pursuant thereto, this Court imposed two (2) essential requisites in order that R.A. 7641 may be given re-
troactive effect:
(1) the claimant for retirement benefits was still in the employ of the employer at the time the statute took
effect; and
(2) the claimant had complied with the requirements for eligibility for such retirement benefits under the
statute.
2) Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the
former. The age of retirement is primarily determined by the existing agreement between the employer and
the employees. However, in the absence of such agreement, the retirement age shall be fixed by law. Under
Art. 287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years,
while the set minimum age for optional retirement is 60 years.
SC applied Art. 287

Art. 287 of the Labor Code which provides for two types of retirement:
(a) compulsory (65); and
(b) optional (CBA, employment contract, retirement plan; 60 years or more, but not beyond 65 years, pro-
vided he has served at least five years in the establishment concerned. NB: That prerogative is exclu-
sively lodged in the employee)
We rule in favor of respondents. Generally, the law looks with disfavor on quitclaims and releases by em-
ployees who have been inveigled or pressured into signing them by unscrupulous employers seeking to evade their
legal responsibilities and frustrate just claims of employees. They are frowned upon as contrary to public policy. A
quitclaim is ineffective in barring recovery of the full measure of a worker's rights, and the acceptance of benefits
therefrom does not amount to estoppel. [Because employee and employer do not stand on same footing, employee is
deemed not to have waived any of their rights. Renuntiatio non praesumitur.]
Application:
First issue, it is evident from the records that when respondents were compulsorily retired from the service,
R.A. 7641 was already in full force and effect. The petitioners failed to prove that the respondents did not comply
with the requirements for eligibility under the law for such retirement benefits. In sum, the aforementioned requi-
sites were adequately satisfied, thus, warranting the retroactive application of R.A. 7641 in this case.
Second issue, in this case, it may be stressed that the CBA does not per se specifically provide for the compul-
sory retirement age nor does it provide for an optional retirement plan. It merely provides that the retirement benefits
accorded to an employee shall be in accordance with law. Thus, we must apply Art. 287 of the Labor Code.
CONCLUSION:
To be precise, only Alejandro was able to claim a partial amount of his retirement benefit. Thus, it is clear from
the decisions of the Arbiter, NLRC and CA that petitioners are still liable to pay Alejandro the differential on his
retirement benefits. On the other hand, Agripino was actually and totally deprivedof his retirement benefit.
LOURDES A. CERCADO, petitioner vs. UNIPROM, INC., respondent

GR. No. 188154. October 13, 2010.
FACTS:
Petitioner was first employed by the respondent on 1978.
On 1980, respondent instituted a non-contributory retirement plan which provides any regular employee shall
automatically become a participant thereof. The participant with 20 years of service, regardless of age, may be re-
tired as his option or the option of the company.
On January 2001, amended its retirement plan in compliance with RA 7641 and reserved the option to retire the
employees.
On December 2000, the respondent implemented a company-wide early retirement which the petitioner, who at
the time, was 47 years old, was offered but rejected the same.
On February 2001, UNIPROM exercised its option under the plan and decided to retire Cercado at the end of
the business hour of the day. A check was issued to her which she refused to accept.
This prompted the petitioner to file a complaint for illegal dismissal before the Labor Arbiter. Latter found that
the petitioner was illegally dismissed. The NLRC affirmed the same. However, the CA reversed the ruling. Hence,
this petition.
a.) Petitioner’s Arguments (Lourdes A. Cercado – Win)

She did not consent to the retirement plan.
b.) Respondent’s Arguments (UNIPROM, INC. – Lose)

Cercado was automatically covered by the retirement plan when she agreed to the company's rules and regulations,
and that her retirement from service was a valid exercise of a management prerogative.
ISSUE:
Whether or not an employer can impose a lower retirement age as an exercise of management prerogative and if the
consent of the employee is required?
RULING:
The petition was granted.
Rule:
Article 287 of the Labor Code, as amended by R.A. No. 7641, 13 pegs the age for compulsory retirement at 65
years, while the minimum age for optional retirement is set at 60 years. An employer is, however, free to impose a
retirement age earlier than the foregoing mandates. This has been upheld in numerous cases as a valid exercise of
management prerogative.
It is axiomatic that a retirement plan giving the employer the option to retire its employees below the ages pro-
vided by law must be assented to and accepted by the latter, otherwise, its adhesive imposition will amount to a de-
privation of property without due process of law.
The plan should either be embodied in a CBA, or established after consultations and negotiations with the em-
ployees' bargaining representative.
Application:
In the instance case, there was no agreement between the company and the employees as to the retirement plan.
There was no acquiescence to the early retirement option attributable to the petitioner.
In addition, it must be underscored that petitioner was hired in 1978 or 2 years before the institution of UNIPROM's
retirement plan in 1980. Logically, her employment contract did not include the retirement plan, much less the early
retirement age option contained therein.
Conclusion:
For failure to prove an agreement as to the early retirement plan, the exercise of the option under the plan shall
be considered as illegal dismissal. The petitioner is entitled to reinstatement without loss of seniority rights and to
full backwages computed from the time of her illegal dismissal in February 16, 2001 until the actual date of her
reinstatement. If reinstatement is no longer possible because the position that petitioner held no longer exists, UNI-
PROM shall pay backwages as computed above, plus, in lieu of reinstatement, separation pay equivalent to one-
month pay for every year of service.
RADIO MINDANAO NETWORK INC, ET AL., petitioner VS. YBAROLA, JR. ET AL., defendant
G.R. No. 198662, September 12, 2012
Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1,
1983, respectively, by RMN. They eventually became account managers, soliciting advertisements and servicing
various clients of RMN.
The respondents’ services were terminated as a result of RMN’s reorganization/restructuring; they were
given their separation pay – P 631,250.00 for Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002,
they executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints (which were later consoli-
dated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims, including at-
torney’s fees. They indicated that their monthly salary rates were P 60,000.00 for Ybarola and P 40,000.00 for Rive-
ra.
Respondent’s Contention: The respondents argued that the release/quitclaim they executed should not be a bar to
the recovery of the full benefits due them; while they admitted that they signed release documents, they did so due to
dire necessity.
Petitioner’s Contention: The petitioners denied liability, contending that the amounts the respondents received
represented a fair and reasonable settlement of their claims, as attested to by the release/quitclaim affidavits which
they executed freely and voluntarily. They belied the respondents’ claimed salary rates, alleging that they each re-
ceived a monthly salary of P 9,177.00, as shown by the payrolls.
Labor Arbiter: The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the pay-
ment of additional separation pay to the respondents – P 490,066.00 for Ybarola and P 429,517.55 for Rivera.
NLRC: The NLRC set aside the labor arbiter’s decision and dismissed the complaint for lack of merit. It ruled that
the withholding tax certificate cannot be the basis of the computation of the respondents’ separation pay as the tax
document included the respondents’ cost-of-living allowance and commissions; as a general rule, commissions can-
not be included in the base figure for the computation of the separation pay because they have to be earned by actual
market transactions attributable to the respondents. From the NLRC, the respondents sought relief from the CA
through a petition for certiorari under Rule 65 of the Rules of Court.
Court of Appeal’s Decision: The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated
the labor arbiter’s separation pay award, rejecting the NLRC’s ruling that the respondents’ commissions are not in-
cluded in the computation of their separation pay. It pointed out that in the present case, the respondents earned their
commissions through actual market transactions attributable to them; these commissions, therefore, were part of
their salary.
Issue: Whether or not the release/quitclaim affidavits are invalid for being against public policy.
Ruling:
On Release/Quitclaim; Separation pay.
The release/quitclaim affidavits are invalid for being against public policy for two reasons:
(1) the terms of the settlement are unconscionable; the separation pay for termination due to reorganiza-
tion/restructuring was deficient by Php400,000.00 for each employee; they were given only half of the
amount they were legally entitled to; and
(2) the absence of voluntariness when the employees signed the document, it was their dire circumstances
and inability to support their families that finally drove them to accept the amount offered.
The petitioners’ reliance on our ruling in Talam v. National Labor Relations Commission, regarding the
“proper appreciation of quitclaims,” as they put it, is misplaced. While Talam, in the cited case, and Ybarola and
Rivera, in this case, are not unlettered employees, their situations differ in all other respects.
In Talam, the employee received a valuable consideration for his less than two years of service with the
company; he was not shortchanged and no essential unfairness took place. In this case, as the CA noted, the separa-
tion pay the respondents each received was deficient by at least P400,000.00; thus, they were given only half of the
amount they were legally entitled to. To be sure, a settlement under these terms is not and cannot be a reasonable
one, given especially the respondents’ length of service – 25 years for Ybarola and 19 years for Rivera. The CA was
correct when it opined that the respondents were in dire straits when they executed the release/quitclaim affidavits.
Without jobs and with families to support, they dallied in executing the quitclaim instrument, but were
eventually forced to sign given their circumstances. To be sure, a settlement under these terms is not and cannot be a
reasonable one, given especially the respondent’s length of service – 25 years for Ybarola and 19 years for Rivera.
Eleazar S. Padillo, petitioner, Vs. Rural Bank OfNabunturan, Inc., respondent

G.R. No. 199338 January 21, 2013.
FACTS:
On October 1, 1977, petitioner was employed by respondent Rural Bank of Nabunturan, Inc. (Bank) as its SA
Bookkeeper. Due to liquidity problems which arose sometime in 2003, the Bank took out retirement/insurance plans
with Philippine American Life and General Insurance Company (Philam Life) for all its employees in anticipation of
its possible closure and the concomitant severance of its personnel. In this regard, the Bank procured a Philam Life
Plan in favor of petitioner for a benefit amount of P100,000.00 and which was set to mature on July 11, 2009. Dur-
ing the latter part of 2007, petitioner suffered a mild stroke due to hypertension which consequently impaired his
ability to effectively pursue his work. On September 10, 2007, he wrote a letter addressed to respondent Oropeza,
the president of the bank, expressing his intention to avail of an early retirement package. Despite several follow-
ups, his request remained unheeded. On October 3, 2007, Padillo was separated from employment due to his poor
and failing health as reflected in a Certification dated December 4, 2007 issued by the Bank. Not having received his
claimed retirement benefits, Padillo filed with the NLRC a complaint for the recovery of unpaid retirement benefits.
Petitioner’s Argument
Petitioner contends that he should be granted the recovery of unpaid retirement benefits as the reason for his
availment was due to his poor health condition.
Respondent’s Argument
The claim of petitioner for retirement benefits was not favorably acted upon for lack of any basis to grant the
same as petitioner was only fifty-five years of age when he opted for retirement.
ISSUE
Whether or not petitioner is entitled to retirement benefits due to poor health conditions but without complying
with the required age of retirement.
RULING:Petition is partly meritorious.
Rule
Under article 300 of the labor code, in the absence of any applicable agreement, an employee must (1) retire when
he is at least sixty (60) years of age and (2) serve at least (5) years in the company to entitle him/her to a retirement
benefit of at least one-half (1/2) month salary for every year of service, with a fraction of at least six (6) months be-
ing considered as one whole year. Notably, these age and tenure requirements are cumulative and non-compliance
with one negates the employee's entitlement to the retirement benefits under Article 300 of the Labor Code.
Application
In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement or any other equiv-
alent contract between the parties which set out the terms and condition for the retirement of employees, with the
sole exception of the Philam Life Plan which premiums had already been paid by the Bank. In the absence of any
applicable contract or any evolved company policy, petitioner should have met the age and tenure requirements set
forth under Article 300 of the Labor Code to be entitled to the retirement benefits provided therein. Unfortunately,
while petitioner was able to comply with the five (5) year tenure requirement — as he served for twenty-nine (29)
years — he, however, fell short with respect to the sixty (60) year age requirement given that he was only fifty-five
(55) years old when he retired. Therefore, without prejudice to the proceeds due under the Philam Life Plan, peti-
tioners' claim for retirement benefits must be denied.
Conclusion
Thus, petitioner is not entitled to the retirement benefits.
GRACE CHRISTIAN HIGH SCHOOL [GCHS], petitioner vs. FILIPINAS A. LAVANDERA, respondent
G.R. No. 177845. August 20, 2014.
FACTS:
Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher since June
1977, with a monthly salary of P18,662.00 as of May 31, 2001. On August 30, 2001, Filipinas filed a complaint for
illegal (constructive) dismissal, non-payment of service incentive leave (SIL) pay, separation pay, service allowance,
damages, and attorney's fees against GCHS and/or its principal, Dr. James Tan.
a) Petitioner’s Argument (Grace Christian High School [GCHS] – WON)
GCHS denied that they illegally dismissed Filipinas. They asserted that the latter was considered retired on May
31, 1997 after having rendered 20 years of service pursuant to GCHS' retirement plan and that she was duly advised
that her retirement benefits in the amount of P136,210.00 based on her salary at the time of retirement, i.e.,
P13,621.00, had been deposited to the trustee-bank in her name. Nonetheless, her services were retained on a yearly
basis until May 11, 2001 when she was informed that her year-to-year contract would no longer be renewed.
b) Respondent’s Argument(Lavandera – LOST)
Private Respondent alleges that on May 11, 2001, she was informed that her services were to be terminated ef-
fective May 31, 2001, pursuant to GCHS' retirement plan which gives the school the option to retire a teacher who
has rendered at least 20 years of service, regardless of age, with a retirement pay of one-half (1/2) month for every
year of service. At that time, Filipinas was only 58 years old and still physically fit to work. She pleaded with GCHS
to allow her to continue teaching but her services were terminated, contrary to the provisions of RA No.
7641, otherwise known as the "Retirement Pay Law."
The LA ruled that Filipinas was not terminated from employment but was considered retired as of May 31,
1997 after rendering 20 years of service and was only allowed by GCHS to continue teaching on a year-to-year basis
(until May 31, 2001) in the exercise of its option to do so under the aforementioned retirement plan until she was
informed that her contract would not be renewed. Nonetheless, the LA found the retirement benefits payable under
GCHS retirement plan to be deficient.
Dissatisfied, GCHS filed an appeal before the NLRC however the NLRC set aside the LA’s award and ruled
that Filipinas’ retirement pay should be computed based on her monthly salary at the time of her retirement on May
31, 1997 (P13,621.00). Moreover, it held that under Article 287 of the Labor Code,as amended by RA 7641, the
retirement package consists of 15 days salary, plus 13th month pay and SIL pay pro-rated to their one-twelfth
(1/12) equivalent.
Aggrieved, Filipinas filed a petition for certiorari before the CA and the CA affirmed the NLRC’s Decision with
modification. CA held that the Court in the case of Capitol Wireless Inc. v Sec. Confesor has simplified the compu-
tation of “1/2 month salary” by equating it to “22.5 days” which is "arrived at after adding 15 days plus 2.5 days
representing one-twelfth of the 13th month pay, plus 5 days of [SIL]." The CA further imposed legal interest at the
rate of six percent (6%) per annum on the award reckoned from the date of the filing of the illegal dismissal com-
plaint until actual payment.
Unperturbed, GCHS filed the instant petition.
ISSUE:
Whether or not the multiplier “22.5 days” should be used in computing the retirement pay differentials of Filipi-
nas.
RULING:
Yes. The Court in the case of Elegir v Philippines Airlines, Inc. recently affirmed that "one-half (1/2) month
salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay and the
remaining 5 days for [SIL]." The Court sees no reason to depart from this interpretation.
Rule:
RA 7641 which states that "an employee's retirement benefits under any collective bargaining [agreement
(CBA)] and other agreements shall not be less than those provided" under the same — that is, at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one whole year —
and that "[u]nless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen
(15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of
service incentive leaves."
The foregoing provision is applicable where:
a) There is no CBA or other applicable agreement providing for retirement benefits to employees, or
b) There is a CBA or other applicable agreement providing for retirement benefits but it is below the requirement
set by law.
Section 5.2, Rule II of the Implementing Rules of Book VI of the Labor Code, as amended, promulgated to im-
plement RA 7641, further clarifies what comprises the "1/2 month salary" due a retiring employee, to wit:
RULE II
Retirement Benefits
xxxxxxxxx
SEC. 5. Retirement Benefits. —
xxxxxxxxx
5.2 Components of One-half (1/2) Month Salary. — For the purpose of determining the minimum retire-
ment pay due an employee under this Rule, the term "one-half month salary" shall include all the fol-
lowing:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. As used herein, the term
"salary" includes all remunerations paid by an employer to his employees for services rendered during
normal working days and hours, whether such payments are fixed or ascertained on a time, task, piece
or commission basis, or other method of calculating the same, and includes the fair and reasonable val-
ue, as determined by the Secretary of Labor and Employment, of food, lodging or other facilities cus-
tomarily furnished by the employer to his employees. The term does not include cost of living allow-
ance, profit-sharing payments and other monetary benefits which are not considered as part of or inte-
grated into the regular salary of the employees.
(b) The cash equivalent of not more than five (5) days of service incentive leave;
(c) One-twelfth of the 13th month pay due the employee.
(d) All other benefits that the employer and employee may agree upon that should be included in the com-
putation of the employee's retirement pay.
Application:
In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives it the op-
tion to retire a teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-
half (1/2) month for every year of service. However, GCHS computed Filipinas' retirement pay without including
one-twelfth (1/12) of her 13th month pay and the cash equivalent of her five (5) days SIL. Thus, as provided by RA
7641, the computation of Filipinas retirement pay should include 15 days plus 2.5 days representing 1/12 of the 13th
month pay and the remaining 5 days of SIL, a total of 22.5 days.
Conclusion:
From the foregoing rules and cited jurisprudence it is clear that the “1/2 month of basic salary” in computation
for an employee’s retirement pay shall means “22.5 days” which includes 15 days salary of the employee, 2.5 days
(1/12 of 13 month pay and cash equivalent of not more than 5 days of service incentive leave.
Moreover, the Court held that the award of legal interest at the rate of 6% per annum should be reckoned from
the rendition of the LA’s decision on March 26, 2002 and not from the filing of the illegal dismissal complaint.
GOODYEAR PHILIPPINES, INC., petitioner vs. ANGUS, defendant.

G.R. No. 185449. November 12, 2014.
FACTS:
On February 5, 2002, Angus filed with the Labor Arbiter a complaint for illegal dismissal with claims for sepa-
ration pay, damages and attorney's fees against petitioners.
Angus was employed by Goodyear on November 16, 1966 and occupied the position of Secretary to the Man-
ager of Quality and Technology.
In order to maintain the viability of its operations in the midst of economic reversals, Goodyear implemented
costsaving measures which included the streamlining of its workforce. Consequently, on September 19, 2001, An-
gus received from Ramos, the Human Resources Director of Goodyear, a letter stating that her position was consi-
dered redundant and that it is to be abolished on that day, as well as, informing her of her termination effective Oc-
tober 18, 2001.
Per company practice, the company would only grant her an early retirement benefit: 47 days' pay per year of
service (which will come from the Pension Fund), fractions of 13th and 14th months pay, longevity pay, emergency
leave and any earned and unused vacation and/or sick leave.
a) Petitioner’s Arguments (Goodyear- Lost)

Petitioner points to a provision in their Collective Bargaining Agreement stating that the availment of retirement
benefits therein shall exclude entitlement to any separation pay, termination pay, redundancy pay, retrenchment pay,
or any other severance pay.
Petitioners asseverated that Angus was validly dismissed for an authorized cause; that she voluntarily accepted
her termination benefits and freely executed the corresponding quitclaim; that her receipt of early retirement benefits
equivalent to 47 days' pay for every year of service, which amount is higher than the regular separation pay, had
effectively barred her from recovering separation pay due to redundancy; and, that Section 1, Article XI of the last
company CBA supports the grant of only one benefit.
b) Respondent’s Argument (Angus- Won)

Respondent claims she is entitled to separation pay in addition to retirement benefits. She suggests she be given
a premium of additional 3 days for every year of service which is only 6.3% or a total of 50 days.
Angus claimed that her termination by reason of redundancy was effected in violation of the Labor Code
for it was not timely reported to the DOLE and no separation pay was given to her; that the separation pay to which
she is entitled by law is entirely different from the retirement benefits that she received; that nothing in the compa-
ny's Retirement Plan under the CBA, the CBA itself or the Employment Contract prohibits the grant of more than
one kind of separation pay; and, that she was only forced to sign a quitclaim after accepting her retirement benefits.
ISSUE:
Whether or not Marina is entitled to separate pay apart from her retirement benefits.
RULING:
Angus is entitled to both separation pay and early retirement benefit due to the absence of a specific provision
in the CBA prohibiting recovery of both.
Rule:
ART. 283. Closure of establishment and reduction of personnel.- The employer may also terminate the em-
ployment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking
xxx
In case of termination due to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures
or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
Application:
In the absence of an express or implied prohibition against it, collection of both retirement benefits and
separation pay upon severance from employment is allowed. This is grounded on the social justice policy that
doubts should always be resolved in favor of labor rights.
In Aquino v. National Labor Relations Commission, citing Batangas Laguna Tayabas Bus Company v. Court of
Appealsand University of the East v. Hon. Minister of Labor,the Court held that an employee is entitled to recover
both separation pay and retirement benefits in the absence of a specific prohibition in the Retirement Plan or CBA.
Concomitantly, the Court ruled that an employee's right to receive separation pay in addition to retirement benefits
depends upon the provisions of the company's Retirement Plan and/or CBA.
The Court agrees with the CA that the amount Angus received from petitioners represented only her retirement
pay and not separation pay. While it is obvious that Angus is not entitled to compulsory retirement as she has not yet
reached the age of 60, there is no denying, however, that she is qualified for early retirement. Under the provision of
the Retirement Plan of the CBA as earlier quoted, a worker who is at least 50 years old and with at least 15 years of
service, and who has been recommended by the President of the Union for early retirement and duly approved by
the Human Resources Director, shall be entitled to lump sum retirement benefits. At the time of her termination,
Angus was already 57 years of age and had been in the service for more than 34 years.
It is worthy to mention at this point that retirement benefits and separation pay are not mutually exclu-
sive.Retirement benefits are a form of reward for an employee's loyalty and service to an employerand are earned
under existing laws, CBAs, employment contracts and company policies.On the other hand, separation pay is that
amount which an employee receives at the time of his severance from employment, designed to provide the em-
ployee with the wherewithal during the period that he is looking for another employment and is recoverable only in
instances enumerated under Articles 283 and 284 of the Labor Code or in illegal dismissal cases when reinstatement
is not feasible.
CONCLUSION:
In the case at bar, Article 283clearly entitles Angus to separation pay apart from the retirement benefits she re-
ceived from petitioners.
Banco De Oro Unibank, Inc., petitioner vs.Guillermo C. Sagaysay, respondent.

G.R. No. 214961. September 16, 2015.
(Note: The principle applied in this case has been amended/repealed by RA 7641 - An Act Amending Article 287 Of
Presidential Decree No. 442, As Amended, Otherwise Known As The Labor Code Of The Philippines, By Providing
For Retirement Pay To Qualified Private Sector Employees In The Absence Of Any Retirement Plan In The Estab-
lishment)
FACTS:
On May 16, 2006, respondent Guillermo Sagaysay(Sagaysay) was hired by petitioner Banco De Oro Unibank,
Inc., (BDO) as Senior Accounting Assistant 5 in its San Jose, Nueva Ecija, branch as a result of a merger with Unit-
ed Overseas Bank (UOB), with BDO as the surviving bank.
In a letter, dated January 8 2010, BDO informed Sagaysay that, pursuant to the retirement policy of the bank
which mandated its retirement age to be sixty (60), he would be formally retired effective September 1, 2010, a few
days after his 60th birthday. The normal or compulsory retirement age of the bank was based on its retirement plan
which was implemented on July 1, 1994, Section 1, Article V of which reads:
Section 1. Normal Retirement. —
The Normal Retirement Date of each member shall be the first day of the month coincident with or next fol-
lowing his sixtieth (60th) birthday. The Member's Normal Retirement Benefit shall be a sum determined in accor-
dance with the Retirement Benefit Schedule stated in Section 4 of this Article as of his retirement date.
In an e-mail, dated July 27, 2010, Sagaysay wrote that, although the time had come that the BDO Retirement
Program would be implemented to those reaching the age of sixty (60), he requested that his services be extended.
BDO denied Sagaysay's appeal and retired him on September 1, 2010.
Sagaysay then signed the Release, Waiver and Quitclaim (quitclaim), dated October 22, 2010, for and in considera-
tion of P98,376.14. The quitclaim stated, among others, that in consideration of the foregoing payment, Sagaysay
released and discharged the bank, its affiliates and its subsidiaries from any action, suit, claim or demand in connec-
tion with his employment.
a) Petitioner’s Arguments (BDO Unibank, Inc. – Win)
BDO stressed that Sagaysay was not dismissed but was retired from the service. BDO principally argues that
the retirement plan has been valid and effective since June 1, 1994; that having been in place for such a long period,
the retirement plan is deemed to have been written into Sagaysay's employment contract, executed on May 16, 2006;
that he even asked for an extension to become eligible to avail of the benefits under the same retirement plan; and
that the 2005-2010 CBA stated, "[t]he Bank shall continue to grant retirement pay," showing that the CBA likewise
recognized the existing retirement plan.
b) Respondent’s Argument’s (Sagaysay - Lost)
Respondent claimed that despite his appeal, BDO compulsory retired him on September 1, 2010. As a result,
he and his family suffered damages in the amount of P2,225,403.00 which he would have received if he was made to
retire at the age of sixty-five (65).
Sagaysay countered that he was retired by BDO against his will; that there was no provision in any CBA that
employees who reached sixty (60) years of age could be compulsorily retired; that there was no agreement either
between Sagaysay and BDO that he would be retired upon reaching sixty (60); and that the quitclaim was invalid
because BDO took undue advantage of his situation and dire financial problems to obtain his signature therein.
ISSUE:
Whether the Retirement Plan is valid and effective and, consequently, the mandatory retirement age of 60 years
old is also binding.
Whether the execution of a release, waiver and quitclaim by respondent is valid.
RULING:
The Court finds the petition meritorious. The petition is granted.
After a judicious study of records, the Court is convinced that Sagaysay was undeniably informed and had con-
sented to the retirement plan of BDO before his compulsory retirement on September 1, 2010 based on the follow-
ing:
First, the retirement plan was established as early as July 1, 1994. The purpose of the plan was to create a BDO
employee's retirement trust fund which would provide for retirement and other benefits for all employees of the
bank. It also discussed the different benefits that an employee could be entitled to upon retirement, resignation or
separation. From its inception until his hiring, no employee had earnestly questioned the retirement plan. By then, it
was unquestionably an established policy within the BDO, applied to each and every worker of the bank.
Second, by accepting the employment offer of BDO, Sagaysay was deemed to have assented to all existing
rules, regulations and policy of the bank, including the retirement plan. Likewise, he consented to the CBAbetween
BDO and the National Union of Bank Employees Banco De Oro Chapter.
Third, on June 1, 2009, BDO issued a memorandumregarding the implementation of its retirement program,
reiterating that the normal retirement date was the first day of the month following the employee's sixtieth (60th)
birthday. By that time, Sagaysay was already an employee and he did not deny being informed of such memoran-
dum.
Lastly, perhaps the most telling detail indicative of Sagaysay's assent to the retirement plan was his e-mails to
the bank, dated July 27, 2010 and August 19, 2010. In these communications, albeit having been informed of his
upcoming retirement, Sagaysay never opposed the company's compulsory age of retirement. In fact, he recognized
that "the time has come that BDO Retirement Program will be implemented to those reaching the age of sixty (60)."
Here, the Court is of the view that the quitclaim was validly executed. For the consideration of the quitclaim,
Sagaysay received the amount of P98,376.14. As admitted by him, the amount was based on a liquidation data sheet
which showed the computation of benefits and emoluments of a rank and le employee.Understandably, the amount
given would not reflect the retirement benefits he demanded because he did not qualify under the retirement plan of
BDO for he had not completed five (5) years of service upon his compulsory retirement. Thus, the consideration
provided in the quitclaim was justified and reasonable.
Finally, on Sagaysay's request to extend his length of service despite the compulsory retirement age of sixty
(60), which was denied by BDO and eventually sparked the present controversy, the Court holds that BDO had the
management prerogative to deny the extension of service. It is important to state that upon the compulsory retire-
ment of an employee or official in the public or private service his employment is deemed terminated. The matter of
extension of service of such employee or official is addressed to the sound discretion of the employer. It is a privi-
lege only the employer can grant.
Rule:
The petition essentially centers on whether the June 1, 1994 retirement plan is valid and effective against Sa-
gaysay. To resolve this issue, a review of the relevant laws and jurisprudence regarding the compulsory retirement
age is warranted.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the for-
mer.Article 287 of the Labor Code is the primary provision which governs the age of retirement and states:
Art. 287. Retirement. — . . .
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the estab-
lishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty- five (65) years
which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said estab-
lishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for
every year of service, a fraction of at least six (6) months being considered as one whole year.
Retirement plans allowing employers to retire employees who have not yet reached the compulsory retirement
age of 65 years are not per se repugnant to the constitutional guaranty of security of tenure. By its express language,
the Labor Code permits employers and employees to x the applicable retirement age at 60 years or below, provided
that the employees' retirement benefits under any CBA and other agreements shall not be less than those provided
therein.
Jurisprudence is replete with cases discussing the employer's prerogative to lower the compulsory retirement
age subject to the consent of its employees.
Application:
In the case at bench wherein the adoption of the retirement plan came before the hiring of Sagaysay. Thus, the
present petition portrays a unique predicament on whether a retirement plan adopted before the employment of an
employee is deemed binding on the latter.
Conclusion:
Therefore, the law is very clear. Citing Art. 302 of the Labor Code PD 442, as amended and renumbered per
DOLE Department Advisory No. 1, series of 2015.
According to this article, any employee may be retired upon reaching the retirement age established in the col-
lective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned
under existing laws and any collective bargaining agreement and other agreements: Provided, however, That an em-
ployee’s retirement benefits under any collective bargaining and other agreements shall not be less than those pro-
vided herein.
PEREZ, petitioner vs. COMPARTS INDUSTRIES, INC., defendant.

G.R. No. 197557. October 5, 2016.
FACTS:
Petitioner, Perez, was an employee of the respondent, Comparts Industries, Inc. (CII). She was appointed as
Marketing Manager from 1998 up to 10 January 2009, the date when she resigned from her work.
CII has a retirement program for its managerial employees or officers covered by "Comparts Industries,
Inc. Employees Retirement Plan" (Retirement Plan) which took effect on 01 June 1999 and was amended
on 25 January 2001. Included therein are provisions relating to optional or early retirement and optional
retirement benefits.
Prior to her resignation, Perez manifested to CIIfor several attempts her intention to avail of the option-
al retirement program since she was already qualified to retire under it. However, all of her applications
were denied by CII which justified its denial by saying that, under the Retirement Plan, it has the option to
grant or deny her application for optional retirement. Considering further that it is experiencing financial cri-
sis, it has no choice but to disallow her intention.
In December 2008, when she again applied for optional retirement, she was informed by CII that it could on-
ly give her Php100,000.00 as gratuity for her twenty years of service as this was the only amount it could
afford. Perez refused the offer. Hence, she filed a Complaint with the NLRC-RAB No. VII against CII praying
for separation pay in the form of optional retirement benefits, under the Retirement Plan for CII officers or under
the Collective Bargaining Agreement (CBA) for rank-and-file employees.
a) Petitioner’s Arguments (Maureen Perez– Lost)

Perez maintains that she is entitled to separation pay: (1) primarily through the optional retirement pro-
gram under the Retirement Plan having rendered more than twenty (20) years of service to CII, (2)
through a similar optional retirement program under the CBAwhich has been likewise extended to other
managerial/middle management employees in several instances, or (3) a retrenchment program undertaken by
CII because of the global financial crisis.
She contends that as she had already completed the minimum number of years to avail of the optional
retirement, she has acquired a vested right to her optional retirement benefits. Further, she alternatively ar-
gues that she is entitled to payment of optional/early retirement benefits based on company practice.
b) Respondent’s Argument’s (Comparts Industries, Inc.- Won)

CII contends that under the CII Retirement Plan which is the plan applicable to Perez as a managerial
employee, the allowance and grant of optional retirement benefits to Perez must be with the consent of CII.
It therefore has the authority to grant or dent applications for optional retirement benefits. Further, CIIcontends that
it has been so affected by the global crisis and has been suffering financial losses which leave them with no
choice but to deny Perez’s application.
ISSUE:
Whether or not Perez is entitled to optional retirement benefits
RULING:
The petition for review was denied
Rule:
ART. 287 (Retirement) of the Labor Code providesthat the age of retirement is primarily determined by
the existing agreement or employment contract. In the absence of such agreement, the retirement age shall
be fixed by law. Under theaforecited law, the mandated compulsory retirement age is set at 65 years, while
the minimum age for optional retirement is set at 60 years.
A Retirement Plan in a company partakes the nature of a contract, with the employer and the em-
ployee as the contracting parties. It creates a contractual obligation in which the promise to pay retirement
benefits is made in consideration of the continued faithful service of the employee for the requisite period.
Being a contract, the employer and employee may establish such stipulations, clauses, terms and conditions
as they may deem convenient.
In the cases of Eastern Shipping Lines, Inc. v. Ferrer D. Antonioand Eastern Shipping Lines, Inc. v.
Sedan,the Supreme Court upheld a stipulation on optional retirement that it is the employer's exclusive pre-
rogative and sole option to retire any covered employee.
Further, to counter petitioner’s argument on entitlement of optional/early retirement benefits based on company
practice, the Supreme Court used as basis the case ofMetropolitan Bank and Trust Company v. NLRC, which
provides that, “to be considered a company practice, the giving of the benefits should have been done over
a long period of time, and must be shown to have been consistent and deliberate.”
Application:
As stipulated in the Retirement Plan, it is not enough that an employee of CII who wants to optionally
retire meets the conditions for optional retirement. CII has to give its consent for the optional retirement to
operate. In this case, Perez's application for optional retirement was denied several times as CII still needs
her services. Perez's unilateral act of retiring without the consent of CII does not bind the latter with the
provisions of the Retirement Plan. Therefore, CII is not liable to give Perez the optional retirement benefits
provided therein.
Further, Perez’sargument that she is entitled to optional retirement benefits based on company practice is de-
feated because of her own assertions: she admits that four (4) of the employees were approved optional re-
tirement benefits based on the CBA prior to the effectivity of the Retirement Plan in 1999, and four (4)
other employees actually received separation pay caused by their retrenchment. These isolated and random
payments to managerial employees of either optional retirement benefits under the CBA or separation pay
due to retrenchment cannot be deemed as company practice that would render the withholding of the bene-
fit to Perez as a diminution of benefits.
Conclusion:
(1) Perez is not entitled to optional retirement benefits without the consent thereto of CII to the grant under
the Retirement Plan; (2) neither is she entitled to the same benefits under the CBA where there is no
established company practice on such benefit
CATOTOCAN v. LOURDES SCHOOL

G.R. No. 213486, April 26, 2017
FACTS:
In 1971, Catotocan was hired by Lourdes School as its music teacher. By 2005-2006, she reached 35 years of
service. The school, LSQC, has a retirement plan upon reaching 60 years of age or separation pay depending years
of service. LSQC, in 2003, modified its retirement plan to 60 years of age or upon reaching 30 years of service, whi-
chever comes first.
Catotocan, with other employees, appealed to the school regarding the latest retirement policy but to no avail. A
series of communications followed but they failed to reach an agreement on their appeal of the new policy. They
raised the issue to the DOLE-NCR and a meeting between the employees concerned and the school officials ensued.
The complainants asked if they can be compelled by the school to retire, which was then answered by Atty. Villaflor
of DOLE-NCR that such would tantamount to constructive dismissal. The school officials did not attend on the
second meeting.
In 2005, Catotocan received a letter that she will be retired by the end of the school year for having served at
least 30 years. She was 56 years old then. In 2006, she was retired after 35 years of service. Upon receiving letter,
she submitted her “Letter of Intent” to be rehired on a contractual basis. She was rehired in 2007 and 2008 until her
re-application was denied in 2009.
She filed for an illegal dismissal complaint and monetary claims against LSQC in the Labor Arbiter.

The Labor Arbiter dismissed Catotocan'scomplaint for lack of merit. The Labor Arbiter pointed out that, al-
though there were exchanges of communications between her and respondents regarding her earlier opposition to the
school's retirement policy, her subsequent actions, however, such as opening her own individual savings account
where the retirement benefits were deposited and credited thereto, her subsequent withdrawals therefrom, her appli-
cation for contractual employment after her retirement, constituted implied consent to the assailed addendum in
LSQC's retirement policy and, in effect, abandoned her objection thereto.
NLRC DECISION
The NLRC affirmed the Labor Arbiter's decision. It held that Catotocan performed all the acts that a retired em-
ployee would do after retirement under the new school policy. These were voluntary acts and she cannot be consi-
dered to have been forced to retire or to have been illegally dismissed. Catotocan moved for reconsideration, but the
same was denied in a Resolution dated May 13, 2011.
A motion for reconsideration was filed by Catotocan but the same was denied by the NLRC.

The CA denied the petition of Catotocan for lack of merit. The appellate court agreed that while Catotocan was
initially opposed to the idea of her retirement at an age below 60 years, her subsequent actions, however, after her
retirement are tantamount to consent to the addendum to the school's retirement policy of retiring from service upon
serving the school for at least thirty (30) continuous years.
ISSUE
 Whether or not the retirement policy is valid and not against the law.
 Whether or not the receipt of the retirement benefits will not bar the illegal dismissal complaint.
 Whether or not there was an illegal dismissal of the employee.
RULING
The petition is denied. Retirement is a bilateral act of the parties, a voluntary agreement between the employer
and the employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the
former. Under this provision, the retirement age is primarily determined by the existing agreement or employment
contract. Only in the absence of such an agreement shall the retirement age be fixed by law (60-65 years). Thus,
retirement plans, as in LSQC's retirement plan, allowing employers to retire employees who have not yet reached
the compulsory retirement age of 65 years are not per se repugnant to the constitutional guaranty of security of te-
nure. By its express language, the Labor Code permits employers and employees to fix the applicable retirement age
at 60 years or below, provided that the employees' retirement benefits under any CBA and other agreements shall
not be less than those provided therein.
Here, the CA and the NLRC did not gravely abuse its discretion in finding that LSQC did not illegally dismiss
Catotocan from service. While it may be true that Catotocan was initially opposed to the idea of her retirement at an
age below 60 years, it must be stressed that Catotocan's subsequent actions after her "retirement" are actually tanta-
mount to her consent to the addendum to the LSQC's retirement policy of retiring her from service upon serving the
school for at least thirty (30) continuous years, to wit: (1) after being notified that she was being retired from service
by LSQC, she opened a savings account with BDO, the trustee bank; (2) she accepted all the proceeds of her retire-
ment package: the lump sum and all the monthly payments credited to her account until June 2009; (3) upon accep-
tance of the retirement benefits, there was no notation that she is accepting the retirement benefits under protest or
without prejudice to the filing of an illegal dismissal case. We also did not find an iota of evidence showing that
LSQC exerted undue influence against Catotocan to acquire her consent on the school's retirement policy. Suffice it
to say that from the foregoing, Catotocan performed all the acts to ratify her retirement in accordance with LSQC's
retirement policy.
Although there was an exchange of communications about the retirees' objection to the new retirement policy
years earlier, eventually, appellantassented thereto when she opened a savings account with BDO, withdrew themo-
ney for her personal use and applied again for a teaching job with theschool.
While it is true that the acceptance of retirement pay and her eventual appointment as Guidance Counselor did
not amount to a waiver to contest her alleged forced retirement or illegal dismissal, the voluntary nature of her acts
from June 2006 up to June 2009 clearly belies her claim of illegal dismissal.
Obviously, appellant filed this complaint claiming illegal dismissal after she had benefited from the proceeds of
her retirement in June 2006, and received salaries as Guidance Counselor of the appellee school for the subsequent
three (3) years which ended in 2009. By her actuations, she is already estopped from questioning the legality of the
new retirement policy.
The privilege of being re-hired after retirement by virtue of the "Contractual Employment of Retired Em-
ployees" provision of LSQC's retirement policy emphasized that the re-hiring was exclusive only for those em-
ployees who has n availed of the retirement benefits or who has been retired by the school but who has not yet
reached 65 years of age. It must be stressed also that Catotocan's repeated application and availment of the re-hiring
program of LSQC for qualified retirees for 3 consecutive years is a supervening event that would reveal that she has
already voluntarily and freely signified her consent to the retirement policy despite her initial opposition to it
APPLICATION
Retirement is a bilateral agreement between the parties, and in the absence of a retirement plan, the provisions
of the law will take in. Age in the retirement plan may be set by the employer and accepted by the employee.
Subsequent supervening events that led to the acceptance of a retirement, despite initial opposition, cannot be
used against the employer as illegal dismissal. Benefiting from the proceeds of retirement and consequently follow-
ing the employer’s policy on retirement (and rehired in this case) will qualify as acceptance of the policy.
CONCLUSION
There was no illegal dismissal since Catotocan has impliedly accepted the retirement by benefiting from its
proceeds and by accepting the subsequent policy to be rehired into the school. The school policy, even if it may re-
tire employees not yet reaching the age suggested by law, is still valid considering that retirement is a bilateral
agreement covered in the employment contract.
PHILIPPINE AIRLINES, INC., petitioner vs. ARJAN T. HASSARAM, respondent

G.R. No. 217730. June 5, 2017
FACTS:
Hassaram filed a complaint against PAL for illegal dismissal and the payment of retirement benefits, damages,
and attorney's fees. He claimed that he had applied for retirement from PAL in August 2000 after rendering 24 years
of service as a pilot, but that his application was denied. Instead, PAL informed him that he had lost his employment
in the company as of 9 June 1998, in view of his failure to comply with the Return to Work Order issued by the Sec-
retary of Labor against members of the Airline Pilots Association of the Philippines (ALPAP) on 7 June 1998.
Before the Labor Arbiter (LA), Hassaram argued that he was not covered by the Secretary's Return to Work
Order; hence, PAL had no valid ground for his dismissal. He asserted that on 9 June 1998, he was already on his
way to Taipei to report for work at Eva Air, pursuant to a four-year contract approved by PAL itself. Petitioner fur-
ther claimed that his arrangement with PAL allowed him to go on leave without pay while working for Eva Air, with
the right to accrue seniority and retire from PAL during the period of his leave.
In its Position Paper, PAL contended that (a) the LA had no jurisdiction over the case, which was a mere off-
shoot of ALPAP's strike, a matter over which the Secretary of Labor had already assumed jurisdiction; (b) the Com-
plaint should be considered barred by res judicata, forum shopping, and prescription; (c) the case should be sus-
pended while PAL was under receivership; and (d) if at all, Hassaram was entitled only to retirement benefits of
P5,000 for every year of service pursuant to the Collective Bargaining Agreement (CBA) between PAL and AL-
PAP.
The LA awarded retirement benefits and attorney's fees to Hassaram. The former explained that Hassaram did
not defy the Return to Work Order, as he was in fact already on leave when the order was implemented. As to the
computation of benefits, the LA ruled that Article 287 of the Labor Code should be applied, since the statute pro-
vided better benefits than the PAL-ALPAP CBA. Hassaram's other claims, on the other hand, were dismissed.
The NLRC set aside the ruling of the LA on account of Hassaram's receipt of retirement benefits under the
Plan. This payment, according to the NLRC, was sufficient to discharge his claim for retirement pay.
Hassaram sought reconsideration of the NLRC Resolution, but his motion was denied. He then elevated the
matter to the CA via a Petition for Certiorari.
The CA issued the assailed Decision reversing the NLRC and reinstating the ruling of the LA. The appellate
court declared that the funds received under the Plan were not the retirement benefits contemplated by law. Hence, it
ruled that Hassaram was still entitled to receive retirement benefits in the amount of P2,111,984.60 pursuant to Arti-
cle 287 of the Labor Code.
ISSUES:
Whether the amount received by Hassaram under the Plan should be deemed part of his retirement pay.
Whether Hassaram is entitled to receive retirement benefits under Article 287 of the Labor Code.
RULING:
On the first issue, the amount received by Hassaram under the PAL Pilots' Retirement Benefit Plan must be
considered part of his retirement pay. It is clear from the provisions of the Plan that it is the company that contrib-
utes to a "retirement fund" for the account of the pilots. These contributions comprise the benefits received by the
latter upon retirement, separation from service, or disability.
Considering that the very same retirement plan is involved in this petition, we adopt the pronouncements in the
above cases. We therefore rule that the amount of P4,456,817.75 received by Hassaram from the PAL Plan formed
part of his retirement pay.
On the second issue, Hassaram's retirement pay should be computed on the basis of the retirement plans pro-
vided by PAL. Bearing in mind our conclusion that the sum received by Hassaram from the Plan formed part of his
retirement pay, we now proceed to determine whether his retirement pay must be computed on the basis of Article
287, or on the retirement plans provided by PAL.
It is clear from the records that Hassaram is a member of ALPAP and as such, is entitled to benefits from both
the retirement plans under the 1967 PAL-ALPAP CBA and the Plan.
Parenthetically, we note the declaration of the CA that the agreement had already expired two years before
Hassaram's claim. This declaration appears to be inaccurate, as the RTC and the CA themselves declared that the
CBA expired only on 31 December 2000, 53 while Hassaram had applied for retirement earlier, on 31 August 2000.
54 The provisions of the CBA are therefore applicable as they would allow Hassaram to claim the following benefits
under two separate plans provided under the CBA: (a) the amount of P5,000 for every year of service under the
PAL-ALPAP Retirement Plan; and (b) an equity equivalent to 240% of his gross monthly salary for every year of
employment pursuant to the Plan.
In contrast, Article 287 would entitle a retiring pilot to the equivalent of only 22.5 days of his monthly salary
for every year of service. This scheme was thus considered by the Court as inferior to the retirement plans granted
by PAL to the latter's pilots.
Following the above pronouncement, we therefore declare that Hassaram's retirement benefits must be com-
puted based on the retirement plans of PAL, and not on Article 287 of the Labor Code.
In view of the undisputed fact that Hassaram has received his benefits under the Plan, 56 he is now entitled to
claim only his remaining benefits under the CBA, i.e., the amount of P120,000 (24 years x P5,000) for his 24 years
of service to the company.

Understanding Employer-Employee Relationship

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GENERAL PRINCIPLES 1

SONZA, petitioner, vs . ABS-CBN, respondent.

a) Petitioner’s Arguments (SONZA – Lost)

b) Respondent’s Argument’s (ABS-CBN - Win)

LAZARO, petitioner vs. SOCIAL SECURITY COMMISION defendant.

PHIL. GLOBAL COMMUNICATION, petitioner VS. DE VERA, defendant

3. the power of dismissal;

ABS-CBN Broadcasting Corp.,petitioner vs. Nazareno, et al.,respondent.

b) Respondent’s Arguments (Nazareno – Win)

ANGELINA FRANCISCO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, KASEI

a) Petitioner’s Arguments (Angelina Francisco – Win)

b) Private Respondent’s Argument’s (Kasei Corporation - Lost)

NOGALEZ ET AL VS CAPITOL MEDICAL CENTER

1) Whether CMC is vicariously liable for the negligence of Dr. Estrada;

Dr. Estrada is not an employee of CMC, but an independent-contractor.

Coca-Cola Bottlers Phils., Inc./Eric Montinola, Managerpetitionersvs.Dr. Dean N. Climacoet.a, respondent.

a) Petitioner’s Arguments (Coca-Cola Bottlers Phils., Inc. – Win)

b) Respondent’s Argument’s (Dr. Dean N. Climaco - Lost)

CALAMBA MEDICAL CENTER, INC. , petitioner vs. NLRC, ET AL, defendant.

a) Petitioner’s Arguments (Calamba Medical Center, Inc. – Lost)

Petitioner, et.al’s contention:

GREGORIO V. TONGKO, petitioner,

In the Agreement, it is provided that:

SEMBLANTE et al. vs. CA, et al.

The CA upheld the NLRC decision.

Ruling: Petition denied.

Ruling of Lower Courts:

CESAR C. LIRIO, petitioner vs. WILMER D. GENOVIA, respondent

a) Petitioner’s Arguments (Cesar C. Lirio – Lost)

b) Respondent’s Arguments (Wilmer D. Genovia – Won)

Jao vs. BCC Products Sales Inc.

circumstances showing him to be the employee of SFC, not of BCC.

LEGEND HOTEL, petitioner vs. REALUYO defendant.

The New Philippine Skylanders, Inc., petitioner vs. Dakila, respondent

Tesoro, et al., petitioner vs. Manila Retreaders, Inc., respondent.

a) Petitioners’ Arguments (Tesoro, et al. – Lost)

b) Respondent’s Arguments (Metro Manila Retreaders, Inc. – Win)

ROYALE HOMES MARKETING CORPORATION, petitioner, vs. FIDEL P. ALCANTARA [deceased],

a) Petitioner’s Arguments (Royale Homes – Win)

b) Private Respondent’s Argument’s (Fidel Alcantara - Lost)

FUJI TELEVISION NETWORK, INC., petitioner, vs. ARLENE S. ESPIRITU, respondent.

The petition for review filed by Fuji is dismissed.

Article 280 of the Labor Code provides that:

An employment shall be deemed to be casual if it is not covered by the preceding para-

their employment relationship, a day certain being understood to be "that

Cabaobas et al., petitionersvs.Pepsi Cola et.al, respondent.

b) Respondent’s Argument’s (Pepsi-Cola Products Philippines, Inc. - Win)

The Court rules in the affirmative: Principle of Stare Decisis

b.) Respondent’s Aruguments ( ABS-CBN Corporation and Amalia Villafuerte – Lost )

SOCIAL SECURITY SYSTEM, petitioner, vs. DEBBIE UBAÑA,respondent

LA rendered a Decision dismissing the case for lack of merit

CA rendered its assailed Decision reversing the NLRC.

G.R. No. 118978. May 23, 1997

Ruling of the Lower Courts:

a) Petitioner’s Arguments ( Tecson – Lost)

b) Respondent’s Argument’s (Glaxo – Win )

STAR PAPER CORPORATION vs. SIMBOL

a) Petitioner’s Arguments (Star Paper– Lost)

b) Respondent’s Argument’s (Simbol, Comia and Estrella- Win)

DEL MONTE PHILIPPINES Inc., petitioner vs. LOLITA VELASCO, defendant.

a) Petitioner’s Arguments(Del Monte Phils. Inc. – Lost)

b) Respondent’s Argument’s (Lolita Velasco - Won)

ARMANDO G. YRASUEGUI,petitioner vs. PHILIPPINE AIRLINES, INC.,respondent