Labor Guims

VOLUME 1 - LABOR STANDARDS
SECOND YEAR LAW
FIRST SEMESTER, A.Y. 2019 – 2020
A Case Digest Compilation
Presented to
Atty. Jefferson M. Marquez
School of Law and Governance
University of San Carlos
Cebu City, Philippines
By:
ISABEL LUCHIE C. GUIMARY

JD - NT 2
EH 308
October 201
I. THE APPLICABLE LAWS
II. BASIC PRINCIPLES
CASES:
1. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004

2. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]
3. Phil. Global Communication vs. De Vera, 459 SCRA 260 [2005]
4. ABS-CBN vs. Nazareno, G.R. No. 164156, Sept. 26, 2006
5. Francisco vs. NLRC, 500 SCRA 690 [2006]
6. Nogales et al., vs. Capitol Medical Center et al., G.R. No. 142625, December
19, 2006
7. Coca-Cola Bottlers Phils., vs. Dr. Climaco, G.R. No. 146881, February 15,
2007
8. Calamba Medical Center vs. NLRC et al., G.R. No. 176484, Nov. 25, 2008
9. Escasinas et al., vs. Shangri-las Mactan Island Resort et al., G.R. No. 178827,
March 4, 2009
10. Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al., G.R. No.
167622, January 25, 2011, En Banc, see June 29, 2010 Main Decision
11. Semblante et al., vs. Court of Appeals, et al., G.R. No. 196426, August 15,
2011
12. Bernarte vs. Phil. Basketball Association et al., G.R. No. 192084, September
14, 2011
13. Lirio vs. Genovia, G.r. No. 169757, November 23, 2011
14. Jao vs. BCC Products Sales Inc. G.R. No. 163700, April 18, 2012
15. Legend Hotel (Manila) vs. Realuyo G.R. No. 153511, July 18, 2012
16. The New Philippine Skylanders, Inc., vs. Dakila, G.R. No. 199547, Sept. 24,
2012
17. Tesoro et al., vs. Metro Manila Retreaders Inc., et al., GR No. 171482, March
12, 2014
18. Royale Homes Marketing Corp., vs. Alcantara, GR No. 195190, July 28, 2014
19. Fuji Television Network Inc. vs. Espiritu, GR No. 204944-45, December 3,
2014
20. Cabaobas et al., vs. Pepsi Cola GR No.176908, March 25, 2015
21. Begino et al., vs. ABS-CBN Corp., GR No. 199166, April 20, 2015
22. Social Security System vs. Ubana, GR No. 200114, Aug 25, 2015
23. Century Properties Inc. vs. Babiano, et al., GR No. 220978, July 5, 2016
24. Lu vs. Enopia, GR No. 197899, March 6, 2017
25. Apelanio vs. Arcanys, Inc. GR No. 227098, November 14, 2018
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26. Dr. Loreche-Amit vs. Cagayan De Oro Medical Center, GR No. 216635, June
3, 2019
27. Fernandez vs. Kalookan Slaughter House Inc., GR No. 225075, June 19, 2019
III. HIRING OF EMPLOYEE
CASES:
1. PT&T vs. NLRC, 272 SCRA 596 [1997]

2. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils., G.R. No.
162994, Sept. 17, 2004
3. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
4. Del Monte Phils vs. Velasco, G.R. No. 153477, March 6, 2007
5. Yrasuegui vs. Phil Air Lines, G.R. No. 168081, October 17, 2008
IV. WAGES & WAGE RATIONALIZATION ACT

IV-A. VIOLATION OF WAGE ORDER
CASES:
1. S.I.P. Food House et al., vs. Batolina, GR No. 192473, Oct 11, 2010
2. SLL International Cables Specialist vs. NLRC, GR No. 172161, March 2, 2011
3. Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. G.R. No. 176985, April 1, 2013
4. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc. -Cebu Plant,
G.R. No. 198783, April 15, 2013
5. The National Wages & Productivity Commission et al., vs. The Alliance of
Progressive Labor et al., GR No. 150326, March 12, 2014
6. David/Yiels Hog Dealer vs. Macasio, GR No. 195466, July 2, 2014
7. Our Haus Realty Development Corp., vs. Parian et al., GR No. 204651,
August 6, 2014
8. Milan et al., vs. NLRC GR No. 202961, February 4, 2015
9. Toyota Pasig Inc vs. De Peralta, GR No. 213488, Nov 7, 2016
10. Soriano et al., vs. Secretary of Finance, G.R. Nos. 184450, 184508, 184538,
185234, January 24, 2017, En Banc
11. CCBPI vs. Iloilo Coca-Cola Plant Employees Union, GR No. 195297,
December 5, 2018
12. Pablico et al., vs. Cerro/Master Pab Resto Bar, GR No. 227200, June 10, 2019
Page | 2
V. WAGE ENFORCEMENT AND RECOVERY
CASES:
1. Tiger Construction and Development Corp vs. Abay et al., GR No. 164141,
Feb. 26, 2010
2. People’s Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al., GR No.
179652, March 6, 2012 Resolution on the main Decision of May 8, 2009
3. Superior Packaging Corp., vs. Balagsay et al., G.R. No. 178909, October 10,
2012
4. Department of Labor & Employment vs. Kentex Manufacturing Corp. GR
No. 253781, July 8, 2019
VI. WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING

WAGES
CASES:
1. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010
2. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No.
188169, November 28, 2011
3. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013
4. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No.
191714, Feb 26, 2014
5. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff
Asso., GR No. 181806, March 12, 2014
6. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7,
2014, citing2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs.
Montecillo
7. Netlink Computer Inc. vs. Delmo, GR No. 160827, June 18, 2014
8. PLDT vs. Estranero, GR No. 192518, October 15, 2014
9. Milan et al vs. NLRC, GR No. 202961, Feb. 4, 2015
10. Galang et al., vs. Boie Takeda Chemicals Inc. et al., GR No. 183934, July 20,
2016
11. Coca-Cola Bottlers Phils Inc., vs. CCBPI Sta Rosa Plant Employees Union,
GR No. 197494, March 25, 2019
VII. PAYMENT OF WAGES

CASES:
Page | 3
1. Congson vs. NLRC, 243 SCRA 260 [1995]
2. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]
3. Heirs of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006
VIII. CONDITIONS OF EMPLOYMENT
CASES:
1. San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997]
2. Simedarby vs. NLRC, 289 SCRA 86 [1998]
3. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]
4. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10,
2007
5. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
6. Dasco et al., vs. Phiktranco Service Enterprise, GR No. 211141, June 29, 2016
7. HSY Marketing Ltd., Villatique, GR No. 219569, August 17, 2016
8. A. Nate Casket Maker et al., vs. Arango, et al., GR No. 192282, October 5,
2016
IX. MINIMUM LABOR STANDARD BENEFITS

CASES:
1. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002
2. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002
3. Lambo vs. NLRC, 317 SCRA 420
4. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004
5. Asian Transmission vs. CA, 425 SCRA 478 [2004]
6. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005
7. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005
8. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006
9. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU,
G.R. No. 1577745, October 19, 2007, citing Wellington Investment vs.
Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June
10, 2004
10. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing
Cagampan vs. NLRC, 195 SCRA 533 [1998]
11. PNCC Skyway Traffic Management and Security Division Workers
Organization, GR No. 171231, Feb. 17, 2010
12. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, Sept.
12, 2012
Page | 4
13. Robina Farms Cebu vs. Villa, GR No. 175869, April 18, 2016
14. Dasco et al., vs. Philtranco Service Enterprise, GR No. 211141, June 29, 2016
15. HSY Marketing Ltd., vs. Villastique, GR No. 219569, Aug. 17, 2016
16. Dela Salle Araneta University vs. Bernardo, GR No. 190809, February 13,
2017
X. Other Special Benefits
CASES:
1. Reyes vs. NLRC et al., G.R. No. 160233, August 8, 2007, citing Boie Takeda
Chemicals vs. Dela Serna, 228 SCRA 329 [1993] & Phil. Duplicators vs.
NLRC, 241 SCRA 380 [1995]
2. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa
Arco Metal-NAFLU, G.R. No. 170734, May 14, 2008
3. Universal Robina Sugar Milling Corp. vs. Caballeda, G.R. No. 156644, July
28, 2008
4. Cercado vs. Uniprom, Inc. G.R. No. 188154, October 13, 2010
5. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al., G.R. No. 198662,
September 12, 2012
6. Padillo vs. Rural bank of Nabunturan Inc. G.R. No. 199338, January 21, 2013
7. Grace Christian High School vs. Lavandera, G.R No. 177845, August 20,
2014
8. Goodyear Philippines Inc. vs. Angus, G.R No. 185449, November 12, 2015
9. Banco De Oro Unibank vs.Sagaysay,G.R No. 214961, September 16, 2015
10. Perez vs. Camparts Industries Inc. GR No. 197557, October 5, 2016
11. Dela Salle Araneta University vs. Bernardo, GR No. 214961, September 16,
2015
12. Catotocan vs. Lourdes School of Quezon City G.R No. 213486, April 26, 2017
13. Philippine Airlines vs. Hassaram, G.R. No. 217730, June 5, 2017
14. Laya vs. Court of Appeals, GR No. 205813, January 10, 2018
15. Maria De Leon Transportation Inc., et al., vs. Macuray, GR No. 21494
XI. JURISDICTION OF THE LABOR ARBITER
XII. 2011 NLRC RULES OF PROCEDURE
CASES:
1. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012
2. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012
3. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012
4. McBurnie vs. Ganzon, G.R. No. 178034/1718117, October 17, 2013, En banc
Page | 5
5. Indophil Textile Mills Inc. vs. Engr. Adviento, G.R. No. 171212, August 4,
2014
6. Manila Mining Corp., vs. Amor G.R. No. 182800, April 20, 2015, citing 2015
Mcburnie
7. Toyota Alabang Inc vs. Games, G.R. No. 206612, Aug 17, 2015
8. Social Security System vs. Ubana, G.R. No. 200114, Aug 25, 2015
9. ILaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils, G.R.
No. 198675, Sept 23, 2015
10. Quantum Foods, Inc. vs. Esloyo, G.R. No. 213696, December 9, 2015, citing
2015 Mcburnie
11. Dela Rosa Liner Inc et vs. Borela et. al. G.R. No. 207286, July 29, 2016
12. Fontana Development Corp., vs. Vukasinovic, G.R. No. 222424, September
21, 2016
Table of Contents
I. THE APPLICABLE LAWS ......................................................................................... 9
II. BASIC PRINCIPLES ................................................................................................. 9
III. HIRING OF EMPLOYEE ...................................................................................... 71
Page | 6
IV. WAGES & WAGE RATIONALIZATION ACT ............................................... 81
IV-A. VIOLATION OF WAGE ORDER ................................................................... 81
V. WAGE ENFORCEMENT AND RECOVERY ................................................... 111

WAGES ......................................................................................................................... 120
VII. PAYMENT OF WAGES ..................................................................................... 144
VIII. CONDITIONS OF EMPLOYMENT .............................................................. 149
IX. MINIMUM LABOR STANDARD BENEFITS................................................ 164
X. OTHER SPECIAL BENEFITS .............................................................................. 198
XI. JURISDICTION OF LABOR ARBITER ........................................................... 226
XII. 2011 NLRC RULES OF PROCEDURE ............................................................. 226
I. THE APPLICABLE LAWS

II. BASIC PRINCIPLES
JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING

CORPORATION, respondent.
GR No. 138051, June 10, 2004
FACTS
Page | 7
In May 1994, ABS-CBN signed an agreement with Mel and Joey
Management and Developments Corporation (MJMDC), a television program.
Referred to in the Agreement as “Agent”, MJMDC agreed to provide Sonza’s
services exclusively to ABS-CBN as talent for radio and television. ABS-CBN
agreed to pay Sonza’s services a monthly talent fee of P310, 000 for the first year
and P317,000 for the second and third year of the agreement.
On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President

Lopez stating that he will irrevocably resign in view of the recent events
concerning his program and career, that he is waiving and renouncing recovery of
the remaining amount stipulated in the Agreement, but reserves the right to seek
recovery of the other benefits under said agreement.
On April 30, 1996, Sonza filed a complaint against ABS-CBN before the
Department of Labor and Employment, NCR alleging that ABS-CBN did not pay
his salary, separation pay, service incentive leave, 13th month pay , signing bonus,
travel allowance and amounts due under the Employees Stock Option Plan
(ESOP). ABS-CBN moved for the dismissal of the complaint on the ground that
there was no employer-employee relationship between them. ABS-CBN insists
that Sonza was an independent contractor.
ISSUE: Whether SONZA is an employee of ABS-CBN or an independent

contractor.
SUPREME COURT RULING
The Supreme Court ruled that SONZA is not an employee of ABS-CBN but
an independent contractor.
The existence of an employer-employee relationship could be established if

the following elements are present:
a) The selection and engagement of the employee;

b) The payment of wages;
c) The power of dismissal and;
d) The employee’s power to control the employee on the means and
methods by which the work is accomplished.
The last element (control test) is the most important element.
Independent contractors often present themselves to possess unique skills,

expertise or talent to distinguish them from other employees. The respondent
Page | 8
corporation specifically selects and hires Sonza because of his unique skills and
talent and celebrity status not possessed by ordinary employees.
With regard to the payment of wages, all the talent fees and benefits paid
to Sonza were the result of negotiations that led to the agreement. If petitioner
were an employee, there would be no need for the parties to stipulate on benefits
which the law automatically incorporates into ever employer-employee contract.
During the life of the agreement, respondent agreed to pay Sonza’s talent
fees as long as “agent and Sonza shall faithfully and completely perform each
condition of their agreement.” Even if it suffered severe business losses,
respondent could not retrench Sonza because it remained obligated to pay his’
talent fees during the life of the agreement. This indicates an independent
contractual relationship.
Applying the control test in the case at bar, the Court found that Sonza is
not an employee but an independent contractor. First, ABS-CBN engaged Sonza’s
services specifically to co-host the “Mel and Jay” program. ABS-CBN did not
assign any other work to Sonza. To perform his work, Sonza only needed his skills
and talent. Sonza delivered his lines appeared on the television and sounded on
radio, all outside the control of ABS-CBN. Sonza did not have to work eight hours
a day. The Agreement required Sonza to attend only rehearsals and tapings. ABS-
CBN could not dictate the contents of Sonza’s script. Sonza had a free hand on
what to say or discuss in his shows. Clearly, ABS-CBN did not exercise control
over the means and methods of performance of Sonza’s work.
ANGELITO L. LAZARO, Proprietor of Royal Star Marketing, petitioner, vs.

SOCIAL SECURITY COMMISSION, ROSALINA LAUDATO, SOCIAL
SECURITY SYSTEM and THE HONORABLE COURT OF APPEALS,
respondents.
[G. R. No. 138254 July 30, 2004]
FACTS
Page | 9
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. 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, Laudato could not be deemed an employee of Royal Star while

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 coverage or remit
Laudato’s social security contributions.
ISSUE: Whether respondent is an employee, which entitles her to be under the

coverage of the Social Security Act.
The Supreme Court held that Laudato is an employee of Royal Star

Marketing. The fact that Laudato was paid by way of commission does not
preclude the establishment of an employer-employee relationship. It doesn’t even
follow that a person who does not observe normal hours of work cannot be
deemed an employee.
The relevant factor remains whether the "employer" controls or has

reserved the right to control the "employee" not only as to the result of the work
to be done but also as to the means and methods by which the same is to be
accomplished. As emphasized by SSC, Laudato was a sales supervisor and not a
mere agent. As such, Laudato oversaw and supervised the sales agents of the
company, and thus was subject to the control of management as to how she
implements its policies and its end results.
The finding of the SSC that Laudato was an employee of Royal Star is
supported by substantial evidence such as the cash vouchers issued by Royal Star
to Laudato, calling cards of Royal Star denominating Laudato as a "Sales
Supervisor" of the company, and Certificates of Appreciation issued by Royal Star
to Laudato in recognition of her unselfish and loyal efforts in promoting the
Page | 10
company. On the other hand, Lazaro has failed to present any convincing contrary
evidence, relying instead on his bare assertions. Hence, the Supreme Court denied
the petition and affirmed the decision of CA.
PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs. RICARDO

DE VERA, respondent.
[G.R. No. 157214 June 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 proposal 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 premises.
On January 1997, de Vera filed a complaint for illegal dismissal before the
NLRC, alleging that he had been actually 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 the 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 relationship.
Page | 11
ISSUE: Whether an employee-employer relationship exists between Philcom and
De Vera.
The Supreme Court disagreed with CA and sustained the decision of the
Labor Arbiter that De Vera is not an employee of Philcom, but an independent
contractor.
The four-fold test is wanting in this case. It was De Vera who sets the
parameters of what his duties would be in offering his services to petitioner. From
the time he started to work with petitioner, he never was included in its payroll;
was never deducted any contribution for remittance to the Social Security System
(SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding
tax for his professional fee. An ordinary employee would consider the SSS
payments important and thus make sure they would be paid. De Vera never
bothered to ask the respondent to remit his SSS contributions. This clearly shows
that the complainant never considered himself an employee of PHILCOM. It was
also noted that the power to terminate the parties’ relationship was mutually
vested on both. Either may terminate the arrangement at will, with or without
cause.
Moreover, there is no element of control. PHILCOMM had no control over

the means and methods by which De Vera went about performing his work. De
Vera could even embark in the private practice of his profession. With the
recognition of the fact that petitioner consistently engaged the services of
respondent on a retainer basis, as shown by their various "retainership contracts",
so can petitioner put an end, with or without cause, to their retainership agreement
as therein provided.
ABS-CBN BROADCASTING CORPORATION, petitioner, vs. MARLYN

NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE
LERASAN, respondents.
[G.R. No. 164156 September 26, 2006]
FACTS
Page | 12
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the
broadcasting business and owns a network of television and radio stations, whose
operations revolve around the broadcast, transmission, and relay of
telecommunication signals. It sells and deals in or otherwise utilizes the airtime it
generates from its radio and television operations. It has a franchise as a
broadcasting company, and was likewise issued a license and authority to operate
by the National Telecommunications Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan

as production assistants (PAs) on different dates. They were assigned at the news
and public affairs, for various radio programs in Cebu Broadcasting Station, with
a monthly compensation of P4,000. They were issued ABS-CBN employees'
identification cards and were required to work for 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 a Collective Bargaining
Agreement (CBA). However, since petitioner refused to recognize PA’s as part 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.
The petitioners contented that the respondents were PAs who basically assist
in the conduct of a particular program run 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 engaged by the station for a
particular or specific program broadcasted by the radio station.
Respondents countered that they were engaged by respondent ABS-CBN as

regular and full time employees for a continuous period of more than 5 years with
a monthly salary rate of P4,000.00 pesos beginning 1995 up until the filing of this
complaint.
ISSUE: Whether respondents are regular employees.
Page | 13
Supreme Court ruled that the respondents are regular employees.
Citing Article 280 of the Labor Code, the Supreme Court stated that any employee
who has rendered at least one year of service, whether continuous or intermittent,
is deemed regular with respect to the activity performed and while such activity
exists.
The Supreme Court further mentioned that there are two kinds of regular
employees under the law: (1) those engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer; and (2) those
casual employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activities in which they are employed.
What determines whether a certain employment is regular or otherwise is the

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

actresses or radio specialists or mere clerks or utility employees. Additionally,
respondents cannot be considered as project or program employees. The principal
test is whether or not the project employees were assigned to carry out a specific
project or undertaking, the duration and scope of which were specified at the time
the employees were engaged for that project. In this case, it is undisputed that
respondents had continuously performed the same activities for an average of five
years. Their assigned tasks are necessary or desirable in the usual business or trade
of the petitioner.
It follows then that respondents are entitled to the benefits provided for in the
existing CBA between petitioner and its rank-and-file employees. As regular
employees, respondents are entitled to the benefits granted to all other regular
employees of petitioner under the CBA.
ANGELINA FRANCISCO, Petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI,
Page | 14
TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA
and RAMON ESCUETA, Respondents.
[G.R. No. 170087 August 31, 2006]
FACTS
In 1995, Francisco was hired by Kasei. She was designated as Accountant and
Corporate Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of Makati to
secure business permits, construction permits and other licenses for the initial
operation of the company. In 1996, petitioner was designated as Acting Manager
and has performed her duties for 5 years.
In January 2001, petitioner was replaced but she was assured that she would and
still relate to Kasei Corporation. Thereafter, Kasei Corporation reduced her salary
and did not pay her with mid-year bonus allegedly because the company was not
earning well. On October 2001, petitioner did not receive her salary from the
company. When she demanded for her salary, she was informed that she is no
longer connected with the company. Hence, she did not report for work and filed
an action for constructive dismissal before the labor arbiter.
Respondents, on the other, hand, maintained that she is not an employee of Kasei.
She was hired as a technical consultant and she performed her work at her own
discretion without control and supervision of the company. Her services are only
temporary in nature.
The Labor Arbiter ruled in favor of Francisco which decision as affirmed by NLRC.
CA, on the other hand, dismissed Francisco’s complaint on the ground of
constructive dismissal.
ISSUE: Whether an employer-employee relationship exists.
The Supreme Court applied the two-tiered test to determine the existence of
employer-employee relationship which involved:
(1) the putative employer’s power to control the employee with respect to the
means and methods by which the work is to be accomplished; and
Page | 15
(2) the underlying economic realities of the activity or relationship.
Following the preceding test, the Supreme Court ruled that she is an employee of
Kasei. By applying the control test, there is no doubt that petitioner is an employee
of Kasei Corporation because she was under the direct control and supervision of
Seiji Kamura, the corporation’s Technical Consultant. Under the broader economic
reality test, the petitioner can likewise be said to be an employee of Kasei because
she is economically dependent on the company for her continued employment in
the latter’s line of business.
She was selected and engaged by the company for compensation and is
economically dependent upon respondent for her continued employment in that
line of business. More importantly, Kasei had the power to control petitioner with
the means and methods by which the work is to be accomplished.
ROGELIO P. NOGALES, for himself and on behalf of the minors, ROGER

ANTHONY, ANGELICA, NANCY, and MICHAEL CHRISTOPHER, all
surnamed NOGALES, petitioners, vs. CAPITOL MEDICAL CENTER, DR.
OSCAR ESTRADA, DR. ELY VILLAFLOR, DR. ROSA UY, DR. JOEL
ENRIQUEZ, DR. PERPETUA LACSON, DR. NOE ESPINOLA, and NURSE J.
DUMLAO, respondents.
[G.R. No. 142625 December 19, 2006]
FACTS
Pregnant with her fourth child, Corazon Nogales (37 years old) was under the
exclusive prenatal care of Dr. Oscar Estrada. While Corazon was on her last
trimester of pregnancy, Dr. Estrada noted an increase in her blood pressure and
development of leg edema indicating preeclampsia, which is a dangerous
complication of pregnancy.
On May 26, 1976, Corazon was admitted at the CMC for delivery of the child. Dr.
Estrada ordered the injection of 10 grams of magnesium sulfate. However, Dr. Ely
Villaflor, who was assisting Dr. Estrada, administered only 2.5 grams of
magnesium sulfate. Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to
extract Corazon's baby. In the process, piece of cervical tissue was allegedly torn.
The baby came out in an apneic, cyanotic, weak and injured condition. Corazon
Page | 16
began to manifest moderate vaginal bleeding which rapidly became profuse. Dr.
Noe Espinola, head of the Obstetrics-Gynecology Department of the CMC, was
apprised of Corazon's condition by telephone. Upon being informed that Corazon
was bleeding profusely, Dr. Espinola ordered immediate hysterectomy. Despite
Dr. Espinola's efforts, Corazon died.
Petitioners filed a complaint for damages with the Regional Trial Court. Petitioners
mainly contended that defendant physicians and CMC personnel were negligent
in the treatment and management of Corazon's condition.
Petitioners charged CMC with negligence in the selection and supervision of

defendant physicians and hospital staff. Trial court rendered judgment finding Dr.
Estrada solely liable for damages.
The Court of Appeals upheld the trial court's ruling, finding Dr. Estrada as an
independent contractor-physician. The Court of Appeals applied the "borrowed
servant" doctrine considering that Dr. Estrada was an independent contractor who
was merely exercising hospital privileges. This doctrine provides that once the
surgeon enters the operating room and takes charge of the proceedings, the acts
or omissions of operating room personnel, and any negligence associated with
such acts or omissions, are imputable to the surgeon.
ISSUES: 1.) Whether there is employer-employee relationship between Dr.

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

physician. There is, however, an exception to this principle. The hospital may be
liable if the physician is the "ostensible" agent of the hospital. This exception is also
known as the "doctrine of apparent authority."
Page | 17
The doctrine essentially involves two factors to determine the liability of an
independent-contractor physician.
The first factor focuses on the hospital's manifestations and is sometimes described
as an inquiry whether the hospital acted in a manner which would lead a
reasonable person to conclude that the individual who was alleged to be negligent
was an employee or agent of the hospital. In this regard, the hospital need not
make express representations to the patient that the treating physician is an
employee of the hospital; rather a representation may be general and implied.
The doctrine of apparent authority is a specie of the doctrine of estoppel. Article

1431 of the Civil Code provides that "through estoppel, an admission or
representation is rendered conclusive upon the person making it and cannot be
denied or disproved as against the person relying thereon." CMC impliedly held
out Dr. Estrada as a member of its medical staff.
Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby
leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent
of CMC. CMC cannot now repudiate such authority. First, CMC granted staff
privileges to Dr. Estrada. Second, CMC made Rogelio sign consent forms printed
on CMC letterhead. Third, Dr. Estrada's referral of Corazon's profuse vaginal
bleeding to Dr. Espinola, who was then the Head of the Obstetrics and Gynecology
Department of CMC, gave the impression that Dr. Estrada as a member of CMC's
medical staff was collaborating with other CMC-employed specialists in treating
Corazon. Hence, CMC is also liable.
COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager,

Petitioners, vs. DR. DEAN N. CLIMACO, Respondent.
[G.R. No. 146881 February 5, 2007]
FACTS
Dr. Dean Climaco (respondent), a medical doctor, was hired by Coca-Cola Bottlers
Phil. (petitioner) by virtue of a Retainer Agreement. The terms and conditions are
as follows:
Page | 18
1. That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec.
31, 1988. Either party may terminate the contract upon giving a 30-day
written notice to the other;
2. That petitioner shall compensate respondent a retainer fee of
P3,800/month. The DOCTOR may charge professional fee for hospital
services rendered in line with his specialization;
3. That in consideration of the retainer’s fee, the DOCTOR agrees to
perform the duties and obligations in the COMPREHENSIVE
MEDICAL PLAN, made an integral part of this retainer agreement;
4. That the DOCTOR shall observe clinic hours at the company’s premises
from Monday to Saturday of a minimum of two (2) hours each day or a
maximum of TWO (2) hours each day or treatment from 7:30 a.m. to 8:30
a.m. and 3:00pm to 4:00pm. It is further understood that the DOCTOR
shall always be on call during the other work shifts to attend to
emergency case(s);
5. That no employee-employer relationship shall exist between the
company and the DOCTOR
The retainer agreement expired after 1 year. However, despite the non-renewal of
the agreement, respondent continued to perform his functions as company doctor
to petitioner until he received a letter dated March 9, 1995 from the company
ending their retainership agreement. Respondent thereafter filed a complaint
before the NLRC seeking recognition as a regular employee of petitioner and thus
prayed from payment of all the benefits of a regular employee including 13th
month pay, COLA, holiday pay, service incentive leave, and Christmas bonus.
Also, respondent filed another complaint for illegal dismissal against petitioner.
In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint
was dismissed by the Labor Arbiters and subsequently affirmed by the NLRC on
the ground that no employer-employee relationship existed between petitioner-
company and respondent. However when it was elevated to CA for review, the
latter ruled that employer-employee relationship existed between the parties after
applying the four-fold test: (1) power to hire employee (2) payment of wages (3)
power to dismissal (4) and power to control over the employee with respect to the
means and methods by which the work is to be accomplished.
Page | 19
Issue: Whether there exists an employer-employee relationship between the
parties.
Petitioner Company lacked the power of control over the performance by

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

RELATIONS COMMISSION, RONALDO LANZANAS AND
MERCEDITHA* LANZANAS, respondents.
[G.R. No. 176484 November 25, 2008]
Page | 20
FACTS:
Calamba Medical Center engaged the services of medical doctors-spouses Dr.

Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians.
Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents
were paid a monthly "retainer" of P4,800.00 each. Also, resident physicians were
also given a percentage share out of fees charged for out-patient treatments,
operating room assistance and discharge billings, in addition to their fixed
monthly retainer.
The work schedules of the members of the team of resident physicians were fixed
by petitioner's medical director Dr. Desipeda, and they were issued ID, enrolled
in the SSS and withheld tax from them.
After an incident where Dr. Trinidad overheard a phone conversation between Dr.
Ronaldo and a fellow employee Diosdado Miscala, the former was given a
preventive suspension and his wife Dr. Merceditha was not given any schedule
after sending the Memorandum. On March 1998, Dr. Ronaldo filed a complaint for
illegal suspension and Dr. Merceditha for illegal dismissal.
ISSUE: Whether there exists an employer-employee relationship between

petitioner and the spouses-respondents.
Drs. Lanzanas are declared employee by the petitioner hospital. Under the
"control test," an employment relationship exists between a physician and a
hospital if the hospital controls both the means and the details of the process by
which the physician is to accomplish his task.
That petitioner exercised control over respondents gains light from the undisputed
fact that in the emergency room, the operating room, or any department or ward
for that matter, respondents' work is monitored through its nursing supervisors,
charge nurses and orderlies. Without the approval or consent of petitioner or its
medical director, no operations can be undertaken in those areas. For control test
to apply, it is not essential for the employer to actually supervise the performance
of duties of the employee, it being enough that it has the right to wield the power.
With respect to respondents' sharing in some hospital fees, this scheme does not
sever the employment tie between them and petitioner as this merely mirrors
additional form or another form of compensation or incentive similar to what
Page | 21
commission-based employees receive as contemplated in Article 97 (f) of the Labor
Code
Moreover, respondents were made subject to petitioner-hospital's Code of Ethics

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

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

SHANGRI-LA'S MACTAN ISLAND RESORT and DR. JESSICA J.R. PEPITO,
Respondents.
[G.R. No. 178827 March 4, 2009]
FACTS
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were
engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent
doctor) to work in her clinic at respondent Shangri-la’sMactan Island Resort
(Shangri-la) in Cebu of which she was a retained physician.
In late 2002, petitioners filed with the National Labor Relations Commission
(NLRC) a complaint for regularization, underpayment of wages, non-payment of
holiday pay, night shift differential and 13th month pay differential against
respondents, claiming that they are regular employees of Shangri-la.
Shangri-la claimed, however, that petitioners were not its employees but of
respondent doctor, that Article 157 of the Labor Code, as amended, does not make
it mandatory for a covered establishment to employ health personnel, that the
services of nurses is not germane nor indispensable to its operations, and that
Page | 22
respondent doctor is a legitimate individual contractor who has the power to hire,
fire and supervise the work of nurses under her.
ISSUES: 1.) Whether or not there was an employee-employer relationship

between Shangri-La and the petitioners. 2.) Whether or not Dr. Pepito is an
independent contractor.
There exists no employee-employer relationship. The petitioners are under the

direct supervision of Dr. Pepito, an independent contractor.
1. The resolution of the case hinges, in the main, on the correct interpretation
of Art. 157 vis a vis Art. 280 and the provisions on permissible job
contracting of the Labor Code, as amended. Under the foregoing provision,
Shangri-La, which employs more than 200 workers, is mandated to
“furnish” its employees with the services of a full-time registered nurse, a
part-time physician and dentist, and an emergency clinic which means that
it should provide or make available such medical and allied services to its
employees, not necessarily to hire or employ a service provider. The term
“full-time” in Art. 157 cannot be construed as referring to the type of
employment of the person engaged to provide the services, for Article 157
must not be read alongside Art. 280[9] in order to vest employer-employee
relationship on the employer and the person so engaged. The phrase
“services of a full-time registered nurse” should thus be taken to refer to the
kind of services that the nurse will render in the company’s premises and
to its employees, not the manner of his engagement.
2. The existence of an independent and permissible contractor relationship is

generally established by considering the following determinants: whether
the contractor is carrying on an independent business; the nature and extent
of the work; the skill required; the term and duration of the relationship;
the right to assign the performance of a specified piece of work; the control
and supervision of the work to another; the employer's power with respect
to the hiring, firing and payment of the contractor's workers; the control of
Page | 23
the premises; the duty to supply the premises, tools, appliances, materials
and labor; and the mode, manner and terms of payment.
Against the above-listed determinants, the Court holds that respondent doctor is
a legitimate independent contractor. That Shangri-La provides the clinic premises
and medical supplies for use of its employees and guests do not necessarily prove
that respondent doctor lacks substantial capital and investment. Besides, the
maintenance of a clinic and provision of medical services to its employees is
required under Art. 157, which are not directly related to Shangri-La’s principal
business – operation of hotels and restaurants.
GREGORIO V. TONGKO, Petitioner, vs. THE MANUFACTURERS LIFE

INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS,
Respondents.
[G.R. No. 167622 January 25, 2011]
FACTS
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic

corporation engaged in life insurance business. Renato A. Vergel De Dios was,
during the period material, its President and Chief Executive Officer. Gregorio V.
Tongko started his professional relationship with Manulife on July 1, 1977 by
virtue of a Career Agent's Agreement (Agreement) he executed with Manulife. In
the Agreement, it is provided that: It is understood and agreed that the Agent is
an independent contractor and nothing contained herein shall be construed or
interpreted as creating an employer-employee relationship between the Company
and the Agent. The Company may terminate this Agreement for any breach or
violation of any of the provisions hereof by the Agent by giving written notice to
the Agent within fifteen (15) days from the time of the discovery of the breach. No
waiver, extinguishment, abandonment, withdrawal or cancellation of the right to
terminate this Agreement by the Company shall be construed for any previous
failure to exercise its right under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time
without cause, by giving to the other party fifteen (15) days’ notice in writing. In
1983, Tongko was named as a Unit Manager in Manulife's Sales Agency
Organization.In 1990, he became a Branch Manager. As the CA found, Tongko's
Page | 24
gross earnings from his work at Manulife, consisting of commissions, persistency
income, and management overrides. The problem started sometime in 2001, when
Manulife instituted manpower development programs in the regional sales
management level. Relative thereto, De Dios addressed a letter dated November
6, 2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers
Meeting. Stating that Tongko’s Region was the lowest performer (on a per
Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain
one of the laggards in this area.
Other issues were: "Some Managers are unhappy with their earnings and would
want to revert to the position of agents." And "Sales Managers are doing what the
company asks them to do but, in the process, they earn less." Tongko was then
terminated. Therefrom, Tongko filed a Complaint dated November 25, 2002 with
the NLRC against Manulife for illegal dismissal in the Complaint. In a Decision
dated April 15, 2004, Labor Arbiter dismissed the complaint for lack of an
employer-employee relationship. The NLRC's First Division, while finding an
employer-employee relationship between Manulife and Tongko applying the
four-fold test, held Manulife liable for illegal dismissal. Thus, Manulife filed an
appeal with the CA. Thereafter, the CA issued the assailed Decision dated March
29, 2005, finding the absence of an employer-employee relationship between the
parties and deeming the NLRC with no jurisdiction over the case.
ISSUES: 1.) Whether or not Tongko was an employee of Manulife; 2.) Whether or
not Tongko was illegally dismissed.
Tongko was an employee. However, his dismissal was not illegal.
1. Yes. In the instant case, Manulife had the power of control over Tongko that
would make him its employee. Several factors contribute to this conclusion.
In the Agreement dated July 1, 1977 executed between Tongko and
Manulife, it is provided that: The Agent hereby agrees to comply with all
regulations and requirements of the Company as herein provided as well
as maintain a standard of knowledge and competency in the sale of the
Company's products which satisfies those set by the Company and
sufficiently meets the volume of new business required of Production Club
Page | 25
membership.Under this provision, an agent of Manulife must comply with
three (3) requirements: (1) compliance with the regulations and
requirements of the company; (2) maintenance of a level of knowledge of
the company's products that is satisfactory to the company; and (3)
compliance with a quota of new businesses. Among the company
regulations of Manulife are the different codes of conduct such as the Agent
Code of Conduct, Manulife Financial Code of Conduct, and Manulife
Financial Code of Conduct Agreement, which demonstrate the power of
control exercised by the company over Tongko. The fact that Tongko was
obliged to obey and comply with the codes of conduct was not disowned
by respondents. Thus, with the company regulations and requirements
alone, the fact that Tongko was an employee of Manulife may already be
established. Certainly, these requirements controlled the means and
methods by which Tongko was to achieve the company's goals. More
importantly, Manulife's evidence establishes the fact that Tongko was
tasked to perform administrative duties that establishes his employment
with Manulife. Additionally, it must be pointed out that the fact that
Tongko was tasked with recruiting a certain number of agents, in addition
to his other administrative functions, leads to no other conclusion that he
was an employee of Manulife.
2. In its Petition for Certiorari dated January 7, 2005[26] filed before the CA,
Manulife argued that even if Tongko is considered as its employee, his
employment was validly terminated on the ground of gross and habitual
neglect of duties, inefficiency, as well as willful disobedience of the lawful
orders of Manulife. Manulife stated: In the instant case, private respondent,
despite the written reminder from Mr. De Dios refused to shape up and
altogether disregarded the latter's advice resulting in his laggard
performance clearly indicative of his willful disobedience of the lawful
orders of his superior. As private respondent has patently failed to perform
a very fundamental duty, and that is to yield obedience to all reasonable
rules, orders and instructions of the Company, as well as gross failure to
reach at least minimum quota, the termination of his engagement from
Manulife is highly warranted and therefore, there is no illegal dismissal to
speak of. It is readily evident from the above-quoted portions of Manulife's
Page | 26
petition that it failed to cite a single iota of evidence to support its claims.
Manulife did not even point out which order or rule that Tongko disobeyed.
More importantly, Manulife did not point out the specific acts that Tongko was
guilty of that would constitute gross and habitual neglect of duty or disobedience.
Manulife merely cited Tongko's alleged "laggard performance," without
substantiating such claim, and equated the same to disobedience and neglect of
duty. Apropos thereto, Art. 277, par. (b), of the Labor Code mandates in explicit
terms that the burden of proving the validity of the termination of employment
rests on the employer. Failure to discharge this evidential burden would
necessarily mean that the dismissal was not justified, and, therefore, illegal. The
Labor Code provides that an employer may terminate the services of an employee
for just cause and this must be supported by substantial evidence. The settled rule
in administrative and quasi-judicial proceedings is that proof beyond reasonable
doubt is not required in determining the legality of an employer's dismissal of an
employee, and not even a preponderance of evidence is necessary as substantial
evidence is considered sufficient. Substantial evidence is more than a mere scintilla
of evidence or relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds, equally reasonable, might conceivably
opine otherwise. Here, Manulife failed to overcome such burden of proof. It must
be reiterated that Manulife even failed to identify the specific acts by which
Tongko's employment was terminated much less support the same with
substantial evidence.
To repeat, mere conjectures cannot work to deprive employees of their means of

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

APPEALS, 19th DIVISION, now SPECIAL FORMER 19th DIVISION,
Page | 27
GALLERA DE MANDAUE / SPOUSES VICENTE and MARIA LUISA LOOT,
Respondents.
[G.R. No. 196426 August 15, 2011]
FACTS
Petitioners assert that they were hired by respondents, as the official masiador and
sentenciador, respectively, of the cockpit sometime in 1993.
A masiador calls and takes the bets from the gamecock owners and other bettors
and orders the start of the cockfight. He also distributes the winnings after
deducting the arriba, or the commission for the cockpit. Meanwhile, as the
sentenciador oversees the proper gaffing of fighting cocks, determines the fighting
cocks' physical condition and capabilities to continue the cockfight, and eventually
declares the result of the cockfight.
For their services as masiador and sentenciador, Semblante receives PhP2,000 per
week or a total of PhP8,000 per month, while Pilar gets PhP3,500 a week or
PhP14,000 per month. They work every Tuesday, Wednesday, Saturday, and
Sunday every week, excluding monthly derbies and cockfights held on special
holidays. Their working days start at 1:00 p.m. and last until 12:00 midnight, or
until the early hours of the morning depending on the needs of the cockpit.
Petitioners had both been issued employees' identification cards that they wear
every time they report for duty. They alleged never having incurred any infraction
and/or violation of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry into the cockpit
upon the instructions of respondents and were informed of the termination of their
services effective that date. This prompted petitioners to file a complaint for illegal
dismissal against respondents.
ISSUE: Whether there existed an employer-employee relationship between the

petitioners and respondent.
Petitioners are NOT employees of respondents, since their relationship fails to

pass the four-fold test of employment.
Page | 28
The Court have repeatedly mentioned in countless decisions: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal;
and (4) the power to control the employee's conduct, which is the most important
element.
As found by both the NLRC and the CA, respondents had no part in petitioners'
selection and management; petitioners' compensation was paid out of the
arriba(which is a percentage deducted from the total bets), not by petitioners; and
petitioners performed their functions as masiador and sentenciador free from the
direction and control of respondents. In the conduct of their work, petitioners
relied mainly on their "expertise that is characteristic of the cockfight gambling,"
and were never given by respondents any tool needed for the performance of their
work.
Respondents, not being petitioners' employers, could never have dismissed,

legally or illegally, petitioners, since respondents were without power or
prerogative to do so in the first place. The rule on the posting of an appeal bond
cannot defeat the substantive rights of respondents to be free from an unwarranted
burden of answering for an illegal dismissal for which they were never
responsible.
JOSE MEL BERNARTE, Petitioner, vs. PHILIPPINE BASKETBALL

ASSOCIATION (PBA), JOSE EMMANUEL M. EALA, and PERRY
MARTINEZ, Respondents.
[G.R. No. 192084 September 14, 2011]
FACTS
Complainants, Jose Mel Bernarte and Renato Guevarra, aver that they were
invited to join the PBA as referees. During the leadership of Commissioner Emilio
Bernardino, they were made to sign contracts on a year-to-year basis. During the
term of Commissioner Eala, however, changes were made on the terms of their
employment.
Bernarte, was not made to sign a contract during the first conference of the All-
Filipino Cup which was from February 23, 2003 to June 2003. It was only during
Page | 29
the second conference when he was made to sign a one-and-a-half-month contract
for the period July 1 to August 5, 2003.
January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory
performance on and off the court. It was a total shock for Bernarte who was
awarded Referee of the year in 2003. He felt that the dismissal was caused by his
refusal to fix a game upon order of Ernie De Leon.
Guevarra alleges that he was invited to join the PBA pool of referees in February
2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed
a yearly contract as Regular Class C referee. On May 6, 2003, respondent Martinez
issued a memorandum to Guevarra expressing dissatisfaction over his
questioning on the assignment of referees officiating out-of-town games.
Beginning February 2004, he was no longer made to sign a contract.
Labor Arbiter’s decision, on 31 March 2005, declared petitioner an employee

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

respondents did not exercise any form of control over the means and methods by
which petitioner performed his work as a basketball referee. The Court of Appeals
denied the motion for reconsideration.
ISSUE: Whether petitioner is an employee of respondents, which in turn

determines whether petitioner was illegally dismissed.
Page | 30
At any rate, the NLRC declared the issue on the finality of the Labor Arbiter’s
decision moot as respondents’ appeal was considered in the interest of substantial
justice. We agree with the NLRC. The ends of justice will be better served if we
resolve the instant case on the merits rather than allowing the substantial issue of
whether petitioner is an independent contractor, or an employee linger and remain
unsettled due to procedural technicalities.
The existence of an employer-employee relationship is ultimately a question of

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

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

contractor: (1) the referees are required to report for work only when PBA games
are scheduled, which is three times a week spread over an average of only 105
playing days a year, and they officiate games at an average of two hours per game;
and (2) the only deductions from the fees received by the referees are withholding
taxes.
Page | 31
In other words, unlike regular employees who ordinarily report for work eight
hours per day for five days a week, petitioner is required to report for work only
when PBA games are scheduled or three times a week at two hours per game. In
addition, there are no deductions for contributions to the Social Security System,
PhilHealth or Pag-Ibig, which are the usual deductions from employees’ salaries.
These undisputed circumstances buttress the fact that petitioner is an independent
contractor, and not an employee of respondents.
CESAR C. LIRIO, doing business under the name and style of CELKOR AD
SONICMIX, Petitioner, vs. WILMER D. GENOVIA, Respondent.
[G.R. No. 169757 November 23, 2011]
FACTS
On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against petitioner

Cesar Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal dismissal, non-
payment of commission and award of moral and exemplary damages.
Genovia (respondent) alleged that on August 15, 2001, he was hired as studio
manager by petitioner Lirio (petitioner), owner of Celkor Ad Sonicmix Recording
Studio (Celkor). He was employed to manage and operate Celkor and to promote
and sell the recording studio's services to music enthusiasts and other prospective
clients. He received a monthly salary of P7,000.00. They also agreed that he was
entitled to an additional commission of P100.00 per hour as recording technician
whenever a client uses the studio for recording, editing or any related work. He
was made to report for work from Monday to Friday from 9:00 a.m. to 6 p.m. On
Saturdays, he was required to work half-day only, but most of the time, he still
rendered eight hours of work or more. All the employees of petitioner, including
respondent, rendered overtime work almost every day, but petitioner never kept
a daily time record to avoid paying the employees overtime pay.
Respondent stated that a few days after he started working as a studio manager,
petitioner approached him and told him about his project to produce an album for
his 15-year-old daughter, Celine Mei Lirio, a former talent of ABS-CBN Star
Records. Petitioner asked respondent to compose and arrange songs for Celine
and promised that he (Lirio) would draft a contract to assure respondent of his
Page | 32
compensation for such services. As agreed upon, the additional services that
respondent would render included composing and arranging musical scores only,
while the technical aspect in producing the album, such as digital editing, mixing
and sound engineering would be performed by respondent in his capacity as
studio manager for which he was paid on a monthly basis. Petitioner instructed
respondent that his work on the album as composer and arranger would only be
done during his spare time, since his other work as studio manager was the
priority. Respondent then started working on the album. Respondent alleged that
before the end of September 2001, he reminded petitioner about his compensation
as composer and arranger of the album. Petitioner verbally assured him that he
would be duly compensated. By mid-November 2001, respondent finally finished
the compositions and musical arrangements of the songs to be included in the
album. Before the month ended, the lead and back-up vocals in the ten (10) songs
were finally recorded and completed. From December 2001 to January 2002,
respondent, in his capacity as studio manager, worked on digital editing, mixing
and sound engineering of the vocal and instrumental audio files.
Thereafter, respondent was tasked by petitioner to prepare official

correspondence, establish contacts and negotiate with various radio stations,
malls, publishers, record companies and manufacturers, record bars and other
outlets in preparation for the promotion of the said album. By early February 2002,
the album was in its manufacturing stage. ELECTROMAT, manufacturer of CDs
and cassette tapes, was tapped to do the job. The carrier single of the album, which
respondent composed and arranged, was finally aired over the radio on February
22, 2002.
On February 26, 2002, respondent again reminded petitioner about the contract on
his compensation as composer and arranger of the album. Petitioner told
respondent that since he was practically a nobody and had proven nothing yet in
the music industry, respondent did not deserve a high compensation, and he
should be thankful that he was given a job to feed his family. Petitioner informed
respondent that he was entitled only to 20% of the net profit, and not of the gross
sales of the album, and that the salaries he received and would continue to receive
as studio manager of Celkor would be deducted from the said 20% net profit share.
Respondent objected and insisted that he be properly compensated. On March 14,
2002, petitioner verbally terminated respondent’s services, and he was instructed
not to report for work.
Page | 33
Respondent asserts that he was illegally dismissed as he was terminated without
any valid grounds, and no hearing was conducted before he was terminated, in
violation of his constitutional right to due process. Having worked for more than
six months, he was already a regular employee. Although he was a so called
“studio manager,” he had no managerial powers, but was merely an ordinary
employee. He prayed for his reinstatement without loss of seniority rights, or, in
the alternative, that he be paid separation pay, back wages and overtime pay; and
that he be awarded unpaid commission in the amount of P2,000.00 for services
rendered as a studio technician as well as moral and exemplary damages.
Respondent’s evidence consisted of the Payroll dated July 31, 2001 to March 15,
2002, which was certified correct by petitioner, and Petty Cash Vouchers
evidencing receipt of payroll payments by respondent from Celkor.
In defense, petitioner averred that his relationship with respondent is one of an

informal partnership under Article 1767of the New Civil Code, since they agreed
to contribute money, property or industry to a common fund with the intention of
dividing the profits among themselves. Allegedly, both agreed to co-produce the
album based on the following terms and conditions: (1) petitioner shall provide
all the financing, equipment and recording studio; (2) Celine Mei Lirio shall sing
all the songs; (3) respondent shall act as composer and arranger of all the lyrics
and the music of the five songs he already composed and the revival songs; (4)
petitioner shall have exclusive right to market the album; (5) petitioner was
entitled to 60% of the net profit, while respondent and Celine Mei Lirio were each
entitled to 20% of the net profit; and (6) respondent shall be entitled to draw
advances of P7,000.00 a month, which shall be deductible from his share of the net
profits and only until such time that the album has been produced.
Petitioner insisted that had no control over the time and manner by which
respondent composed or arranged the songs, except on the result thereof.
Respondent reported to the recording studio between 10:00 a.m. and 12:00 noon.
Hence, petitioner contended that no employer-employee relationship existed
between him and the respondent, and there was no illegal dismissal to speak of.
ISSUE: Whether employer-employee relationship exists?
SUPREME COURT RULING:
Page | 34
Yes. The elements to determine the existence of an employment relationship are:
(a) the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer’s power to control the employee’s
conduct. The most important element is the employer’s control of the employee’s
conduct, not only as to the result of the work to be done, but also as to the means
and methods to accomplish it.
It is settled that no particular form of evidence is required to prove the existence

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

was an employee of petitioner are as follows: (a) a document denominated as
"payroll" (dated July 31, 2001 to March 15, 2002) certified correct by petitioner,
which showed that respondent received a monthly salary of P7,000.00 (P3,500.00
every 15th of the month and another P3,500.00 every 30th of the month) with the
corresponding deductions due to absences incurred by respondent; and (2) copies
of petty cash vouchers, showing the amounts he received and signed for in the
payrolls.
The said documents showed that petitioner hired respondent as an employee and
he was paid monthly wages of P7,000.00. Petitioner wielded the power to dismiss
as respondent stated that he was verbally dismissed by petitioner, and respondent,
thereafter, filed an action for illegal dismissal against petitioner. The power of
control refers merely to the existence of the power. It is not essential for the
employer to actually supervise the performance of duties of the employee, as it is
sufficient that the former has a right to wield the power. Nevertheless, petitioner
stated in his Position Paper that it was agreed that he would help and teach
respondent how to use the studio equipment. In such case, petitioner certainly had
the power to check on the progress and work of respondent.
CHARLIE JAO, Petitioner, vs. BCC PRODUCTS SALES INC., and

TERRANCE TY, Respondents.
[G.R. No. 163700 April 18, 2012]
FACTS
Page | 35
Petitioner offered the following: (a) BCC Identification Card (ID) issued to him
stating his name and his position as “comptroller,” and bearing his picture, his
signature, and the signature of Ty; (b) a payroll of BCC for the period of October
1-15, 1996 that petitioner approved as comptroller; (c) various bills and receipts
related to expenditures of BCC bearing the signature of petitioner; (d) various
checks carrying the signatures of petitioner and Ty, and, in some checks, the
signature of petitioner alone; (e) a court order showing that the issuing court
considered petitioner’s ID as proof of his employment with BCC; (f) a letter of
petitioner dated March 1, 1997 to the Department of Justice on his filing of a
criminal case for estafa against Ty for non-payment of wages; (g) affidavits of some
employees of BCC attesting that petitioner was their co-employee in BCC; and (h)
a notice of raffle dated December 5, 1995 showing that petitioner, being an
employee of BCC, received the notice of raffle in behalf of BCC.
But respondent countered the evidences presented by the petitioner by proving

that Charlie Jao is not their employee, as SFC had installed petitioner as its
comptroller in BCC to oversee and supervise SFC’s collections and the account of
BCC to protect SFC’s interest; that their issuance of the ID to petitioner was only
for the purpose of facilitating his entry into the BCC premises in relation to his
work of overseeing the financial operations of BCC for SFC; that the ID should not
be considered as evidence of petitioner’s employment in BCC; that petitioner
executed an affidavit in March 1996, stating, among others, that he is a CPA
presently employed at SFC.
ISSUE: Whether there exists an employee-employer relationship between the

petitioner and respondent
The Supreme Court held that there exists no employee-employer relationship

between the two based on the affidavits made by the petitioner that he is an
employee of SFC to oversee and supervise SFC's collection.
Moreover, in determining the presence or absence of an employer-employee

relationship, the Court has consistently looked for the following incidents, to wit:
(a) the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer’s power to control the employee on
Page | 36
the means and methods by which the work is accomplished. The last element, the
so-called control test, is the most important element.
It can be deduced from the March 1996 affidavit of petitioner that respondents
challenged his authority to deliver some 158 checks to SFC. Considering that he
contested respondents’ challenge by pointing to the existing arrangements
between BCC and SFC, it should be clear that respondents did not exercise the
power of control over him, because he thereby acted for the benefit and in the
interest of SFC more than of BCC.
In addition, petitioner presented no document setting forth the terms of his

employment by BCC. The failure to present such agreement on terms of
employment may be understandable and expected if he was a common or
ordinary laborer who would not jeopardize his employment by demanding such
document from the employer but may not square well with his actual status as a
highly educated professional.
LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION,

and/or, NELSON NAPUD, in his capacity as the President of Petitioner
Corporation, Petitioner, vs. HERNANI S. REALUYO, also known as JOEY
ROA, Respondent.
[G.R. No. 153511 July 18, 2012]
FACTS
This labor case for illegal dismissal involves a pianist employed to perform in the
restaurant of a hotel. On August 9, 1999, Realuyo, whose stage name was Joey R.
Roa, filed a complaint for alleged unfair labor practice, constructive illegal
dismissal, and the underpayment/nonpayment of his premium pay for holidays,
separation pay, service incentive leave pays, and 13th month pay. He prayed for
attorney’s fees, moral damages of P100,000.00 and exemplary damages for
P100,000.00 - Roa averred that he had worked as a pianist at the Legend Hotel’s
Tanglaw Restaurant from September 1992 with an initial rate of P400.00/night; and
Page | 37
that it had increased to P750.00/night. During his employment, he could not
choose the time of performance, which had been fixed from 7:00PM to 10:00pm for
three to six times a week. July 9, 1999: the management had notified him that as a
cost-cutting measure, his services as a pianist would no longer be required
effective July 30, 1999.
In its defense, petitioner denied the existence of an employer-employee

relationship with Roa, insisting that he had been only a talent engaged to provide
live music at Legend Hotel’s Madison Coffee Shop for three hours/day on two
days each week; and stated that the economic crisis that had hit the country
constrained management to dispense with his services. - December 29, 1999: the
Labor Arbiter (LA) dismissed the complaint for lack of merit upon finding that the
parties had no employer-employee relationship, because Roa was receiving talent
fee and not salary, which was reinforced by the fact that Roa received his talent fee
nightly, unlike the regular employees of the hotel who are paid monthly. NLRC
affirmed the LA’s decision on May 31, 2001.
CA set aside the decision of the NLRC, saying CA failed to take into consideration
that in Roa’s line of work, he was supervised and controlled by the hotel’s
restaurant manager who at certain times would require him to perform only
tagalong songs or music, or wear barong tagalong to conform with the Filipinana
motif of the place and the time of his performance is fixed. As to the status of Roa,
he is considered a regular employee of the hotel since his job was in furtherance of
the restaurant business of the hotel. Granting that Roa was initially a contractual
employee, by the sheer length of service he had rendered for the company, he had
been converted into a regular employee. - CA held that the dismissal was due to
retrenchment in order to avoid or minimize business losses, which is recognized
by law under Art. 283 of the Labor Code.
ISSUES: 1.) Whether or not there was employer-employee relationship between

the two? 2.) Whether or not Roa was validly terminated?
1. Employer-employee relationship existed between the parties.
Roa was undeniably employed as a pianist of the restaurant. The hotel wielded
the power of selection at the time it entered into the service contract dated Sept. 1,
Page | 38
1992 with Roa. The hotel could not seek refuge behind the service contract entered
into with Roa. It is the law that defines and governs an employment relationship,
whose terms are not restricted to those fixed in the written contract, for other
factors, like the nature of the work the employee has been called upon to perform,
are also considered.
The law affords protection to an employee and does not countenance any attempt
to subvert its spirit and intent. Any stipulation in writing can be ignored when the
employer utilizes the stipulation to deprive the employee of his security of tenure.
The inequality that characterizes employer-employee relationship generally tips
the scales in favor of the employer, such that the employee is often scarcely
provided real and better options. The argument that Roa was receiving talent fee
and not salary is baseless. There is no denying that the remuneration denominated
as talent fees was fixed on the basis of his talent, skill, and the quality of music he
played during the hours of his performance. Roa’s remuneration, albeit
denominated as talent fees, was still considered as included in the term wage in
the sense and context of the Labor Code, regardless of how petitioner chose to
designate the remuneration, as per Article 97(f) of the Labor Code.
The power of the employer to control the work of the employee is considered the
most significant determinant of the existence of an employer-employee
relationship. This is the so-called control test and is premised on whether the
person for whom the services are performed reserves the right to control both the
end achieved and the manner and means used to achieve that end.
Lastly, petitioner claims that it had no power to dismiss respondent due to his not
being even subject to its Code of Discipline, and that the power to terminate the
working relationship was mutually vested in the parties, in that either party might
terminate at will, with or without cause. This claim is contrary to the records.
Indeed, the memorandum informing respondent of the discontinuance of his
service because of the financial condition of petitioner showed the latter had the
power to dismiss him from employment.
2. No, Roa was not validly terminated.
The conclusion that Roa’s termination was by reason of retrenchment due to an

authorized cause under the labor Code is inevitable.
Page | 39
Retrenchment is one of the authorized causes for the dismissal of employees
recognized by the Labor Code. It is a management prerogative resorted to by
employers to avoid ro to minimize business losses. On this matter, Article 283 of
the Labor Code states:
Article 283. Closure of establishment and reduction of personnel.
The employer may also terminate the employment of any employee due to the installation
of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least one (1) month before the
intended date thereof. xxx. In case of retrenchment to prevent losses and in cases of closures
or cessation of operations of establishment or undertaking not due to serious business losses
or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least
one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least
six (6) months shall be considered one (1) whole year.
Justifications for retrenchment: a. The expected losses should be substantial and

not merely de minimis in extent; b. The substantial losses apprehended must be
reasonably imminent; c. The retrenchment must be reasonably necessary and
likely to effectively prevent the expected losses; and d. The alleged losses, if
already incurred, and the expected imminent losses sought to be forestalled must
be proved by sufficient and convincing evidence.
In termination cases, the burden of proving that the dismissal was for a valid or
authorized cause rests upon the employer. Here, petitioner did not submit
evidence of the losses to its business operations and the economic havoc it would
thereby imminently sustain. It only claimed that Roa’s termination was due to its
“present business/financial condition.” This bare statement fell short of the norm
to show a valid retrenchment. Hence, there was no valid cause for the
retrenchment of respondent. Since the lapse of time since the retrenchment might
have rendered Roa’s reinstatement to his former job no longer feasible, Legend
Hotel should pay him separation pay at the rate of one month pay for every year
of service computed from September 1992 until the finality of this decision, and
full back wages from the time his compensation was withheld until the finality of
this decision. Petition denied.
Page | 40
THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER M. ENANO-
BOTE, Petitioners, vs. FRANCISCO N. DAKILA, Respondent.
[G.R. No. 199547 September 24, 2012]
FACTS
Respondent Francisco Dakila (Dakila) was employed by The New Philippine

Skylanders, Inc. (Skylanders) as early as 1987 and terminated for cause in April
1997 when the corporation was sold. In May 1997, he was rehired as consultant by
Skylanders under a Contract for Consultancy Services. Thereafter, in a letter dated
April 19, 2007, Dakila informed Skylanders of his compulsory retirement effective
May 2, 2007 and sought for the payment of his retirement benefits. His request,
however, was not acted upon. Instead, he was terminated from service effective
May 1, 2007.
Thus, Dakila filed a complaint for constructive illegal dismissal. He averred that
the consultancy contract was a scheme to deprive him of the benefits of
regularization, claiming to have assumed tasks necessary and desirable in the
trade or business of Skylanders and under their direct control and supervision. On
the contrary, Skylanders argued that Dakila was not their regular employee as he
was not required to observe regular working hours and was free to adopt means
and methods to accomplish his task except as to the results of the work required
of him. Hence, no employer-employee relationship existed between them.
Both the Labor Arbiter and the NLRC ruled that Dakila was illegally dismissed.
The Court of Appeals affirmed the findings of the Labor Arbiter and the NLRC.
ISSUE: Whether Dakila was illegally dismissed.
Dakila was illegally dismissed.
The issue of illegal dismissal is premised on the existence of an employer-

employee relationship between the parties herein. Records reveal that both the LA
and the NLRC, as affirmed by the CA, have found substantial evidence to show
that respondent Dakila was a regular employee who was dismissed without cause.
Following Article 279 of the Labor Code, an employee who is unjustly dismissed
from work is entitled to reinstatement without loss of seniority rights and other
Page | 41
privileges and to his full back wages computed from the time he was illegally
dismissed. However, considering that respondent Dakila was terminated on May
1, 2007, or one (1) day prior to his compulsory retirement on May 2, 2007, his
reinstatement is no longer feasible. His backwages should be computed only for
days prior to his compulsory retirement which in this case is only a day.
ASHMOR M. TESORO, PEDRO ANG and GREGORIO SHARP, Petitioners,

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

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

of wages, incentive pay, 13th month pay and damages against Bandag with the
National Labor Relations Commission (NLRC). Petitioners contend that despite
the SFA, they remained employees of Bandag.
For its part, Bandag pointed out that petitioners freely resigned from their
employment and decided to avail themselves of the opportunity to be
Page | 42
independent entrepreneurs under the franchise scheme that Bandag had. Thus, no
employer–employee relationship existed between petitioners and Bandag.
ISSUE: Whether petitioners remained to be Bandag’s salesmen under the

franchise scheme it entered into with them.
No, petitioners were no longer employees of Bandag the moment they entered into
the SFA.
Franchising is a business method of expansion that allows an individual or group

of individuals to market a product or a service and to use of the patent, trademark,
trade name and the systems prescribed by the owner. Applying the four-fold test,
it is noted that petitioners are not employees. When petitioners agreed to operate
Bandag’s franchise branches in different parts of the country, they knew that this
substantially changed their former relationships. They were to cease working as
Bandag’s salesmen, the positions they occupied before they ventured into running
separate Bandag branches. They were to cease receiving salaries or commissions.
Their incomes were to depend on the profits they made. Yet, petitioners did not
then complain of constructive dismissal. They took their chances, ran their
branches, Gregorio Sharp in La Union for several months and Ashmor Tesoro in
Baguio and Pedro Ang in Pangasinan for over a year. Clearly, their belated claim
of constructive dismissal is quite hollow.
It is pointed out that Bandag continued, like an employer, to exercise control over
petitioners’ work. It points out that Bandag: (a) retained the right to adjust the
price rates of products and services; (b) imposed minimum processed tire
requirement (MPR); (c) reviewed and regulated credit applications; and (d)
retained the power to suspend petitioners’ services for failure to meet service
standards. But uniformity in prices, quality of services, and good business
practices are the essence of all franchises. A franchisee will damage the franchisor’s
business if he sells at different prices, renders different or inferior services, or
engages in bad business practices. These business constraints are needed to
maintain collective responsibility for faultless and reliable service to the same class
of customers for the same prices. This is not the “control” contemplated in
employer–employee relationships. Control in such relationships addresses the
details of day to day work like assigning the particular task that has to be done,
monitoring the way tasks are done and their results, and determining the time
Page | 43
during which the employee must report for work or accomplish his assigned task.
Petitioners cannot use the revolving funds feature of the SFAs as evidence of their
employer–employee relationship with Bandag. These funds do not represent
wages. They are more in the nature of capital advances for operations that Bandag
conceptualized to attract prospective franchisees. Petitioners’ incomes depended
on the profits they make, controlled by their individual abilities to increase sales
and reduce operating costs.
ROYALE HOMES MARKETING CORPORATION, Petitioner, vs. FIDEL P.

ALCANTARA [deceased], substituted by his heirs, Respondent.
[G.R. No. 195190 July 28, 2014]
FACTS
Royale Homes, a corporation engaged in marketing real estates, appointed

Alcantara as its Marketing Director for a fixed period of one year. His work
consisted mainly of marketing Royale Homes' real estate inventories on an
exclusive basis. Royale Homes reappointed him for several consecutive years
On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal against
Royale Homes alleging that he was dismissed from work without any valid or just
cause and in gross disregard of the proper procedure for dismissing employees.
He prayed to be reinstated to his former position without loss of seniority rights
and other privileges, as well as to be paid backwages, moral and exemplary
damages, and attorney's fees.
Royale Homes denied that Alcantara is its employee because:
(1) it engaged his services as an independent sales contract for one year
only;
(2) he never received any salary, 13th month pay, overtime pay or holiday
pay;
(3) he was paid on commission basis;
(4) it had no control on how Alcantara would accomplish his tasks
Labor Arbiter rendered a Decision holding that Alcantara is an employee of Royale

Homes. NLRC rendered its Decision ruling that Alcantara is not an employee but
Page | 44
a mere independent contractor of Royale Homes. It based its ruling mainly on the
contract. CA promulgated its Decision reversing the NLRC's Decision pointing out
that Royale Homes exercised some degree of control over Alcantara since his jobis
subject to company rules, regulations, and periodic evaluations.
ISSUE: Whether Alcantara was an independent contractor or an employee of

Royale Homes
Alcantara is not an employee of Royal Home but a mere independent contractor.
The juridical relationship of the parties based on their written contract:
The primary evidence of the nature of the parties' relationship in this case is the written
contract that they signed. While the existence of employer-employee relationship is a matter
of law, the characterization made by the parties in their contract as to the nature of their
juridical relationship cannot be simply ignored, particularly in this case where the parties'
written contract unequivocally states their intention at the time they entered into it. In
this case, the contract duly signed and not disputed by the parties, conspicuously provides
that "no employer-employee relationship exists between" Royale Homes and Alcantara, as
well as his sales agents. They did not want to be bound by employer-employee relationship
at the time of the signing of the contract. The stipulation of the contract is clear, and no
construction is needed, as per SC.
The juridical relationship of the parties based on Control Test:
The Supreme Court noted that the four-fold test is wanting in this case. The CA
ratiocinated that since the performance of his tasks is subject to company rules, regulations,
code of ethics, and periodic evaluation, the element of control is present. The court
disagrees. Not every form of control is indicative of employer-employee relationship. A
person who performs work for another and is subjected to its rules, regulations, and code
of ethics does not necessarily become an employee. As long as the level of control does not
interfere with the means and methods of accomplishing the assigned tasks, the rules
imposed by the hiring party on the hired party do not amount to the labor law concept of
control that is indicative of employer-employee relationship.
Payment of Wages:
Page | 45
The element of payment of wages is also absent in this case. Alcantara's remunerations
consist only of commission override of 0.5%, budget allocation, sales incentive and other
forms of company support. There is no proof that he received fixed monthly salary. No
payslip or payroll was ever presented and there is no proof that Royale Homes deducted
from his supposed salary withholding tax or that it registered him with the Social Security
System, Philippine Health Insurance Corporation, or Pag-Ibig Fund.
FUJI TELEVISION NETWORK, INC., Petitioner, vs. ARLENE S. ESPIRITU,

Respondent.
[G.R. No. 204944-45 December 3, 2014]
FACTS
Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as
a news correspondent/producer tasked to report Philippine news to Fuji through
its Manila Bureau field office. The employment contract was initially for one year
but was successively renewed on a yearly basis with salary adjustments upon
every renewal.
In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about
her condition, and the Chief of News Agency of Fuji, Yoshiki Aoki, informed the
former that the company had a problem with renewing her contract considering
her condition. Arlene insisted she was still fit to work as certified by her attending
physician.
After a series of verbal and written communications, Arlene and Fuji signed a non-
renewal contract. In consideration thereof, Arlene acknowledged the receipt of the
total amount of her salary from March-May 2009, year-end bonus, mid-year bonus
and separation pay. However, Arlene executed the non-renewal contract under
protest.
Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of
the NLRC, alleging that she was forced to sign the non-renewal contract after Fuji
came to know of her illness. She also alleged that Fuji withheld her salaries and
other benefits when she refused to sign, and that she was left with no other
recourse but to sign the non-renewal contract to get her salaries.
The Labor Arbiter dismissed the complaint and held that Arlene was not a regular
employee but an independent contractor. The NLRC reversed the Labor Arbiter’s
Page | 46
decision and ruled that Arlene was a regular employee since she continuously
rendered services that were necessary and desirable to Fuji’s business.
The Court of Appeals affirmed that NLRC ruling with modification that Fuji
immediately reinstate Arlene to her position without loss of seniority rights and
that she be paid her backwages and other emoluments withheld from her. The
Court of Appeals agreed with the NLRC that Arlene was a regular employee,
engaged to perform work that was necessary or desirable in the business of Fuji,
and the successive renewals of her fixed-term contract resulted in regular
employment. The case of Sonza does not apply in the case because Arlene was not
contracted on account of a special talent or skill. Arlene was illegally dismissed
because Fuji failed to comply with the requirements of substantive and procedural
due process. Arlene, in fact, signed the non-renewal contract under protest as she
was left without a choice.
ISSUES: 1.) Was Arlene an independent contractor? 2.) Was Arlene a regular
employee? 3.) Was Arlene illegally dismissed?
1.) Arlene was not an independent contractor.
Fuji alleged that Arlene was an independent contractor citing the Sonza case. She
was hired because of her skills. Her salary was higher than the normal rate. She
had the power to bargain with her employer. Her contract was for a fixed term. It
also stated that Arlene was not forced to sign the non-renewal agreement,
considering that she sent an email with another version of her non-renewal
agreement.
Arlene argued (1) that she was a regular employee because Fuji had control and
supervision over her work; (2) that she based her work on instructions from Fuji;
(3) that the successive renewal of her contracts for four years indicated that her
work was necessary and desirable; (4) that the payment of separation pay
indicated that she was a regular employee; (5) that the Sonza case is not applicable
because she was a plain reporter for Fuji; (6) that her illness was not a ground for
her dismissal; (7) that she signed the non-renewal agreement because she was not
in a position to reject the same.
Page | 47
DISTINCTIONS AMONG FIXED-TERM EMPLOYEES, INDEPENDENT
CONTRACTORS, AND REGULAR EMPLOYEES:
Fixed Term Employment
1) The fixed period of employment was knowingly and voluntarily agreed upon
by the parties without any force, duress, or improper pressure being brought to
bear upon the employee and absent any other circumstances vitiating his
consent;
2) It satisfactorily appears that the employer and the employee dealt with each
other on more or less equal terms with no moral dominance exercised by the
former or the latter. These indications, which must be read together, make the
Brent doctrine applicable only in a few special cases wherein the employer and
employee are on more or less in equal footing in entering into the contract. The
reason for this is evident: when a prospective employee, on account of special
skills or market forces, is in a position to make demands upon the prospective
employer, such prospective employee needs less protection than the ordinary
worker. Lesser limitations on the parties’ freedom of contract are thus required for
the protection of the employee.
For as long as the guidelines laid down in Brent are satisfied, this court will
recognize the validity of the fixed-term contract.
Independent Contractor
One who carries on a distinct and independent business and undertakes to

perform the job, work, or service on its own account and under one’s own
responsibility according to one’s own manner and method, free from the control
and direction of the principal in all matters connected with the performance of the
work except as to the results thereof. No employer-employee relationship exists
between the independent contractors and their principals.
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with
another person for the performance of the former’s work, the employees of the contractor
and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of
this Code.
The Secretary of Labor and Employment may, by appropriate regulations, restrict

or prohibit the contracting-out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate
Page | 48
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code. There is
“labor-only” contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed
by such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed by
him.
Department Order No. 18-A, Series of 2011, Section 3
(c) . . . an arrangement whereby a principal agrees to put out or farm out with a contractor
the performance or completion of a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work or service is to be performed or
completed within or outside the premises of the principal.
This department order also states that there is a trilateral relationship in legitimate
job contracting and subcontracting arrangements among the principal, contractor,
and employees of the contractor. There is no employer-employee relationship
between the contractor and principal who engages the contractor’s services, but
there is an employer-employee relationship between the contractor and workers
hired to accomplish the work for the principal
Jurisprudence has recognized another kind of independent contractor: individuals

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

job contracting and those who have unique skills and talents that set them apart
from ordinary employees. Since no employer-employee relationship exists
between independent contractors and their principals, their contracts are
governed by the Civil Code provisions on contracts and other applicable laws.
Regular Employees
Page | 49
Contracts of employment are different and have a higher level of regulation
because they are impressed with public interest. Article 13, Section 3 of the 1987
Constitution provides full protection to labor.
Apart from the Constitutional guarantee, Article 1700 of the Civil Code states that:
The relations between capital and labor are not merely contractual. They are so impressed
with public interest that labor contracts must yield to the common good. Therefore, such
contracts are subject to the special laws on labor unions, collective bargaining, strikes and
lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.
In contracts of employment, the employer and the employee are not on equal
footing. Thus, it is subject to regulatory review by the labor tribunals and courts
of law. The law serves to equalize the unequal. The labor force is a special class
that is constitutionally protected because of the inequality between capital and
labor. This presupposes that the labor force is weak.
The level of protection to labor should vary from case to case. When a prospective
employee, on account of special skills or market forces, is in a position to make
demands upon the prospective employer, such prospective employee needs less
protection than the ordinary worker.
The level of protection to labor must be determined on the basis of the nature of
the work, qualifications of the employee, and other relevant circumstances such as
but not limited to educational attainment and other special qualifications.
Fuji’s argument that Arlene was an independent contractor under a fixed-term

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

relationship must first be settled with the use of the four-fold test, especially the
qualifications for the power to control.
Page | 50
The distinction is in this guise:
Rules that merely serve as guidelines towards the achievement of a mutually

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

CONTRACT
In determining whether an employment should be considered regular or non-

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

not always desirable in the usual course of business of the employer. In this
situation, there is no regular employment. Fuji’s Manila Bureau Office is a small
unit and has a few employees. Arlene had to do all activities related to news
gathering.
A news producer “plans and supervises newscast [and] works with reporters in
the field planning and gathering information, including monitoring and getting
news stories, reporting interviewing subjects in front of a video camera,
submission of news and current events reports pertaining to the Philippines, and
Page | 51
traveling to the regional office in Thailand.” She also had to report for work in
Fuji’s office in Manila from Mondays to Fridays, eight per day. She had no
equipment and had to use the facilities of Fuji to accomplish her tasks
The successive renewals of her contract indicated the necessity and desirability of
her work in the usual course of Fuji’s business. Because of this, Arlene had become
a regular employee with the right to security of tenure.
Arlene’s contract indicating a fixed term did not automatically mean that she could
never be a regular employee. For as long as it was the employee who requested,
or bargained, that the contract have a “definite date of termination,” or that the
fixed-term contract be freely entered into by the employer and the employee, then
the validity of the fixed-term contract will be upheld.
3.) ARLENE WAS ILLEGALLY DISMISSED
As a regular employee, Arlene was entitled to security of tenure under Article 279
of the Labor Code and could be dismissed only for just or authorized causes and
after observance of due process.
The expiration of the contract does not negate the finding of illegal dismissal. The
manner by which Fuji informed Arlene of non-renewal through email a month
after she informed Fuji of her illness is tantamount to constructive dismissal.
Further, Arlene was asked to sign a letter of resignation prepared by Fuji. The
existence of a fixed-term contract should not mean that there can be no illegal
dismissal. Due process must still be observed.
Moreover, disease as a ground for termination under Article 284 of the Labor Code
and Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code
require two requirements to be complied with: (1) the employee’s disease cannot
be cured within six months and his continued employment is prohibited by law
or prejudicial to his health as well as to the health of his co-employees; and (2)
certification issued by a competent public health authority that even with proper
medical treatment, the disease cannot be cured within six months. The burden of
proving compliance with these requisites is on the employer. Non-compliance
leads to illegal dismissal.
Arlene was not accorded due process. After informing her employer of her lung
cancer, she was not given the chance to present medical certificates. Fuji
immediately concluded that Arlene could no longer perform her duties because of
Page | 52
chemotherapy. Neither did it suggest for her to take a leave. It did not present any
certificate from a competent public health authority.
PURISIMO M. CABA OBAS, EXUPERIO C. MOLINA, GILBERTO V.

OPINION, VICENTE R. LAURON, RAMON M. DE PAZ, JR., ZACARIAS E.
CARBO, JULITO G. ABARRACOSO, DOMINGO B. GLORIA, and
FRANCISCO P. CUMPIO, Petitioners, vs. PEPSI-COLA PRODUCTS,
PHILIPPINES, INC., Respondents.
[G.R. No. 176908 November 11, 2015]
FACTS
Pepsi-Cola Products Philippines, Inc.’s Tanauan Plant in Tanauan, Leyte incurred

business losses in the total amount of 29,167,390.00. To avert further losses, PCPPI
implemented a company-wide retrenchment program and retrenched 47
employees of its Tanauan Plant. Petitioners, who are permanent and regular
employees of the Tanauan Plant, received their respective letters, informing them
of the cessation of their employment. Petitioners then filed their respective
complaints for illegal dismissal before the National Labor Relations Commission
Regional Arbitration Branch No. VIII in Tacloban City.
Petitioners alleged that PCPPI was not facing serious financial losses because after
their termination, it regularized four (4) employees and hired replacements for the
forty-seven (47) previously dismissed employees. They also alleged that PCPPI's
CRP was just designed to prevent their union, Leyte Pepsi-Cola Employees Union-
Associated Labor Union (LEPCEU-ALU), from becoming the certified bargaining
agent of PCPPI's rank-and-file employees.
PCPPI countered that petitioners were dismissed pursuant to its CRP to save the
company from total bankruptcy and collapse; thus, it sent notices of termination
to them and to the Department of Labor and Employment
In support of its argument that its CRP is a valid exercise of management

prerogative, PCPPI submitted audited financial statements showing that it
suffered financial reverses in 1998 in the total amount of SEVEN HUNDRED
MILLION (P700,000,000.00) PESOS, TWENTY- SEVEN MILLION (P27,000,000.00)
PESOS of which was allegedly incurred in the Tanauan Plant in 1999.
Page | 53
The Labor Arbiter ruled that the dismissal of the petitioners was illegal. On appeal
of both parties, the Fourth Division of the NLRC reversed the decision of the labor
arbiter.
The petitioners’ appeal was dismissed, and the CA affirmed the NLRC’s Fourth
Division’s decision. However, acting on the petition for certiorari filed by Molon,
et al., the CA reversed its own decision and declaring that the retrenchment was
contrary to the prescribed rules and procedure and declaring that petitioners were
illegally terminated. Their reinstatement to their former positions or its equivalent
is hereby ordered, without loss of seniority rights and privileges and PEPSI-COLA
is also ordered the payment of their backwages from the time of their illegal
dismissal up to the date of their actual reinstatement. If reinstatement is not
feasible because of strained relations or abolition of their respective positions, the
payment of separation pay equivalent to 1-month salary for every year of service,
a fraction of at least 6 months shall be considered a whole year. The monetary
considerations received by some of the employees shall be deducted from the total
amount they ought to receive from the company.
ISSUE: Whether the dismissal was legal and valid.
The petition has no merit.
The prerogative of an employer to retrench its employees must be exercised only

as a last resort, considering that it will lead to the loss of the employees' livelihood.
It is justified only when all other less drastic means have been tried and found
insufficient or inadequate. Corollary thereto, the employer must prove the
requirements for a valid retrenchment by clear and convincing evidence;
otherwise, said ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning losses or reverses in their business
ventures in order to ease out employees.
REQUISITES:
(1) That retrenchment is reasonably necessary and likely to prevent

business losses which, if already incurred, are not merely de minimis,
but substantial, serious, actual and real, or if only expected, are
Page | 54
reasonably imminent as perceived objectively and in good faith by the
employer
(2) That the employer served written notice both to the employees and to
the Department of Labor and Employment at least one month prior to
the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay
equivalent to one (1) month pay or at least one-half (½) month pay for
every year of service, whichever is higher.
(4) That the employer exercises its prerogative to retrench employees in

good faith for the advancement of its interest and not to defeat or
circumvent the employees’ right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among the employees,
such as status, efficiency, seniority, physical fitness, age, and financial
hardship for certain workers.
In due regard of these requisites, the Court observes that Pepsi had validly
implemented its retrenchment program. It is axiomatic that absent any clear
showing of abuse, arbitrariness or capriciousness, the findings of fact by the
NLRC, especially when affirmed by the CA – as in this case – are binding and
conclusive upon the Court. Thus, given that there lies no discretionary abuse with
respect to the foregoing findings, the Court sees no reason to deviate from the
same. Moreover, it must be underscored that Pepsi’s management exerted
conscious efforts to incorporate employee participation during the
implementation of its retrenchment program. Records indicate that Pepsi had
initiated sit-downs with its employees to review the criteria on which the selection
of who to be retrenched would be based.
NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN

AND MA. CRISTINA SUMAYAO, Petitioners, vs. ABS-CBN CORPORATION
(FORMERLY, ABS-CBN BROADCASTING CORPORATION) AND AMALIA
VILLAFUERTE, Respondents.
[G.R. No. 199166 April 20, 2015]
FACTS
Page | 55
Respondent ABS-CBN is a television and radio broadcasting company with
Amalia Villafuerte as the manager. Thru Villafuerte, ABS-CBN engaged in the
services of petitioners Benigno and Del Valle who were cameramen/editors for TV
broadcasting. Petitioners Ma. Cristina Sumayao and Llorin were likewise
reporters sometime in 1996-2002. Their services were engaged thru talent contracts
that provided terms ranging from 3 months to 1 year. They were also given Project
Assignment Forms which detailed the duration of a p[articular project as well as
the budget and the daily technical requirements thereof. Petitioners were tasked
to cover news items for subsequent daily airings in respondents’ TV Patrol Bicol
Program. While specifically providing that nothing therein shall be deemed or
construed to establish an employer-employee relationship between the parties, the
aforesaid Talent Contracts included, among other matters, provisions on the
following matters:
(a) The Talent’s creation and performance of work in accordance with the ABS-
CBN’s professional standards and compliance with its policies and guidelines
covering intellectual property creators, industry codes as well as the rules and
regulations of the Kapisanan ng mga Broadcasters sa Pilipinas (KBP) and other
regulatory agencies;
(b) The Talent’s non-engagement in similar work for a person or entity directly or
indirectly in competition with or adverse to the interests of ABS-CBN and non-
promotion of any product or service without prior written consent;
(c) The results-oriented nature of the talent’s work which did not require them to
observe normal or fixed working hours.3 Subjected to contractor’s tax,
petitioners’ remunerations were denominated as Talent Fees which, as of last
renewal, were admitted to be pegged per airing day at P273.35 for Begino, P
302.92 for Del Valle, P 323.08 for Sumayao and P 315.39 for Llorin.
Petitioners claim for regularization, underpayment of overtime pay, holiday pay,

13th month pay, and service incentive leave pay. They also claim that their work
is necessary in the business of ABS CBN. They further allege that they were
working under the direct supervision and control of ABSCBN. Respondent argued
that, although it occasionally engages in production and generates programs thru
various means, ABS-CBN is primarily engaged in the business of broadcasting
television and radio content. Not having the full manpower complement to
produce its own program, the company had allegedly resorted to engaging
independent contractors like actors, directors, artists, anchormen, reporters,
Page | 56
scriptwriters and various production and technical staff, who offered their services
in relation to a program Petitioners filed a 2nd complaint for the same cause of
action due to the fact that ABS CBN terminated their services during the pendency
of the first case.
ISSUE: Whether petitioners may claim from ABS-CBN? Whether or not there is an
employer – employee relationship?
SC ruled in favor of petitioners.
To determine the existence of said relation, case law has consistently applied the
four-fold test, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to
control the employee on the means and methods by which the work is
accomplished.23 Of these criteria, the so-called “control test” is generally
regarded as the most crucial and determinative indicator of the presence or
absence of an employer-employee relationship. Under this test, an employer-
employee relationship is said to exist where the person for whom the services are
performed reserves the right to control not only the end result but also the manner
and means utilized to achieve the same
ART. 280. Regular and Casual Employment: The provisions of written agreement
to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed and his
employment shall continue while such actually exists.
Page | 57
The Court finds that, notwithstanding the nomenclature of their Talent Contracts
and/or Project Assignment Forms and the terms and condition embodied therein,
petitioners are regular employees of ABS-CBN. Time and again, it has been ruled
that the test to determine whether employment is regular or not is the reasonable
connection between the activity performed by the employee in relation to the
business or trade of the employer. As cameramen/editors and reporters,
petitioners were undoubtedly performing functions necessary and essential to
ABS-CBN’s business of broadcasting television and radio content. It matters little
that petitioners’ services were engaged for specified periods for TV Patrol Bicol
and that they were paid according to the budget allocated therefor. Aside from
the fact that said program is a regular weekday fare of the ABS-CBN’s Regional
Network Group in Naga City, the record shows that, from their initial engagement
in the aforesaid capacities, petitioners were continuously re-hired by respondents
over the years. To the mind of the Court, respondents’ repeated hiring of
petitioners for its long-running news program positively indicates that the latter
were ABS-CBN’s regular employees. Also, the court finds that petitioners were
under the direct control and supervision of the network. Thus, SC ruled in favor
of petitioners.
SOCIAL SECURITY SYSTEM, Petitioner, v. DEBBIE UBAÑA, Respondent.
[G.R. No. 200114 August 24, 2015
FACTS
Respondent Debbie Ubana filed a civil case for damages against the DBP Service
Corporation, petitioner Social Security System (SSS), and the SSS Retirees
Association before the RTC. She alleged that after she applied for employment,
passed the examinations and accomplished all the requirements, she was instead
referred to DBP Service Corporation for "transitory employment." She claimed she
was qualified for her position as Processor, having completed required training
and passed the SSS qualifying examination for Computer Operations Course
given by the National Computer Institute, U.P. Diliman yet she was not given the
proper salary. When she can no longer stand the exploitation of being transeferred
from one department to another without being absorbed permanently as an
employee and without proper payment of wage, she was then forced to resign.She
averred that she suffered actual losses because of it for six years while working for
Page | 58
the petitioner. Citing Civil Service Commission Memorandum Circular No. 40,
respondent contended that the performance of functions outside of the nature
provided in the appointment and receiving salary way below that received by
regular SSS employee’s amount to an abuse of rights
Petitioner and its co-defendants SSS Retirees Association and DBP Service
Corporation filed their respective motions to dismiss, arguing that the subject
matter of the case and respondent's claims arose out of employer-employee
relations, which are beyond the RTC's jurisdiction and properly cognizable by the
National Labor Relations Commission (NLRC).
RTC dismissed the complaint on the ground of lack of jurisdiction, stating that the
complaint filed is clearly a case of unfair labor practice, therefore should be filed
with the Labor Arbiter of the NLRC. This was however set aside by the same court
during reconsideration because SSS was created under an original charter
pursuant to R.A. No. 1161as amended by R.A. 8282, which means that the said
agency is governed by the Civil Service Commission. However, since the SSS
denied the existence of an employer-employee relationship, and the case is one for
Damages, it is not the Civil Service Commission that has jurisdiction to try the
case, but the regular courts.
CA affirmed this decision of RTC agreeing that a careful perusal of the complaint
shows that it is one action for damages which the regular courts have jurisdiction.
It is the nature of action of the subject of the controversy that must be based on in
determining which body has jurisdiction. Where the claim to the principal relief
sought is to be resolved not by reference to the Labor Code or other labor relations
statute or a collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice and not to the
Labor Arbiter and the NLRC.
ISSUE: Whether Labor Code has any relevance to the principal relief sought in the
complaint, giving NLRC jurisdiction over it?
No. Labor Code does not apply in this case, therefore NLRC has no jurisdiction
to try and hear the case. Jurisdiction should be with the regular courts.
Page | 59
During respondent's stint with petitioner, she never became an SSS employee, as
she remained an employee of DBP Service Corporation and SSS Retirees
Association - the two being independent contractors with legitimate service
contracts with SSS. Petitioner denied the existence of employer-employee
relationship but in fact insists on the validity of the service agreements with DBP
Service Corporation and SSS Retirees Association, meaning that SSS is not the true
employer. In order for the Labor Arbiter to acquire jurisdiction over a dispute,
there must be an employer-employee relation between the parties thereto. Article
217 of the Labor Code as amended vests upon the labor arbiters exclusive original
jurisdiction only over the following:
1. Unfair labor practices;

2. Termination disputes
3. If accompanied with a claim for reinstatement, those cases that workers
may file involving wages, rates of pay, hours of work and other terms
and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising
from employer-employee relations
5. Cases arising from any violation of Article 264 of this Code, including
questions involving legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare
and maternity benefits, all other claims, arising from employer-
employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos
(P5,000.00) regardless of whether accompanied with a claim for
reinstatement.
Since there is no employer-employee relationship between the parties herein, then

there is no labor dispute cognizable by the Labor Arbiters or the NLRC. There
being no employer-employee relation or any other definite or direct contract
between respondent and petitioner, the latter being responsible to the former only
for the proper payment of wages, respondent is thus justified in filing a case
against petitioner, based on Articles 19 and 20 of the Civil Code, to recover the
proper salary due her as SSS Processor. Because of this, case is remanded to RTC
for the continuation of proceedings.
Page | 60
CENTURY PROPERTIES, INC., Petitioner, vs EDWIN J. BABIANO and
EMMA B. CONCEPCION, Respondents.
[G.R. No. 220978 July 5, 2016]
FACTS
Concepcion was initially hired as a sales agent by Century Properties, Inc. (CPI)
and was eventually promoted as project director on September 1, 2007. As such,
she signed an employment agreement, denominated as “Contract of Agency for
Project Director” which provided, among others, that she would directly report to
Edwin J. Babiano and receive a monthly subsidy of P60, 000.00, 0.5 percent
commission, and cash incentives. On March 31, 2008, she executed a similar
contract anew with CPI in which she would receive a monthly subsidy of P50,
000.00, 0.5 percent commission, and cash incentives as per company policy. It was
stipulated in both contracts that no employer-employee relationship exists
between her and CPI.
She resigned as CPI’s project director through a letter dated Feb. 23, 2009, effective
immediately. On August 8, 2011, she and Babiano filed a complaint before the
NLRC for non-payment of commissions and damages against CPI and its
executive vice president claiming that their repeated demands for their payment
remained unheeded. CPI invoked the defense that the NLRC had no jurisdiction
to hear the complaint because there was no employer-employee a relationship
between them, and thus, she should have litigated the same in an ordinary civil
action.
ISSUE: Whether employer-employee relationship exists.
No. Anent the nature of Concepcion’s engagement, based on case law, the presence
of the following elements evinces the existence of an employer-employee
relationship:
(a) the power to hire, i.e., the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and (d) the employer’s power to control the employee’s
conduct, or the so called “control test.”
Page | 61
The control test is commonly regarded as the most important indicator of the
presence or absence of an employer-employee relationship. Under this test, an
employer-employee relationship exists where the person for whom the services
are performed reserves the right to control not only the end achieved, but also the
manner and means to be used in reaching that end. Guided by these parameters,
the Court finds that Concepcion was an employee of CPI considering that:
(a) CPI continuously hired and promoted Concepcion from October 2002 until
her resignation on February 23, 2009, thus, showing that CPI exercised the
power of selection and engagement over her person and that she performed
functions that were necessary and desirable to the business of CPI;
(b) the monthly “subsidy” and cash incentives that Concepcion was receiving
from CPI are actually remuneration in the concept of wages as it was
regularly given to her on a monthly basis without any qualification, save
for the “complete submission of documents on what is a sale policy”;
(c) CPI had the power to discipline or even dismiss Concepcion as her
engagement contract with CPI expressly conferred upon the latter “the
right to discontinue her service anytime during the period of engagement
should she fail to meet the performance standards,” among others, and that
CPI actually exercised such power to dismiss when it accepted and
approved Concepcion’s resignation letter; and most importantly,
(d) as aptly pointed out by the CA, CPI possessed the power of control over
Concepcion because in the performance of her duties as Project Director -
particularly in the conduct of recruitment activities, training sessions, and
skills development of Sales Directors - she did not exercise independent
discretion thereon, but was still subject to the direct supervision of CPI,
acting through Babiano. Besides, while the employment agreement of
Concepcion was denominated as a “Contract of Agency for Project
Director,” it should be stressed that the existence of employer-employee
relations could not be negated by the mere expedient of repudiating it in a
contract.
Page | 62
JOAQUIN LU, Petitioner vs TIRSO ENOPIA, et.al.
[G.R. No. 197899 March 6, 2017]
FACTS
Enopia and others were hired from January 20, 1994 to March 20, 1996 as crew
members of the fishing mother boat FIB MG-28 owned by Joaquin “Jake” Lu who
is the sole proprietor of Mommy Gina Tuna Resources [MGTR] based in General
Santos City. Parties had an income-sharing arrangement wherein 55% goes to Lu,
45% to the crew members, with an additional 4% as “backing incentive”; they also
equally share the expenses for the maintenance and repair of the mother boat, and
for the purchase of nets, ropes and payaos. Sometime in August 1997, Lu proposed
the signing of a Joint Venture Fishing Agreement between them, but complainants
refused to sign the same as they opposed the one-year term provided in the
agreement.
According to complainants, during their dialogue on August 18, 1997, Lu

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

motion for reconsideration was denied in a Resolution. Complainants filed a
petition for certiorari with the CA.
The CA dismissed the petition for having been filed beyond the 60-day
reglementary period as provided under Rule 65 of the Rules of Court, and that the
sworn certification of non-forum shopping was signed only by two (2) of the
complainants who had not shown any authority to sign in behalf of the other
Page | 63
crewmembers. As their motion for reconsideration was denied, they went to the
Supreme Court via a petition for certiorari assailing the dismissal which the SC
granted and remanded the case to the CA for further proceedings.
In a remanded case, the CA rendered its assailed Decision reversing the NLRC
awarding separation pay, full back wages, exemplary damages, and attorney’s
fees. The CA found that Lu exercised control over respondents. Lu’s motion for
reconsideration was denied by the CA. Aggrieved, he filed the instant petition for
review on certiorari.
ISSUES: 1.) Whether or not there was employer-employee relationship between

the parties; 2.) Whether or not the CA can pass upon the evidence in a petition for
certiorari.
The judicial function of the CA in the exercise of its certiorari jurisdiction over the
NLRC extends to the careful review of the NLRC’s evaluation of the evidence
because the factual findings of the NLRC are accorded great respect and finality
only when they rest on substantial evidence.
Accordingly, the CA is not to be restrained from revising or correcting such factual

findings whenever warranted by the circumstances simply because the NLRC is
not infallible. Indeed, to deny to the CA this power is to diminish its corrective
jurisdiction through the writ of certiorari.
In determining the existence of an employer-employee relationship, the following

elements are considered:
(1) the selection and engagement of the workers;
(2) the power to control the worker’s conduct;
(3) the payment of wages by whatever means; and
(4) the power of dismissal.
The Court found all these elements present in this case.
Page | 64
JULIUS Q. APELANIO, Petitioner vs. ARCANYS, INC. AND
DEBONNEVILLE, Respondents.
[GR No. 227098]
FACTS
On April 10, 2012, Apelanio was hired by Arcanys, Inc. as a Usability/Web Design
Expert. He was placed on a "probationary status" for a period of six months. Due
to low evaluation ratings, Arcanys served Apelanio a letter, informing him that
Arcanys would not convert his status into a regular employee. Apelanio was given
his final pay and he signed a “Waiver, Release and Quitclaim” in favor of
respondents. Apelanio averred that when his probationary contract was
terminated, he was immediately offered a retainership agreement lasting from
October 10, 2012 until October 24, 2012. It involved a similar scope of work and
responsibilities but on a project basis, without security of tenure, with lesser pay,
and without any labor standard benefits. Apelanio was confused with the
arrangement but agreed since he had a family to support.
He believed that he was still undergoing Arcanys’ evaluation. On October 26, 2012,
after the lapse of the retainership agreement, Apelanio was offered another
retainership agreement, from October 25, 2012 to November 12, 2012, again with
an identical scope of work but at a reduced daily rate. As a result, Apelanio became
suspicious of Arcanys’ motives and consulted with a lawyer, who informed him
that said practice was illegal. He then refused to sign the second retainership
agreement and questioned why they offered him another retainership agreement
if he was deemed unqualified for the position. Apelanio filed a complaint for
illegal dismissal.
Simply put, after failing to meet the standards for regularization, probationary
employee Apelanio alleged that he accepted the offer of Arcanys for retainership
for the period October 10-24, 2012. He did not sign the retainership contract. After
the expiration of said period, Apelanio alleged that Arcanys made another offer of
retainership for the period October 25-November 12, 2012. In discussing the terms
of the second retainership offer, Apelanio and Arcanys discussed the same
remuneration figure covered by the alleged first retainership offer. The draft
agreement embodying the second offer stated that it was signed by the parties on
the same date as the first agreement.
ISSUES: Whether Apelanio was illegally dismissed.
Page | 65
NO. Apelanio was not illegally dismissed.
The SC cited the CA’s ruling:
The first agreement, which supposedly re-hired Apelanio for the same position,
did not bear his signature. This fact alone stirs doubt on whether the aforementioned
agreement really got finalized. The NLRC gave full credence to Apelanio's proposition
that it is normal for an employee not to sign his copy and that if Apelanio really wanted to,
he could have signed his copy before submitting it as evidence. Unfortunately, We
cannot align Our view with that of the NLRC considering that x x x the absence of
Apelanio's signature in the first agreement was also coupled with other indicators that
support the conclusion that such agreement was never really carried out.
First, the draft of the second agreement, which Apelanio claimed to be another extension of
the first, indicated that such agreement was entered into, and supposed to be signed by the
parties on the 10th of October 2012 (the date supposedly of the first agreement).
Second, the Skype conversation between Apelanio and Arcanys’ representative on October
24, 2012 x x x showed that they were discussing possible compensation atP18,000.00,
which was the remuneration indicated in the first agreement. If the first agreement got
finalized and was already implemented, then why would the draft of the second one still
indicates the 10th October 2012 as the date of execution and signing of the first agreement?
Although it may be argued that the dates were merely clerical errors or unreplaced
entries resulting to oversight, the Skype conversation between Apelanio and
Arcanys’ representative on October 24, 2012, confirmed the non-conclusion of the
first agreement; for it would be illogical for the parties to still discuss the
remuneration indicated in the first agreement if the same had already been
implemented, and, in fact, was about to end on the day that the conversation took
place. Furthermore, a review of the retainership agreements indicates that
Apelanio was merely engaged as a consultant, in relation to the hacking incidents
endured by Arcanys.
Apelanio merely alleged that he was hired as an employee under said retainership
agreements but has yet to provide evidence to support such claim. "It is a basic
rule in evidence that each party must prove his affirmative allegations." Therefore,
Page | 66
Article 281 of the Labor Code finds no application in this case, absent any evidence
to prove that Apelanio worked beyond his probationary employment.
DR. MARY JEAN P. LORECHE-AMIT vs. CAGAYAN DE ORO MEDICAL

CENTER, INC. (CDMC), DR. FRANCISCO OH and DR. HERNANDO
EMANO
[GR No. 216635]
Facts
In Cagayan De Oro Medical Center, Inc. (CDMC), Dr. Mary Jean P. Loreche-Amit
started working sometime in May 1996, when she was engaged by the late Dr. Jose
N. Gaerlan (Dr. Gaerlan) as Associate Pathologist in the Department of
Laboratories. Upon the demise of Dr. Gaerlan, CDMC's Board of Directors
formally appointed petitioner as Chief Pathologist for five years or until May 15,
2011.
On 2007, the Board passed a resolution, recalling petitioner's appointment as Chief

Pathologist. This made petitioner file a complaint for illegal dismissal, contending
that she was illegally dismissed by CDMC without just cause and due process. She
averred that Dr. Hernando Emano asked her to help his daughter Dr. Helga
Emano-Bleza to qualify as a pathologist considering that petitioner is one of the
Board of Governors accredited by the PRC. However, petitioner refused because
the latter failed to qualify in the clinical pathology examination. Such refusal,
according to petitioner, started the subtle attempt of Dr. Emano to oust her from
her job.
Soon thereafter, Dr. Francisco Oh issued an Inter-Office Memorandum addressed

to all laboratory personnel stating that working in and out of the building without
proper permission is to be treated as absence without official leave and payment
for printing of duplicate copies not endorsed to the hospital is a form of stealing.
As petitioner slammed the Memorandum against the wall and tagged the name of
Dr. Oh as an irrational man, she received an Inter-Office Memorandum from Dr.
Oh for alleged conduct unbecoming/insubordination, and to explain why her
appointment should not be revoked due to such behavior. A Memorandum
recalling her appointment was issued.
Page | 67
The Labor Arbiter found that petitioner is a corporate officer of the hospital
because of her appointment by the Board of Directors through a resolution; thus,
matters relating to the propriety of her dismissal is under the jurisdiction of the
RTC under Section 5.2 of RA No. 8799 (The Securities Regulation Code of the
Philippines).
On appeal, the NLRC in a Resolution affirmed the ruling of the Labor Arbiter.
Petitioner filed a Petition for Certiorari before the CA but the same, as well as her
subsequent motion for reconsideration, were dismissed.
ISSUE: Whether petitioner is an employee of the CDMC.
No. The four-fold test, to wit: 1) the selection and engagement of the employees;
2) the payment of wages; 3) the power of dismissal; and 4) the power to control
the employee's conduct, must be applied to determine the existence of an
employer- employee relationship.
Based on the records, CDMC does not exercise the power of control over
petitioner. The power to control the work of the employee is considered the most
significant determinant of the existence of an employer-employee relationship.
This test is premised on whether the person for whom the services are performed
reserves the right to control both the end achieved and the manner and means
used to achieve that end.
As the Labor Arbiter, NLRC, and the CA aptly observed, petitioner was working
for two other hospitals aside from CDMC, not to mention those other hospitals
which she caters to when her services are needed. Such fact evinces that petitioner
controls her working hours. On this note, relevant is the economic reality test
which this Court has adopted in determining the existence of employer-employee
relationship. Under this test, the economic realities prevailing within the activity
or between the parties are examined, taking into consideration the totality of
circumstances surrounding the true nature of the relationship between the parties,
to wit:
x x x. In our jurisdiction, the benchmark of economic reality in analyzing possible

employment relationships for purposes of applying the Labor Code ought to be the economic
dependence of the worker on his employer.
Page | 68
Thus, the fact that petitioner continued to work for other hospitals strengthens the
proposition that petitioner was not wholly dependent on CDMC.
The rule is that where a person who works for another performs his job more or
less at his own pleasure, in the manner he sees fit, not subject to definite hours or
conditions of work, and is compensated according to the result of his efforts and
not the amount thereof, no employer-employee relationship exists
ARNULFO M. FERNANDEZ, petitioner, vs. KALOOKAN

SLAUGHTERHOUSE, INCORPORATED/ERNESTO CUNANAN,
respondents
[G.R. No. 225075, June 19, 2019]
FACTS
Petitioner was hired in 1994 as a butcher by Kalookan Slaughterhouse, Inc. a single

proprietorship owned by respondent Ernesto Cunanan. He claimed that he
worked from Monday to Sunday, from 6:30 P.M. to 7:30 A.M., with a daily wage
of P700.00, which was later reduced to P500.00.8 He further claimed that he met
an accident while driving Kalookan Slaughterhouse’s truck in December 2013 and
that deductions were made from his wages. He questioned these deductions in
July 2014, and thereafter he was treated unreasonably. Petitioner further claimed
that on July 21, 2014, he suffered from a headache and did not report for work. The
next day, however, he was shocked when he only received P200.00 due to his
previous undertime and was informed that he could no longer report for work due
to his old age.
Kalookan Slaughterhouse asserted that petitioner is an independent butcher

working under its Operation Supervisor, Cirilo Tablit. He received payment based
on the number of hogs he butchered and was only required to be in the
slaughterhouse when customers brought hogs to be slaughtered. Kalookan
Slaughterhouse alleged that it imposed policies on the entry to the premises, which
applied to employees, dealers, independent butchers, hog and meat dealers and
trainees, and that petitioner violated the policies and he misconstrued the
disallowance to enter the slaughterhouse as an act of dismissal.
On August 5, 2014, petitioner filed the complaint for illegal dismissal before the
LA. After the exchange of pleadings, the LA ruled that petitioner was illegally
Page | 69
dismissed. Aggrieved, Kalookan Slaughterhouse appealed to the NLRC, which
reversed the LA. Petitioner questioned the NLRC Decision to the CA through a
petition for certiorari. The CA, however, denied the petition. Petitioner moved for
reconsideration, but the CA denied this. Hence, this Petition.
ISSUE: Whether the CA committed a reversible error in affirming the NLRC

Decision and Resolution which failed to recognize that there was an employer-
employee between the petitioner and the respondents.
Yes. Petitioner was an employee of Kalookan Slaughterhouse. It is settled that

"[t]o determine the existence of an employer-employee relationship, four elements
generally need to be considered, namely: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power
to control the employee's conduct. These elements or indicators comprise the so-
called 'four-fold' test of employment relationship.
Petitioner submitted these following (a) log sheets for three days in September
2012 where it was shown that he reported for work; (b) three gate passes and one
identification card all of which state that he was a butcher; 40 and (c) a trip ticket
showing that on December 30, 2007, petitioner was part of a group who went to
Bataan. The ticket had a notation that petitioner was a captain of the trip and the
truck with Plate Number CJH 377 was driven by a certain Peter.
While Kalookan Slaughterhouse presented these evidences: (a) Sinumpaang

Salaysay of Tablit alleging that he has been an employee of Kalookan
Slaughterhouse for more or less 20 years; (b) Photographs of petitioner sleeping in
the premises of Kalookan Slaughterhouse; (c) Photographs of policies
implemented by Kalookan Slaughterhouse as listed by Tablit; and, (d)
Sinumpaang Salaysay of De Guzman where he alleged that he is a caretaker of
Kalookan Slaughterhouse and he knew of petitioner as one of the butchers hired
by Tablit; he would often reprimand petitioner for failing to follow Kalookan
Slaughterhouse's policies such as when petitioner failed to wear his ID, wear his
uniform, and properly store his knives used for butchering. Petitioner would also
sometimes come to work with dirty clothes, and there was one time he caught
petitioner sleeping.
Page | 70
In lieu of this, it is undisputed that petitioner rendered butchering services at
Kalookan Slaughterhouse. The LA found that petitioner was engaged by Kalookan
Slaughterhouse itself since petitioner submitted log sheets and gate passes. The
Court finds that the NLRC and the CA committed a grave error and agrees with
the LA.
Here, the totality of petitioner's evidence and the admissions of Kalookan

Slaughterhouse convinces the Court that petitioner was indeed an employee of
Kalookan Slaughterhouse. Petitioner was able to present an I.D., gate passes, log
sheets, and a trip ticket. Kalookan Slaughterhouse even admitted through De
Guzman that uniforms were given to all personnel, including petitioner.
III. HIRING OF EMPLOYEE
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION and GRACE DE
GUZMAN, respondents.
[G.R. No. 118978 May 23, 1997]
FACTS
Grace de Guzman was initially hired by petitioner as a reliever for a fixed period
from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on
maternity leave. Under the Reliever Agreement which she signed with Petitioner
Company; her employment was to be immediately terminated upon expiration of
the agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19,
1991 to August 8, 1991, private respondent’s services as reliever were again
engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went
on leave during both periods. After August 8, 1991, and pursuant to their Reliever
Agreement, her services were terminated.
It now appears that private respondent had made a representation that she was
single even though she contracted marriage months before, in the two successive
reliever agreements which she signed on June 10, 1991 and July 8, 1991. When
petitioner supposedly learned about the same later, its branch supervisor sent to
private respondent a memorandum requiring her to explain the discrepancy. In
that memorandum, she was reminded about the company’s policy of not accepting
married women for employment.
Page | 71
Private respondent was dismissed from the company effective January 29, 1992,
which she readily contested by initiating a complaint for illegal dismissal. Labor
Arbiter handed down a decision declaring that private respondent, who had
already gained the status of a regular employee, was illegally dismissed by
petitioner. On appeal to the National Labor Relations Commission (NLRC), said
public respondent upheld the labor arbiter and it ruled that private respondent
had indeed been the subject of an unjust and unlawful discrimination by her
employer, PT&T.
ISSUE: Whether discrimination merely by reason of the marriage of a female

employee is expressly prohibited by Article 136.
The stipulation is violative of Art. 136 of the Labor Code.
An employer is free to regulate, according to his discretion and best business

judgment, all aspects of employment, “from hiring to firing,” except in cases of
unlawful discrimination or those which may be provided by law. Petitioner’s
policy of not accepting or considering as disqualified from work any woman
worker who contracts marriage runs afoul of the test of, and the right against,
discrimination, afforded all women workers by our labor laws and by no less than
the Constitution.
Respondent’s act of concealing the true nature of her status from PT&T could not
be properly characterized as willful or in bad faith as she was moved to act the
way she did mainly because she wanted to retain a permanent job in a stable
company. In other words, she was practically forced by that very same illegal
company policy into misrepresenting her civil status for fear of being disqualified
from work.
The government, to repeat, abhors any stipulation or policy in the nature of that
adopted by petitioner PT&T. Under American jurisprudence, job requirements
which establish employer preference or conditions relating to the marital status of
an employee are categorized as a “sex-plus” discrimination where it is imposed
on one sex and not on the other. Further, the same should be evenly applied and
must not inflict adverse effects on a racial or sexual group which is protected by
federal job discrimination laws.
Page | 72
Petitioner’s policy is not only in derogation of the provisions of Article 136 of the
Labor Code on the right of a woman to be free from any kind of stipulation against
marriage in connection with her employment, but it likewise assaults good morals
and public policy, tending as it does to deprive a woman of the freedom to choose
her status, a privilege that by all accounts inheres in the individual as an intangible
and inalienable right.
Hence, while it is true that the parties to a contract may establish any agreements,
terms, and conditions that they may deem convenient, the same should not be
contrary to law, morals, good customs, public order, or public policy. Carried to
its logical consequences, it may even be said that petitioner’s policy against
legitimate marital bonds would encourage illicit or common-law relations and
subvert the sacrament of marriage.
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.

TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES, INC.,
Respondent.
[G.R. No. 162994 September 17, 2004]
FACTS
Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome Philppines

(Glaxo) as medical representative on October 24, 1994 thereafter signed a contract
of employment which stipulates among others that he agrees to study and abide
existing company rules; to disclose to management any existing of future
relationship by consanguinity or affinity with co-employees or employees of
competing drug companies and if ever that such management find such conflict
of interest, he must resign. The Employee Code of Conduct of Glaxo similarly
provides that an employee is expected to inform management of any existing or
future relationship by consanguinity or affinity with co-employees or employees
of competing drug companies. If management perceives a conflict of interest or a
potential conflict between such relationship and the employee’s employment with
the company, the management and the employee will explore the possibility of a
“transfer to another department in a non-counterchecking position” or
preparation for employment outside the company after six months.
Page | 73
Reminders from Tecson’s district manager did not stop him from marrying.
Tecson married Bettsy, an Astra’s Branch Coordinatior in Albay. She supervised
the district managers and medical representatives of her company and prepared
marketing strategies for Astra in that area. Tecson was reassigned to another place
and was not given products that the Astra Company has and he was not included
in products seminars and training.
Tecson requested for time in complying said policy by asking for a transfer in the
Glaxo’s milk division in which the other company had no counterpart. Thereafter,
he bought the matter to Grievance Committee but the parties failed to resolve such
issue, Glaxo offered Tecson a separation pay of one-half (½) month pay for every
year of service, or a total of P50,000.00 but he declined the offer. On November 15,
2000, the National Conciliation and Mediation Board (NCMB) rendered its
Decision declaring as valid Glaxo’s policy on relationships between its employees
and persons employed with competitor companies and affirming Glaxo’s right to
transfer Tecson to another sales territory.
Tecson filed for a petition for review on the CA and the CA promulgated that the
NCMB did not err in rendering its decision. A recon was filed in appellate court,
but it was denied, hence this petition for certiorari. Petitioner’s contention it was
violative of constitutional law which is the equal protection clause and he was
constructively dismissed while the respondents’ contention that it is a valid
exercise of its management prerogatives.
ISSUE: Whether the policy of a pharmaceutical company prohibiting its

employees from marrying employees of another pharmaceutical company is valid.
This petition was denied.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information from competitors,
especially so that it and Astra are rival companies in the highly competitive
pharmaceutical industry.
The prohibition against personal or marital relationships with employees of

competitor companies upon Glaxo’s employees is reasonable under the
circumstances because relationships of that nature might compromise the interests
Page | 74
of the company. In laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor company will gain
access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied.
No less than the Constitution recognizes the right of enterprises to adopt and
enforce such a policy to protect its right to reasonable returns on investments and
to expansion and growth.
The challenged company policy does not violate the equal protection clause of the
Constitution as petitioners erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed only to the state or those
acting under color of its authority.
From the wordings of the contractual provision and the policy in its employee
handbook, Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free
to cultivate relationships with and marry persons of their own choosing. What the
company merely seeks to avoid is a conflict of interest between the employee and
the company that may arise out of such relationships.
There was no merit in Tecson’s contention that he was constructively dismissed

when he was transferred from the Camarines Norte-Camarines Sur sales area to
the Butuan City-Surigao City-Agusan del Sur sales area, and when he was
excluded from attending the company’s seminar on new products which were
directly competing with similar products manufactured by Astra. Constructive
dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or unlikely; when
there is a demotion in rank or diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee. The
record does not show that Tecson was demoted or unduly discriminated upon by
reason of such transfer.
STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN

CHUA, Petitioners, vs. RONALDO D. SIMBOL, WILFREDA N. COMIA &
LORNA E. ESTRELLA, Respondents.
[G.R. No. 164774 April 12, 2006]
Page | 75
FACTS
Simbol was employed by Star Paper Corporation on October 1993. He met Alma
Dayrit, also an employee of the company, whom he married. Before marriage,
Josephine Ongsitco, the manager, advised the couple that one of them must resign
if they decided to get married pursuant to a company policy to which Simbol
complied. Simbol resigned on June 20, 1998 pursuant to the company policy. On
February 5, 1997, Comia was hired by the company. She met Howard Comia, a co-
employee, whom she married on June 1, 2000. Ongsitco likewise reminded them
the company policy, Comia resigned on June 30, 2000. Estrella was also hired on
July 29, 1994. She met Luisito Zuñiga, also a co-worker. Petitioners stated that
Zuñiga, a married man, got Estrella pregnant. The company allegedly could have
terminated her services due to immorality, but she opted to resign on December
21, 1999.
The Labor Arbiter dismissed the complaint and stated that the company policy
was decreed pursuant to what the respondent corporation perceived as
management prerogative. On appeal to the NLRC, the Commission affirmed the
decision of the Labor Arbiter. In its assailed Decision dated August 3, 2004, the
Court of Appeals reversed the NLRC decision.
ISSUE: Whether the questioned policy violates the rights of the employee under
the Constitution and the Labor Code?
The Court ruled on the side of the respondents.
Article 136 of the Labor Code which provides:
It shall be unlawful for an employer to require as a condition of employment or

continuation of employment that a woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married a woman employee shall be deemed resigned
or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.
It is significant to note that respondents were hired after they were found fit for
the job but were asked to resign when they married a co-employee. Petitioners
failed to show how the marriage of Simbol to Alma Dayrit could be detrimental to
Page | 76
its business operations. It must be reasonable under the circumstances to qualify
as a valid exercise of management prerogative.
The questioned policy may not facially violate Article 136 of the Labor Code but it
creates a disproportionate effect. The failure of petitioners to prove a legitimate
business concern in imposing the questioned policy cannot prejudice the
employee’s right to be free from arbitrary discrimination based upon stereotypes
of married persons working together in one company.
DEL MONTE PHILIPPINES, INC., Petitioner, vs.LOLITA VELASCO,

Respondent.
[G.R. No. 153477 March 6, 2007]
FACTS
Del Monte hired Lolita Velasco as seasonal employee and was subsequently
regularized by Del Monte. On June 1987, petitioner warned Velasco of its absences
and was repeatedly reminded that her absence without permission may result to
forfeiture of her vacation leave.
Another warning was sent due to her absences without permission which
eventually led to the forfeiture of her vacation entitlement. On September 1994, a
notice of hearing was sent to Velasco informing her of the charges filed against her
for violating the Absence without leave rule. On January 1995, after the hearing,
Del Monte terminated the services of Velasco due to excessive absence without
leave. Feeling aggrieved, Velasco filed a case for illegal dismissal. She asserted that
she was absent since she was suffering urinary tract infection and she was
pregnant. She sent an application for leave to the supervisor. Upon check-up of
the company doctor, Velasco was advised to rest. On the following check-ups, she
was again advised to rest where this time, she was not able to get secure a leave.
The Labor Arbiter rendered decision that she was an incorrigible absentee.
Respondent appealed to the NLRC. NLRC vacated the decision of the Labor
Arbiter. It decided that respondent was illegally dismissed and was entitled to
reinstatement. Petitioner appealed to CA where it dismissed its claim and affirmed
NLRC, thus, this petition.
ISSUE: Whether the dismissal was illegal.
Page | 77
Yes. In this case, by the measure of substantial evidence, what is controlling is

the finding of the NLRC and the CA that respondent was pregnant and suffered
from related ailments.
It would be unreasonable to isolate such condition strictly to the dates stated in

the Medical Certificate or the Discharge Summary. It can be safely assumed that
the absences that are not covered by, but which nonetheless approximate, the dates
stated in the Discharge Summary and Medical Certificate, are due to the
continuing condition of pregnancy and related illnesses, and, hence, are justified
absences.
The termination was illegal since it comes within the purview of the prohibited
acts provided in Article 137 of the Labor Code. Based on Article 137, it shall be
unlawful for any employer to:
1. Deny any woman employee the benefits provided for in this Chapter or to
discharge any woman employed by him for the purpose of preventing her from
enjoying any of the benefits provided under this Code;
2. Discharge such woman on account of her pregnancy, or while on leave or in

confinement due to her pregnancy; and
3. Discharge or refuse the admission of such woman upon returning to her work
for fear that she may again be pregnant.
The respondent was illegally dismissed by the petitioner on account of her

pregnancy. The act of the employer is unlawful, it being contrary to law.
ARMANDO G. YRASUEGUI, petitioners, vs. PHILIPPINE AIRLINES, INC.,

respondents.
[G.R. No. 168081 October 17, 2008]
Page | 78
FACTS
Petitioner was a former international flight steward of Philippine Airlines, Inc.

(PAL). He stands 5’8’’ tall and the proper weight for a man of his height and body
structure is from 147 to 166 pounds, as mandated by the Cabin and Crew
Administration Manual of PAL. The weight problems of petitioner dates back to
1984 and was advised go on an extended vacation leave for several occasions to
meet the company’s weight standards. On February 25, 1989, petitioner
underwent weight check. It was discovered that he gained, instead of losing,
weight. He was overweight at 215 pounds; He was formally requested to trim
down to his ideal weight and report for weight checks on several dates and was
also told that he may avail of the services of the company physician should he wish
to do so.
On November 13, 1992, PAL finally served petitioner a Notice of Administrative

Charge for violation of company standards on weight requirements for not
attending to his weight checks and not losing weight.
On June 15, 1993, petitioner was formally informed by PAL that due to his inability
to attain his ideal weight, and considering the utmost leniency extended to him
which spanned a period covering a total of almost five (5) years, his services were
considered terminated effective immediately.
On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled that petitioner was
illegally dismissed. The Labor Arbiter held that the weight standards of PAL are
reasonable in view of the nature of the job of petitioner. However, the weight
standards need not be complied with under pain of dismissal since his weight did
not hamper the performance of his duties. If it did, petitioner could be transferred
to other positions where his weight would not be a negative factor. Notably, other
overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were promoted
instead of being disciplined.
They appealed to the NLRC and on June 23, 2000, the NLRC rendered judgment
affirming the Labor Arbiter’s decision. NLRC agree with the findings of the Labor
Arbiter but it found as unnecessary to hold that petitioner was not remiss in the
performance of his duties as flight steward despite being overweight and should
have limited himself to the issue of whether the failure of petitioner to attain his
ideal weight constituted willful defiance of the weight standards of PAL. Both
appeal of respondent PAL was dismissed.
Page | 79
In its appeal to the CA, the decision of the NLRC was reversed and set aside and
opined that there was grave abuse of discretion on the part of the NLRC because
it looked at wrong and irrelevant considerations in evaluating the evidence of the
parties. Contrary to the NLRC ruling, the weight standards of PAL are meant to
be a continuing qualification for an employee’s position. The failure to adhere to
the weight standards is an analogous cause for the dismissal of an employee under
Article 282(e) of the Labor Code in relation to Article 282(a). On petitioner’s
motion, the CA held that the weight standards of PAL are a bona fide occupational
qualification which, in case of violation, justifies an employee’s separation from
the service.
ISSUE: Whether petitioner’s dismissal is valid and can be predicated on the bona
fide occupational qualification defense.
SC upheld the legality of dismissal. Separation pay, however, should be awarded

in favor of the employee as an act of social justice or based on equity.
This is so because his dismissal is not for serious misconduct and neither it ia
reflective of his moral character. The obesity of petitioner, when placed in the
context of his work as flight attendant, becomes an analogous cause under Article
282(e) of the Labor Code. His obesity may not be unintended but is nonetheless
voluntary. “[v]oluntariness basically means that the just cause is solely attributable
to the employee without any external force influencing or controlling his actions.
This element runs through all just causes under Article 282, whether they be in the
nature of a wrongful action or omission. Gross and habitual neglect, a recognized
just cause, is considered voluntary although it lacks the element of intent found in
Article 282(a), (c), and (d).”
Likewise, petitioner’s claim of discrimination must fail. The Constitution, the

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

of the job involved; and
Page | 80
(2) That there is factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties of
the job.
In short, the test of reasonableness of the company policy is used because it is

parallel to BFOQ. BFOQ is valid “provided it reflects an inherent quality
reasonably necessary for satisfactory job performance.” The weight standards of
PAL are reasonable. A common carrier, from the nature of its business and for
reasons of public policy, is bound to observe extraordinary diligence for the safety
of the passengers it transports. The primary objective of PAL in the imposition of
the weight standards for cabin crew is flight safety It cannot be gainsaid that cabin
attendants must always maintain agility in order to inspire passenger confidence
on their ability to care for the passengers when something goes wrong.
The business of PAL is air transportation. As such, it has committed itself to safely
transport its passengers. In order to achieve this, it must necessarily rely on its
employees, most particularly the cabin flight deck crew who are on board the
aircraft. The weight standards of PAL should be viewed as imposing strict norms
of discipline upon its employees. On board an aircraft, the body weight and size
of a cabin attendant are important factors to consider in case of emergency.
Aircrafts have constricted cabin space, and narrow aisles and exit doors.
Thus, the arguments of respondent that whether the airlines flight attendants are
overweight or not has no direct relation to its mission of transporting passengers
to their destination; and that the weight standards has nothing to do with
airworthiness of respondents airlines, must fail. The court is also of view that the
biggest problem with an overweight cabin attendant is the possibility of impeding
passengers from evacuating the aircraft, should the occasion call for it. The job of
a cabin attendant during emergencies is to speedily get the passengers out of the
aircraft safely. Being overweight necessarily impedes mobility and evacuation
might slow down just because a wide-bodied cabin attendant is blocking the
narrow aisles.
IV. WAGES & WAGE RATIONALIZATION ACT

IV-A. VIOLATION OF WAGE ORDER
Page | 81
S.I.P. FOOD HOUSE and MR. and MRS. ALEJANDRO PABLO, Petitioners,
vs. RESTITUTO BATOLINA, ALMER CALUMPISAN, ARIES MALGAPO,
ARMANDO MALGAPO, FLORDELIZA MATIAS, PERCIVAL MATIAS,
ARWIN MIRANDA, LOPE MATIAS, RAMIL MATIAS, ALLAN STA. INES,
Respondents.
[G.R. No. 192473 October 11, 2010]
FACTS
The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the

employees of the Government Service Insurance System (GSIS). Incidental to its
purpose, GMPC wanted to operate a canteen in the new GSIS Building but had no
capability and expertise in this area. Thus, it engaged the services of the petitioner
S.I.P. Food House (SIP), owned by the spouses Alejandro and Esther Pablo, as
concessionaire. The respondents Restituto Batolina and nine (9) others (the
respondents) worked as waiters and waitresses in the canteen.
In February 2004, GMPC terminated SIP’s “contract as GMPC concessionaire. The

termination of the concession contract caused the termination of the respondents’
employment, prompting them to file a complaint for illegal dismissal, with money
claims, against SIP and the spouses Pablo. NLRC ruled in favor of the petitioner
and CA affirmed the ruling of NLRC.SIP seeks a reversal of the appellate court’s
ruling that it was the employer of the respondents, claiming that it was merely a
labor-only contractor of GMPC.
ISSUE: Whether SIP was liable to them for their statutory benefits, although it was
not made to answer for their lost employment due to the involuntary nature of the
canteen’s closure.
The employer-employee relationship issue
The CA ruled out SIP’s claim that it was a labor-only contractor or a mere agent of
GMPC. We agree with the CA; SIP and its proprietors could not be considered as
mere agents of GMPC because they exercised the essential elements of an
employment relationship with the respondents such as hiring, payment of wages
and the power of control, not to mention that SIP operated the canteen on its own
account as it paid a fee for the use of the building and for the privilege of running
the canteen. The fact that the respondents applied with GMPC in February 2004
Page | 82
when it terminated its contract with SIP, is another clear indication that the two
entities were separate and distinct from each other. We thus see no reason to
disturb the CA’s findings.
The respondent’s money claims
We likewise affirm the CA ruling on the monetary award to Batolina and the other
complainants. The free board and lodging SIP furnished the employees cannot
operate as a set-off for the underpayment of their wages. We held in Mabeza v.
National Labor Relations Commission that the employer cannot simply deduct
from the employee’s wages the value of the board and lodging without satisfying
the following requirements: (1) proof that such facilities are customarily furnished
by the trade; (2) voluntary acceptance in writing by the employees of the
deductible facilities; and (3) proof of the fair and reasonable value of the facilities
charged. As the CA aptly noted, it is clear from the records that SIP failed to
comply with these requirements.
On the collateral issue of the proper computation of the monetary award, we also
find the CA ruling to be in order. Indeed, in the absence of evidence that the
employees worked for 26 days a month, no need exists to re-compute the award
for the respondents who were “explicitly claiming for their salaries and benefits
for the services rendered from Monday to Friday or 5 days a week or a total of 20
days a month.”
SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON,

Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, 4th
DIVISION, ROLDAN LOPEZ, EDGARDO ZUÑIGA and DANILO CAÑETE,
Respondents.
G.R. No. 172161 March 2, 2011
FACTS
Sometime in 1996, and January 1997, private respondents were hired by petitioner
Lagon as apprentice or trainee cable/lineman. The three were paid the full
minimum wage and other benefits but since they were only trainees, they did not
report for work regularly but came in as substitutes to the regular workers or in
undertakings that needed extra workers to expedite completion of work. Soon
after, they were engaged as private employees for their Islacom project in Bohol.
Page | 83
Private respondents started on March 15, 1997 until December 1997. Upon the
completion of their project, their employment was also terminated. Private
respondents received the amount of P145.00, the minimum prescribed daily wage
for Region VII. In July 1997, the amount of P145 was increased to P150.00 and in
October of the same year, the latter was increased to P155.00
On May 21, 1999, private respondents for the 4th time worked with Lagon's project
in Camarin, Caloocan City with Furukawa Corporation as the general contractor.
Their contract would expire on February 28, 2000, the period of completion of the
project. From May 21, 1997-December 1999, private respondents received the wage
of P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In
January to February 28, the three received the wage of P165.00. The existing rate
at that time was P213.00.
For reasons of delay on the delivery of imported materials from Furukawa

Corporation, the Camarin project was not completed on the scheduled date of
completion. Face[d] with economic problem[s], Lagon was constrained to cut
down the overtime work of its worker[s][,] including private respondents. Thus,
when requested by private respondents on February 28, 2000 to work overtime,
Lagon refused and told private respondents that if they insist, they would have to
go home at their own expense and that they would not be given any more time
nor allowed to stay in the quarters. This prompted private respondents to leave
their work and went home to Cebu. On March 3, 2000, private respondents filed a
complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month
pay for 1997 and 1998 and service incentive leave pay as well as damages and
attorney's fees
ISSUES: 1.) Whether or not the respondent should be allowed to recover the
differential due to the failure of the petitioner to pay the minimum wage. 2.)
Whether or not value of the facilities that the private respondents enjoyed should
be included in the computation of the "wages" received by them.
In this case, petitioners, aside from bare allegations that private respondents
received wages higher than the prescribed minimum, failed to present any
evidence, such as payroll or pays lips, to support their defense of payment. Thus,
petitioners utterly failed to discharge the onus probandi.
Page | 84
As a general rule, on payment of wages, a party who alleges payment as a defense
has the burden of proving it. Specifically with respect to labor cases, the burden of
proving payment of monetary claims rests on the employer, the rationale being
that the pertinent personnel files, payrolls, records, remittances and other similar
documents -- which will show that overtime, differentials, service incentive leave
and other claims of workers have been paid -- are not in the possession of the
worker but in the custody and absolute control of the employer
On whether the value of the facilities should be included in the computation of the
"wages" received by private respondents, Section 1 of DOLE Memorandum
Circular No. 2 provides that an employer may provide subsidized meals and
snacks to his employees provided that the subsidy shall not be less 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.
Moreover, before the value of facilities can be deducted from the employees'
wages, the following requisites must all be attendant: first, proof must be shown
that such facilities are customarily furnished by the trade; second, the provision of
deductible facilities must be voluntarily accepted in writing by the employee; and
finally, facilities must be charged at reasonable value.[20] Mere availment is not
sufficient to allow deductions from employees' wages.
These requirements, however, have not been met in this case. SLL failed to present
any company policy or guideline showing that provisions for meals and lodging
were part of the employee's salaries. It also failed to provide proof of the
employees' written authorization, much less show how they arrived at their
valuations. At any rate, it is not even clear whether private respondents enjoyed
said facilities.
In short, the benefit or privilege given to the employee which constitutes an extra
remuneration above and over his basic or ordinary earning or wage is supplement;
and when said benefit or privilege is part of the laborers' basic wages, it is a facility.
The distinction lies not so much in the kind of benefit or item (food, lodging, bonus
or sick leave) given, but in the purpose for which it is given. In the case at bench,
the items provided were given freely by SLL for the purpose of maintaining the
efficiency and health of its workers while they were working at their respective
projects.
Page | 85
For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At
any rate, these were cases of dismissal with just and authorized causes. The
present case involves the matter of the failure of the petitioners to comply with the
payment of the prescribed minimum wage.
The Court sustains the deletion of the award of differentials with respect to
respondent Roldan Lopez. As correctly pointed out by the CA, he did not work
for the project in Antipolo.
RICARDO E. VERGARA, JR., Petitioner, vs. COCA-COLA BOTTLERS

PHILIPPINES, INC., Respondent.
[G.R. No. 176985 April 1, 2013
FACTS
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola

Bottlers Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a
District Sales Supervisor (DSS) for Las Piñas City, Metro Manila. As stipulated in
respondent's existing Retirement Plan Rules and Regulations at the time, the
Annual Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered
in the computation of retirement benefits, as follows: Basic Monthly Salary +
Monthly Average Performance Incentive (which is the total performance incentive
earned during the year immediately preceding 12 months) No. of Years in Service.
Claiming his entitlement to an additional ₱474, 600.00 as Sales Management

Incentives (SMI) and to the amount of ₱496, 016.67 which respondent allegedly
deducted illegally, representing the unpaid accounts of two dealers within his
jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the
payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives,
Length of Service, Actual, Moral and Exemplary Damages, and Attorney's Fees.
(Apparently, Petitioner argued that the granting of SMI to all retired DSSs
regardless of whether they qualify to the same had ripened into company practice.
They claimed that the SMI was included in their retirement package even if they
did not meet the sales and collection qualifiers. Therefore, the failure of employer
to grant him his SMI is a violation on the principle of non-diminution of benefits.)
ISSUE: Whether the granting of SMI to all retired DSSs regardless of whether they
qualify to the same had ripened into company practice.
Page | 86
Generally, employees have a vested right over existing benefits voluntarily

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

or difficult question of law; and
4. The diminution or discontinuance is done unilaterally by the employer.
To be considered as a regular company practice, the employee must prove by

substantial evidence that the giving of the benefit is done over a long period of
time, and that it has been made consistently and deliberately. The common
denominator in previously decided cases appears to be the regularity and
deliberateness of the grant of benefits over a significant period of time. It requires
an indubitable showing that the employer agreed to continue giving the benefit
knowing fully well that the employees are not covered by any provision of the law
or agreement requiring payment thereof. In sum, the benefit must be characterized
by regularity, voluntary and deliberate intent of the employer to grant the benefit
over a considerable period of time.
Upon review of the entire case records, we find no substantial evidence to prove
that the grant of SMI to all retired DSSs regardless of whether or not they qualify
to the same had ripened into company practice. The granting of the SMI in the
Page | 87
retirement package of Velazquez was an isolated incident and could hardly be
classified as a company practice that may be considered an enforceable obligation.
To repeat, the principle against diminution of benefits is applicable only if the
grant or benefit is founded on an express policy or has ripened into a practice over
a long period of time which is consistent and deliberate; it presupposes that a
company practice, policy and tradition favorable to the employees has been clearly
established; and that the payments made by the company pursuant to it have
ripened into benefits enjoyed by them. Certainly, a practice or custom is, as a
general rule, not a source of a legally demandable or enforceable right. Company
practice, just like any other fact, habits, customs, usage or patterns of conduct,
must be proven by the offering party who must allege and establish specific,
repetitive conduct that might constitute evidence of habit or company practice.
ROYAL PLANT WORKERS UNION, Petitioner, vs. COCA-COLA BOTTLERS

PHILIPPINES, INC.-CEBU PLANT, Respondent.
G.R. No. 198783 April 15, 2013
FACTS
Under the employ of each bottling plant of Coca-Cola are bottling operators. In the
case of the plant in Cebu City, there are 20 bottling operators who work for its
Bottling Line 1 while there are 12-14 bottling operators who man its Bottling Line
2. All of them are male and they are members of herein respondent Royal Plant
Workers Union (ROPWU).
In 1974, the bottling operators of then Bottling Line 2 were provided with chairs
upon their request. In 1988, the bottling operators of then Bottling Line 1 followed
suit and asked to be provided also with chairs. Their request was likewise granted.
Sometime in September 2008, the chairs provided for the operators were removed
pursuant to a national directive of petitioner. This directive is in line with the "I
Operate, I Maintain, I Clean" program of petitioner for bottling operators, wherein
every bottling operator is given the responsibility to keep the machinery and
equipment assigned to him clean and safe. The program reinforces the task of
bottling operators to constantly move about in the performance of their duties and
responsibilities.
Page | 88
With this task of moving constantly to check on the machinery and equipment
assigned to him, a bottling operator does not need a chair anymore, hence,
petitioner’s directive to remove them. Furthermore, CCBPI rationalized that the
removal of the chairs is implemented so that the bottling operators will avoid
sleeping, thus, prevent injuries to their persons. As bottling operators are working
with machines which consist of moving parts, it is imperative that they should not
fall asleep as to do so would expose them to hazards and injuries. In addition,
sleeping will hamper the efficient flow of operations as the bottling operators
would be unable to perform their duties competently.
ISSUE: Whether the removal of the bottling operators’ chairs was a valid exercise
of management prerogative.
Yes. According to the Union, such removal constitutes a violation of the 1)

Occupational Health and Safety Standards which provide that every worker is
entitled to be provided by the employer with appropriate seats, among others; 2)
policy of the State to assure the right of workers to a just and humane condition
of work as provided for in Article 3 of the Labor Code;8 3) Global Workplace
Rights Policy of CCBPI which provides for a safe and healthy workplace by
maintaining a productive workplace and by minimizing the risk of accident,
injury and exposure to health risks; and 4) diminution of benefits provided in
Article 100 of the Labor Code.
The Court has held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees,
work supervision, lay-off of workers, and discipline, dismissal and recall of
workers. The exercise of management prerogative, however, is not absolute as it
must be exercised in good faith and with due regard to the rights of labor.
In the present controversy, it cannot be denied that CCBPI removed the operators’
chairs pursuant to a national directive and in line with its "I Operate, I Maintain, I
Clean" program, launched to enable the Union to perform their duties and
Page | 89
responsibilities more efficiently. The chairs were not removed indiscriminately.
They were carefully studied with due regard to the welfare of the members of the
Union. The removal of the chairs was compensated by: a) a reduction of the
operating hours of the bottling operators from a two-and-one-half (2 ½)-hour
rotation period to a one-and-a-half (1 ½) hour rotation period; and b) an increase
of the break period from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions as
CCBPI wanted to avoid instances of operators sleeping on the job while in the
performance of their duties and responsibilities and because of the fact that the
chairs were not necessary considering that the operators constantly move about
while working. In short, the removal of the chairs was designed to increase work
efficiency. Hence, CCBPI’s exercise of its management prerogative was made in
good faith without doing any harm to the workers’ rights.
The rights of the Union under any labor law were not violated. There is no law
that requires employers to provide chairs for bottling operators. There was no
violation either of the Health, Safety and Social Welfare Benefit provisions under
Book IV of the Labor Code of the Philippines. As shown in the foregoing, the
removal of the chairs was compensated by the reduction of the working hours and
increase in the rest period. The directive did not expose the bottling operators to
safety and health hazards.
The Union should not complain too much about standing and moving about for
one and one-half (1 ½) hours because studies show that sitting in workplaces for a
long time is hazardous to one’s health. The CBA between the Union and CCBPI
contains no provision whatsoever requiring the management to provide chairs for
the operators in the production/manufacturing line while performing their duties
and responsibilities.
The Court completely agrees with the CA ruling that the removal of the chairs did
not violate the general principles of justice and fair play because the bottling
operators’ working time was considerably reduced from two and a half (2 ½)
hours to just one and a half (1 ½) hours and the break period, when they could sit
down, was increased to 30 minutes between rotations. The bottling operators’ new
work schedule is certainly advantageous to them because it greatly increases their
rest period and significantly decreases their working time. A break time of thirty
(30) minutes after working for only one and a half (1 ½) hours is a just and fair
work schedule.
Page | 90
The operators’ chairs cannot be considered as one of the employee benefits
covered in Article 10016 of the Labor Code. In the Court’s view, the term "benefits"
mentioned in the non-diminution rule refers to monetary benefits or privileges
given to the employee with monetary equivalents.
Such benefits or privileges form part of the employees’ wage, salary or

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

THE ALLIANCE OF PROGRESSIVE LABOR ET AL.
[GR No. 150326, March 12, 2014]
FACTS
On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to rationalize
wages throughout the Philippines, Republic Act No. 6727 created the NWPC and
the RTWPBs of the different regions.
Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727,
empowered the NWPC to formulate policies and guidelines on wages, incomes
and productivity improvement at the enterprise, industry and national levels; to
prescribe rules and guidelines for the determination of appropriate minimum
wage and productivity measures at the regional, provincial or industry levels; and
to review regional wage levels set by the RTWPBs to determine whether the levels
were in accordance with the prescribed guidelines and national development
plans, among others.
Page | 91
On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of
Republic Act No. 6727, tasked the RTWPBs to determine and fix minimum wage
rates applicable in their region, provinces or industries therein; and to issue the
corresponding wage orders, subject to the guidelines issued by the NWPC.
Consequently, the RTWPB–NCR issued Wage Order No. NCR–07 on October 14,
1999 imposing an increase of P25.50/day on the wages of all private sector workers
and employees in the NCR and pegging the minimum wage rate in the NCR at
P223.50/day.6 However, Section 2 and Section 9 of Wage Order No. NCR–07
exempted certain sectors and industries from its coverage.
Feeling aggrieved by their non–coverage by the wage adjustment, the Alliance of

Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal
(TNMR) filed an appeal with the NWPC assailing Section 2(A) and Section 9(2) of
Wage Order No. NCR–07. They contended that neither the NWPC nor the
RTWPB–NCR had the authority to expand the non–coverage and exemptible
categories under the wage order; hence, the assailed sections of the wage order
should be voided.
The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No.
NCR–07. It observed that the RTWPB’s power to determine exemptible categories
was adjunct to its wage fixing function conferred by Article 122(e) of the Labor
Code, as amended by Republic Act No. 6727; that such authority of the RTWPB
was also recognized in NWPC Guidelines No. 01, Series of 1996. The APL and
TNMR assailed the decisions of the NWPC on certiorari in the CA, contending that
the power of the RTWPB–NCR to determine exemptible categories was not an
adjunct to its wage fixing function. CA favored the respondents and granted the
petition for certiorari. Hence, this appeal by petition for review on certiorari by the
NWPC and RTWPB–NCR.
ISSUE: Whether the RTWPB–NCR had authority.
The RTWPB–NCR had the authority to provide additional exemptions from the
minimum wage adjustments embodied in Wage Order No. NCR–07.
The NWPC promulgated NWPC Guidelines No. 001–95 (Revised Rules of

Procedure on Minimum Wage Fixing) to govern the proceedings in the NWPC
Page | 92
and the RTWPBs in the fixing of minimum wage rates by region, province and
industry. Section 1 of Rule VIII of NWPC Guidelines No. 001–95 recognized the
power of the RTWPBs to issue exemptions from the application of the wage orders
subject to the guidelines issued by the NWPC (this is the rationale behind
exemption)
SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS
Exemption of establishments from compliance with the wage increases and cost of living
allowances prescribed by the Boards may be granted in order to (1) assist establishments
experiencing temporary difficulties due to losses maintain the financial viability of their
businesses and continued employment of their workers; (2) encourage the establishment of
new businesses and the creation of more jobs, particularly in areas outside the National
Capital Region and Export Processing Zones, in line with the policy on industry dispersal;
and (3) ease the burden of micro establishments, particularly in the retail and service sector,
that have a limited capacity to pay.
The following categories of establishments may be exempted upon application

with and as determined by the Board:
1. Distressed establishments;
2. New business enterprises (NBEs);
3. Retail/Service establishments employing not more than ten (10) workers;
4. Establishments adversely affected by natural calamities.
Under the guidelines, the RTWPBs could issue exemptions from the application of
the wage orders if the exemptions complied with the rules of the NWPC. In its
rules, the NWPC enumerated four exemptible establishments, but the list was not
exclusive. The RTWPBs had the authority to include in the wage orders
establishments that belonged to, or to exclude from the four enumerated
exemptible categories.
If the exemption was outside of the four exemptible categories, like here, the
exemptible category should be: (1) in accord with the rationale for exemption; (2)
reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the
wage order must submit a strong and justifiable reason or reasons for the inclusion
of such category. It is the compliance with the second requisite that is at issue here.
Page | 93
The NWPC, in arriving at its decision, weighed the arguments of the parties and
ruled that the RTWPB–NCR had substantial and justifiable reasons in exempting
the sectors and establishments enumerated in Section 2(A) and Section 9(2) based
on the public hearings and consultations, meetings, social–economic data and
informations gathered prior to the issuance of Wage Order No. NCR–07. The very
fact that the validity of the assailed sections of Wage Order No. NCR–07 had been
already passed upon and upheld by the NWPC meant that the NWPC had already
given the wage order its necessary legal imprimatur. Accordingly, the requisite
approval or review was complied with.
The RTWPBs are the thinking group of men and women guided by statutory
standards and bound by the rules and guidelines prescribed by the NWPC. In the
nature of their functions, the RTWPBs investigate and study all the pertinent facts
to ascertain the conditions in their respective regions. Hence, they are logically
vested with the competence to determine the applicable minimum wages to be
imposed as well as the industries and sectors to exempt from the coverage of their
wage orders.
Lastly, Wage Order No. NCR–07 is presumed to be regularly issued in the absence
of any strong showing of grave abuse of discretion on the part of RTWPB–NCR.
The presumption of validity is made stronger by the fact that its validity was
upheld by the NWPC upon review.
ARIEL L. DAVID, doing business under the name and style "YIELS HOG
DEALER," Petitioner, vs. JOHN G. MACASIO, Respondent.
[G.R. No. 195466 July 2, 2014]
FACTS
On January 2009, Macasio filed before the LA a complaint against petitioner Ariel
L. David, doing business under the name and style "Yiels Hog Dealer," for non-
payment of overtime pay, holiday pay and 13th month pay. He also claimed
payment for moral and exemplary damages and attorney’s fees. Macasio also
claimed payment for service incentive leave (SIL). Macasio alleged before the LA
that he had been working as a butcher for David since January 6, 1995. Macasio
claimed that David exercised effective control and supervision over his work,
pointing out that David: (1) set the work day, reporting time and hogs to be
Page | 94
chopped, as well as the manner by which he was to perform his work; (2) daily
paid his salary of P700.00, which was increased from P600.00 in 2007, P500.00 in
2006 and P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio
added that David owned the hogs delivered for chopping, as well as the work
tools and implements; the latter also rented the workplace. Macasio further
claimed that David employs about twenty-five (25) butchers and delivery drivers.
In his defense, David claimed that he started his hog dealer business in 2005 and
that he only has ten employees. He alleged that he hired Macasio as a butcher or
chopper on "pakyaw" or task basis who is, therefore, not entitled to overtime pay,
holiday pay and 13th month pay pursuant to the provisions of the Implementing
Rules and Regulations (IRR) of the Labor Code. David pointed out that Macasio:
(1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day
or earlier, depending on the volume of the delivered hogs; (2) received the fixed
amount of P700.00 per engagement, regardless of the actual number of hours that
he spent chopping the delivered hogs; and (3) was not engaged to report for work
and, accordingly, did not receive any fee when no hogs were delivered.
ISSUE: Whether Respondent Macasio is entitled to overtime pay, holiday pay,

13th month pay, and service incentive leave (SIL).
Respondent Macasio is entitled to such monetary claims except 13th month pay.
Macasio is engaged on "pakyaw" or task basis. At this point, we note that all three
tribunals – the LA, the NLRC and the CA – found that Macasio was engaged or
paid on "pakyaw" or task basis. This factual finding binds the Court under the rule
that factual findings of labor tribunals when supported by the established facts
and in accord with the laws, especially when affirmed by the CA, is binding on
this Court. A distinguishing characteristic of "pakyaw" or task basis engagement,
as opposed to straight-hour wage payment, is the non-consideration of the time
spent in working. In a task-basis work, the emphasis is on the task itself, in the
sense that payment is reckoned in terms of completion of the work, not in terms
of the number of times spent in the completion of work. Once the work or task is
completed, the worker receives a fixed amount as wage, without regard to the
standard measurements of time generally used in pay computation.
Page | 95
In Macasio’s case, the established facts show that he would usually start his work
at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the workplace
or of the total number of the hogs assigned to him for chopping, Macasio would
receive the fixed amount of P700.00 once he had completed his task. Clearly, these
circumstances show a "pakyaw" or task basis engagement that all three tribunals
uniformly found.
In determining whether workers engaged on "pakyaw" or task basis" is entitled to

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

ALEXANDER PARIAN, JAY C. ERINCO, ALEXANDER CANLAS, BERNARD
TENEDERO and JERRY SABULAO, Respondents.
[G.R. No. 204651 August 6, 2014]
FACTS
Page | 96
Respondents are laborers of petitioner-corporation (construction business).
Because of financial distress, the corporation suspended some projects, which
resulted in giving vacation leaves to the affected workers, including respondents.
Instead of going back to work after their vacation leaves, respondents filed a
complaint with the Labor Arbiter, citing underpayment of wages and Our Haus’
failure to pay their holiday, SIL, 13th month and overtime pays.
One of their contentions, respondent-laborers claim that value of their meals

should not be considered in determining their wage total amount since Our Haus
failed to comply with the requirement of agreement in writing under DOLE
Memorandum Circular No. 2 and that the value of the facilities was not fair and
reasonable. Labor Arbiter ruled in favor of Our Haus, stating that respondents
failed to substantiate their claims and if the values of board and lodging would be
taken into consideration, respondent’s wages would meet the minimum wage
rate. On appeal to the NLRC, the decision was reversed, stating that respondents
did not authorize Our Haus in writing to charge the values of their board and
lodging to their wages.
Our Haus moved to reconsider but was denied, so they filed a petition for
certiorari with the CA with a new theory regarding a significant distinction
between ‘deduction’ and ‘charging’. They contended that a written authorization
is only necessary if the facility's value will be ‘deducted’ and will not be needed if
it will merely be ‘charged’/included in the computation of wages. Thus according
to them, they did not actually deduct the values of the meals and housing benefits.
They only considered these in computing the total amount of wages paid to the
respondents for purposes of compliance with the minimum wage law. CA denied
this contention citing no difference between ‘deduction’ and ‘charging’. Our Haus
filed a petition for review on certiorari under Rule 45 after their motion for
reconsideration was denied.
ISSUE: Whether the facilities value will be deducted or merely included in the
computation of the wages.
Petition is denied.
Page | 97
In reality, deduction and charging both operate to lessen the actual take-home pay
of an employee; they are two sides of the same coin. In both, the employee receives
a lessened amount because supposedly, the facility's value, which is part of his
wage, had already been paid to him in kind. As there is no substantial distinction
between the two, the requirements set by law must apply to both.
Requisites of fair and reasonable facilities:
a. proof must be shown that such facilities are customarily furnished by the trade;
b. the provision of deductible facilities must be voluntarily accepted in writing by

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

success of its projects is largely a function of the physical strength, vitality and
efficiency of its laborers. Its business will be jeopardized if its workers are weak,
sickly, and lack the required energy to perform strenuous physical activities. Thus,
by ensuring that the workers are adequately and well fed, the employer is actually
investing on its business. Even under the purpose test, the subsidized meals and
free lodging provided by Our Haus are actually supplements. Although they also
work to benefit the respondents, an analysis of the nature of these benefits in
relation to Our Haus' business shows that they were given primarily for Our Haus'
greater convenience and advantage. If weighed on a scale, the balance tilts more
towards Our Haus' side. Accordingly, their values cannot be considered in
computing the total amount of the respondents' wages.
For the second requisite:
Oddly, Our Haus only offered these documents when the NLRC had already ruled
that respondents did not accomplish any written authorization, to allow deduction
Page | 98
from their wages. The five kasunduans were also undated, making the SC wonder
if they had really been executed when respondents first assumed their jobs.
For the third requisite:
Our Haus never explained how it came up with the values it assigned for the
benefits it provided; it merely listed its supposed expenses without any
supporting document. The records, however, are bereft of any evidence to support
Our Haus' meal expense computation. Without any corroborative evidence, it
cannot be said that Our Haus complied with this third requisite.
Respondents are entitled to other monetary benefits. A party who alleges payment
as a defense has the burden of proving it. Particularly in labor cases, the burden of
proving payment of monetary claims rests on the employer. Records will disclose
the absence of any credible document which will show that respondents had been
paid their 13th month pay, holiday and SIL pays. Our Haus merely presented a
hand-written certification from its administrative officer that its employees
automatically become entitled to five days of service incentive leave as soon as
they pass probation.
EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO

DAVID, BONIFACIO MATUNDAN, NORA MENDOZA, et al., Petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION, ·SOLID MILLS, INC.,
and/or PHILIP ANG, Respondents.
[G.R. No. 202961 February 4, 2015]
FACTS
Petitioners are the employees of respondent Solid Mills Inc. They are represented
by their collective bargaining agent, NAFLU. Petitioners were allowed to occupy
SMI Village (property owned by Solid Mills) out of liberality and for the
convenience of its employees. They further agreed that petitioners would vacate
the lot anytime the company deems fit. On October 2003, Solid Mills would cease
operations due to serious business losses.
Petitioners were sent individual notices to vacate SMI Village. They were asked to
sign a Memorandum of Agreement with Release and Quitclaim; employees who
signed it were considered to have agreed to vacate SMI Village as a condition for
Page | 99
the release of their termination benefits and separation pay. Petitioners however
refused to sign it and demanded their benefits and separation pay.
Thereafter Petitioners Milan, et al filed a complaint before the Labor Arbiter on the
ground that their accrued benefits and separation pay cannot be withheld because
it is based on company policy and practice. Solid Mills countered by saying the
complaint was premature because they have not vacated the property in view of
the Memorandum of Agreement.
The Labor Arbiter favored the petitioners, stating Solid Mills’ illegality of the
withholding of benefits. Solid Mills appealed to the NLRC and reversed pertinent
parts of the decision. Petitioners moved to reconsider but was denied, so they file
a petition for certiorari with the CA. This was dismissed, hence their present
petition.
ISSUE: Whether the benefits of Petitioners may be validly and legally withheld by
Solid Mills Inc.
Petition is denied; Solid Mills may validly and legally withhold the benefits.
The Civil Code provides that the employer is authorized to withhold wages for
debts due: Article 1706. Withholding of the wages, except for a debt due, shall not
be made by the employer.
"Debt" in this case refers to any obligation due from the employee to the employer.
It includes any accountability that the employee may have to the employer. There
is no reason to limit its scope to uniforms and equipment, as petitioners would
argue.
More importantly, respondent Solid Mills and NAFLU, the union representing
petitioners, agreed that the release of petitioners' benefits shall be "less
accountabilities."
"Accountability," in its ordinary sense, means obligation or debt. The ordinary

meaning of the term "accountability" does not limit the definition of accountability
to those incurred in the worksite. As long as the debt or obligation was incurred
by virtue of the employer-employee relationship, it shall be included in the
employee's accountabilities that are subject to clearance procedures.
Page | 100
Petitioners do not categorically deny respondent Solid Mills' ownership of the
property, and they do not claim superior right to it. What can be gathered from
the findings of the Labor Arbiter, NLRC, and the CA is that respondent Solid Mills
allowed the use of its property for the benefit of petitioners as its employees.
Petitioners were merely allowed to possess and use it out of respondent Solid
Mills' liberality. The employer may, therefore, demand the property at will.
Withholding of payment by the employer does not mean that the employer may
renege on its obligation to pay employees their wages, termination payments, and
due benefits. The employees' benefits are also not being reduced. It is only
subjected to the condition that the employees return properties properly belonging
to the employer. This is only consistent with the equitable principle that "no one
shall be unjustly enriched or benefited at the expense of another."
TOYOTA PASIG INC vs. VILMA S. DE PERALTA
[GR No. 213488, November 7, 2016]
FACTS
Respondent was an employee of Toyota. She was initially hired as a cashier and
attained the position of Insurance sales executive due to her excellence in the work
as was shown when she was awarded Best Sales Insurance Executive from 2007 to
2011. Issue came when her husband, who was also an employee of petitioner,
organized a collective bargaining unit the members of which, including her
husband, were later dismissed from service. She also suffered the same fate, and
according to respondent, she was then accused of fraud in the processing of
several insurance transactions in that she claimed commissions in those
transactions instead of considering such under the marketing department’s new
business accounts. With this, she was preventively suspended and was later
terminated upon her receipt of the notice of termination.
Respondent then filed a case claiming payment of her earned substantial

commissions, tax rebates, and other benefits dating back from July 2011 to January
2012, amounting to P617,248.08. Petitioner in defense, contended that respondent
was terminated with just cause and that the claims she is asking are unfounded
and unsupported by documents and that such claims do not partake of unpaid
wages/salaries.
Page | 101
Labor Arbiter found respondent liable for the accusations against her and did not
order the payment of the benefits claimed by respondent, instead it merely
required petitioner to pay the unpaid salary.
NLRC and CA agreed with LA that respondent is guilty of the accusations, but it
ordered petitioner to pay the claim of P617, 248.08 of respondent.
Issue: 1.) Whether or not the claims of respondent are included in the definition of
“wages” in the labor code. 2.) Whether or not the claims will be discarded for
failure of respondent to substantiate such claims.
On the first issue:
Yes, respondent’s claims fall within the definition of “wages”. Under Art. 97 (f) of
the labor code, “wage paid to an employee shall mean the remuneration of
earnings, however designated, capable of being expressed in terms of money,
whether ascertained on a time, task, piece, or commission basis”. The claims of
commissions, tax rebates for achieved monthly targets, and success share/profit
sharing, are given to respondent as incentives or forms of encouragement in order
for her to put extra effort in performing her duties as an insurance sales executive
are included in the term “commission” which falls within the definition of
“wages” under Art. 97(f) of the labor code. This is because the nature of the work
of a salesman is to stimulate growth in sales which can be achieved by encouraging
such employees to put more effort in their jobs through commissions. Hence,
commissions are indubitably included in a sales employee’s wages.
On the second issue:
No, the claims will not be discarded just because respondent was not able to
produce supporting documents. Under law, once an employee alleges non-
payment of specific claims in his/her complaint with particularity, the one who
pleads payment has the burden of proving it and even if the employee alleges non-
payment, it is still the employer who has to prove payment rather than the
employee to prove non-payment. Here, the petitioner did not allege payment of
the claims or at least allege that respondent is not entitled to such claims. Hence,
since petitioner failed to overcome the burden, the claims will not be discarded.
Page | 102
JAIME N. SORIANO, MICHAEL VERNON M. GUERRERO, MARY ANN L.
REYES, MARAH SHARYN M. DE CASTRO and CRIS P. TENORIO,
petitioners, vs. SECRETARY OF FINANCE and the COMMISSIONER OF
INTERNAL REVENUE, respondents.
[GR No. 184450 January 24, 2017]
FACTS
On 19 May 2008, the Senate filed its Senate Committee Report No. 53 on Senate
Bill No. (S.B.) 2293. On 21 May 2008, former President Gloria M. Arroyo certified
the passage of the bill as urgent through a letter addressed to then Senate President
Manuel Villar. On the same day, the bill was passed on second reading IN the
Senate and, on 27 May 2008, on third reading. The following day, 28 May 2008, the
Senate sent S.B. 2293 to the House of Representatives for the latter's concurrence.
On 17 June 2008, R.A. 9504 entitled "An Act Amending Sections 22, 24, 34, 35, 51,
and 79 of Republic Act No. 8424, as Amended, Otherwise Known as the National
Internal Revenue Code of 1997," was approved and signed into law by President
Arroyo
The following are the salient features of the new law: It increased the basic
personal exemption from P20,000 for a single individual, P25,000 for the head of
the family, and P32,000 for a married individual to P50,000 for each individual. It
increased the additional exemption for each dependent not exceeding four from
P8,000 to P25,000. It raised the Optional Standard Deduction (OSD) for individual
taxpayers from 10% of gross income to 40% of the gross receipts or gross sales. It
introduced the OSD to corporate taxpayers at no more than 40% of their gross
income. It granted MWEs exemption from payment of income tax on their
minimum wage, holiday pay, overtime pay, night shift differential pay, and
hazard pay.
Accordingly, R.A. 9504 was published in the Manila Bulletin and Malaya on 21
June 2008. On 6 July 2008, the end of the 15-day period, the law took effect.
Petitioners Jaime N. Soriano et al. primarily assail Section 3 of RR 10-2008

providing for the prorated application of the personal and additional exemptions
for taxable year 2008 to begin only effective 6 July 2008 for being contrary to
Section 4 of Republic Act No. 9504.[2]Petitioners argue that the prorated
application of the personal and additional exemptions under RR 10-2008 is not "the
Page | 103
legislative intendment in this jurisdiction."[3] They stress that Congress has always
maintained a policy of "full taxable year treatment" as regards the application of
tax exemption laws. They allege further that R.A. 9504 did not provide for a
prorated application of the new set of personal and additional exemptions.
Then Senator Manuel Roxas, as principal author of R.A. 9504, also argues for a full
taxable year treatment of the income tax benefits of the new law. He relies on what
he says is clear legislative intent in his "Explanatory Note of Senate Bill No. 103,"
he stresses "the very spirit of enacting the subject tax exemption law.
Petitioner Trade Union Congress of the Philippine contends that the provisions of
R.A. 9504 provide for the application of the tax exemption for the full calendar
year 2008. It also espouses the interpretation that R.A. 9504 provides for the
unqualified tax exemption of the income of MWEs regardless of the other benefits
they receive.[14] In conclusion, it says that RR 10-2008, which is only an
implementing rule, amends the original intent of R.A. 9504, which is the
substantive law, and is thus null and void.
Petitioners Senator Francis Joseph Escudero, the Tax Management Association of

the Philippines, Inc., and Ernesto Ebro allege that R.A. 9504 unconditionally grants
MWEs exemption from income tax on their taxable income, as wel1 as increased
personal and additional exemptions for other individual taxpayers, for the whole
year 2008. They note that the assailed RR 10-2008 restricts the start of the
exemptions to 6 July 2008 and provides that those MWEs who received "other
benefits" in excess of P30,000 are not exempt from income taxation. Petitioners
believe this RR is a "patent nullity"[15] and therefore void.
The Office of the Solicitor General (OSG) filed a Consolidated Comment [16] and
took the position that the application of R.A. 9504 was intended to be prospective,
and not retroactive. This was supposedly the general rule under the rules of
statutory construction: law will only be applied retroactively if it clearly provides
for retroactivity, which is not provided in this instance
The OSG further argues that the legislative intent of non-retroactivity was
effectively confirmed by the "Conforme" of Senator Escudero, Chairperson of the
Senate Committee on Ways and Means, on the draft revenue regulation that
became RR 10-2008.
ISSUES: First, whether the increased personal and additional exemptions

provided by R.A. 9504 should be applied to the entire taxable year 2008 or
Page | 104
prorated, considering that R.A. 9504 took effect only on 6 July 2008.Second,
whether an MWE is exempt for the entire taxable year 2008 or from 6 July 2008
only. Third, whether Sections 1 and 3 of RR 10-2008 are consistent with the law in
providing that an MWE who receives other benefits in excess of the statutory limit
of P30,000[19] is no longer entitled to the exemption provided by R.A. 9504.
The policy of full taxable year treatment is established, not by the amendments
introduced by R.A. 9504, but by the provisions of the 1997 Tax Code, which
adopted the policy from as early as 1969.
This Court ruled in the affirmative, considering that the increased exemptions
were already available on or before 15 April 1992, the date for the filing of
individual income tax returns. Further, the law itself provided that the new set of
personal and additional exemptions would be immediately available upon its
effectivity. While R.A. 7167 had not yet become effective during calendar year
1991, the Court found that it was a piece of social legislation that was in part
intended to alleviate the economic plight of the lower-income taxpayers. For that
purpose, the new law provided for adjustments "to the poverty threshold level"
prevailing at the time of the enactment of the law.The Court is of the considered
view that Rep. Act 7167 should cover or extend to compensation income earned or
received during calendar year 1991
In sum, R.A. 9504, like R.A. 7167 in Umali, was a piece of social legislation clearly
intended to afford immediate tax relief to individual taxpayers, particularly low-
income compensation earners. Indeed, if R.A. 9504 was to take effect beginning
taxable year 2009 or half of the year 2008 only, then the intent of Congress to
address the increase in the cost of living in 2008 would have been negated.
The NIRC is clear on these matters. The taxable income of an individual taxpayer
shall be computed on the basis of the calendar year.[30] The taxpayer is required
to fi1e an income tax return on the 15th of April of each year covering income of
the preceding taxable year.[31] The tax due thereon shall be paid at the time the
return is filed
In the present case, the increased exemptions were already available much earlier
than the required time of filing of the return on 15 April 2009. R.A. 9504 came into
Page | 105
law on 6 July 2008, more than nine months before the deadline for the filing of the
income tax return for taxable year 2008. Hence, individual taxpayers were entitled
to claim the increased amounts for the entire year 2008. This was true despite the
fact that incomes were already earned or received prior to the law's effectivity on
6 July 2008.
We find the facts of this case to be substantially identical to those of Umali. First,
both cases involve an amendment to the prevailing tax code. The present petitions
call for the interpretation of the effective date of the increase in personal and
additional exemptions. Otherwise stated, the present case deals with an
amendment (R.A. 9504) to the prevailing tax code (R.A. 8424 or the 1997 Tax Code).
Like the present case, Umali involved an amendment to the then prevailing tax
code - it interpreted the effective date of R.A. 7167, an amendment to the 1977
NIRC, which also increased personal and additional exemptions. Second, the
amending law in both cases reflects an intent to make the new set of personal and
additional exemptions immediately available after the effectivity of the law. As
already pointed out, in Umali, R.A. 7167 involved social legislation intended to
adjust personal and additional exemptions. The adjustment was made in keeping
with the poverty threshold level prevailing at the time. Third, both cases involve
social legislation intended to cure a social evil - R.A. 7167 was meant to adjust
personal and additional exemptions in relation to the poverty threshold level,
while R.A. 9504 was geared towards addressing the impact of the global increase
in the price of goods. Fourth, in both cases, it was clear that the intent of the
legislature was to hasten the enactment of the law to make its beneficial relief
immediately available.
COCA-COLA BOTTLERS PHILIPPINES, INC. vs. ILOILO COCA-COLA

PLANT EMPLOYEES LABOR UNION (ICCPELU)
[GR No. 195297]
FACTS
The conflict arose due to the CCBPI's policy wherein it required several of its
employees to report for work on certain Saturdays to perform a host of activities,
usually involving maintenance of the facilities. This prerogative was supposedly
consistent with the pertinent provisions in the CBA between CCBPI and its
employees, which stated that management had the sole option to schedule work
on Saturdays on the basis of operational necessity. CCBPI later on informed the
Page | 106
respondent that, as Saturday work involved maintenance-related activities, CCBPI
would then only schedule the day's work as the need arose for these particular
undertakings, particularly on some Saturdays from September to December 2005.
On July 1, 2005, the parties met, with CCBPI's Manufacturing Manager setting
forth the official proposal to stop the work schedule during Saturdays. This
proposal was opposed and rejected by the officers and members of the respondent
but the CCBPI pushed through with the non-scheduling of work on the following
Saturday, July 2, 2005.
The respondent submitted to CCBPI its written grievance, stating therein that
CCBPI's act of disallowing its employees to report during Saturday is a violation
of the CBA provisions, specifically Section 1, Article 10 thereof. The respondent
also requested a meeting with CCBPI to discuss the issue. CCBPI response to the
request, however, was to merely send a letter reiterating to the respondent that
under the set of facts, management has the option to schedule work on Saturday
on the basis of operational necessity. Further letters on the part of the respondent
were responded to in the same way by CCBPI.
Respondent thus brought its grievances to the office of the NCMB. The parties
pursuant to the provisions of their CBA submitted the case for voluntary
arbitration. The panel comprised of three (3) voluntary arbitrators was charged
with resolving two issues: First, whether or not members of the respondent were
entitled to receive their basic pay during Saturdays under the CBA even if they
would not report for work, and second, whether or not CCBPI could be compelled
by the respondent to provide work to its members during Saturdays under the
CBA. On the first issue, the Panel stated that the Union members are nary entitled
to receive their Basic Pay; on the second issue, the Panel rules that CCBPI cannot
be compelled by the Union to provide works to its members during Saturdays
under the CBA.
Unwilling to accept the fndings of the Panel of Arbitrators, the respondent

elevated its case to the CA via a Petition for Review under Rule 43 of the Rules of
Court, which granted the respondent's petition.
CCBPI's Motion for Reconsideration was denied by the CA. Hence, this Petition,
to which the respondent filed a Comment 22 to on June 11, 2011, the latter pleading
responded to by CCBPI via Reply 23 on September 6, 2011.
Page | 107
ISSUE: Whether scheduling Saturday work has ripened into a company practice,
the removal of which constituted a diminution of benefits, to which CCBPI is
likewise liable to the affected employees for, including the corresponding wage
for the Saturday work which was not performed pursuant to the policy of the
Company to remove Saturday work based on operational necessity.
No. In its Decision, the CA held that the fact that CCBPI had been providing
work to its employees every Saturday for several years, a circumstance that
proved Saturday was part of the regular work week, made the grant of Saturday
work ripen into company practice.
On the other hand, CCBPI argues that work on a Saturday is akin to overtime work
because employees who are required to perform such work are given additional
compensation or premium in the CBA.
According to Art. 87 of the Labor Code, overtime work is work exceeding eight
hours within the worker's 24-hour workday. What is involved in this case is work
undertaken within the normal hours of work on Saturdays and not work
performed beyond eight hours in one day. Under Article 83 of the same Code:
Article 83. Normal hours of work. — The normal hours of work of any employee
shall not exceed eight (8) hours a day.
Despite the mistaken notion of CCBPI that Saturday work is synonymous to

overtime work, the Court still disagrees with the CA ruling that the previous
practice of instituting Saturday work by CCBPI had ripened into a company
practice covered by Article 100 of the Labor Code.
To note, it is not Saturday work per se which constitutes a benefit to the company's
employees. Rather, the benefit involved in this case is the premium which the
company pays its employees above and beyond the minimum requirements set by
law. The CBA between CCBPI and the respondent guarantees the employees that
they will be paid their regular wage plus an additional 50% thereof for the first
eight (8) hours of work performed on Saturdays. Therefore, the benefit, if ever
there is one, is the premium pay given by reason of Saturday work, and not the
grant of Saturday work itself.
Page | 108
Also, even assuming arguendo that the Saturday work involved in this case falls
within the definition of a "benefit" protected by law, the fact that it was made
subject to a condition (i.e., the existence of operational necessity) negates the
application of Article 100 pursuant to the established doctrine that when the grant
of a benefit is made subject to a condition and such condition prevails, the rule on
non-diminution finds no application. Otherwise stated, if Saturday work and its
corresponding premium pay were granted to CCBPI's employees without
qualification, then the company's policy of permitting its employees to suffer work
on Saturdays could have perhaps ripened into company practice protected by the
non-diminution rule.
PABLICO and MASTER'S PAB RESTO BAR vs. NUMERIANO B. CERRO,

JR., MICHAEL CALIGUIRAN, ET.AL.
[GR No. 227200]
FACTS
Respondent Numeriano Cerro, Jr. works as a bartender in Master's Pab Resto Bar
(MPRB). At the former's suggestion, the petitioner purchased and took over the
management of MPRB from its original owner, the Feliciano family, on November
18, 2008. On the same day, he promoted Cerro as Officer-in- Charge with a daily
wage of P200.00 and gave the latter the authority to hire additional employees.
Due to several infractions that caused MPRB losses, the petitioner transferred
Cerro to another establishment. On October 18, 2011, respondents Caliguiran,
Panganiban, Pauig, Lim, Napitan, Caronan, and Baguno received text messages,
which they interpreted to mean that they have been terminated from work on
account of their close association to Cerro. Acting on this, on October 24, 2011, the
respondents then filed a Complaint for illegal dismissal, underpayment of salaries
and benefits, damages and attorney's fees before the NLRC. The Labor Arbiter
dismissed their complaint for lack of merit. However, insofar as Cerro, the LA held
that his suspension is a valid exercise by the employer of disciplinary authority
pursuant to the former's infractions. Anent the other respondents on the other
hand, the LA held that they failed to discharge the burden of proving that they
have been terminated. Finally, on account of the respondents' money claims, the
LA found the payrolls presented by the petitioner as sufficient proof of payment.
The NLRC affirmed the LA Decision with modifications regarding complainants'
monetary claims. According to the NLRC, the respondents are entitled to the
Page | 109
following, namely: (1) wage differentials for 3 years counted backwards from
October 2011; and (2) 13th month pay for a period of 3 years counted backwards
from October 2011.
The respondents filed a partial motion for reconsideration, which the NLRC
denied. The petitioner elevated the case to the CA via a petition for certiorari under
Rule 65 of the Rules of Court. The CA dismissed the petition for lack of merit. The
subsequent motion for reconsideration was partially granted, wherein it affirmed
the NLRC Decision except for the award of Separation Pay. Thus, this petition for
review on certiorari before the SC.
Issue: Whether or not the NLRC committed a reversible error when it granted the
claim of the employees for wage differential without due regard to the evidence
presented by the petitioner anent the amount of salary being paid to his
employees.
Ruling: No, the NLRC did not commit a reversible error. It is a basic principle in
procedure that the burden is upon the person who asserts the truth of the matter
that he has alleged. The Court emphasized in C. Planas Commercial v. NLRC (Second
Division), that in order to be exempted under RA No. 6727 or the Wage
Rationalization Act, two elements must concur — first, it must be shown that the
establishment is regularly employing not more than ten (10) workers, and second,
that the establishment had applied for and was granted exemption by the
appropriate Regional Board in accordance with the applicable rules and
regulations issued by the Commission. The conclusion proceeds from the
unequivocal language of the law itself:
Section 4. x x x
xxx xxx xxx
(c) Exempted from the provisions of this Act are x x x Retail/service establishments
regularly employing not more than ten (10) workers may be exempted from the
applicability of this Act upon application with and as determined by the
appropriate Regional Board in accordance with the applicable rules and
regulations issued by the Commission. Whenever an application for exemption
has been duly 􏰆led with the appropriate Regional Board, action on any complaint
for alleged non-compliance with this Act shall be deferred pending resolution of
the application for exemption by the appropriate Regional Board.
Page | 110
In the event that applications for exemptions are not granted, employees shall
receive the appropriate compensation due them as provided for by this Act plus
interest of one per cent (1%) per month retroactive to the effectivity of this Act.
The petitioner himself admitted that he did not apply for such exemption, thus, he
cannot claim benefits under the law. The petitioner cannot shield himself from
complying with the law by the lone fact that he is just a layman and cannot be
expected to know of the law's requirements. Under our legal system, ignorance of
the law excuses no one from compliance therewith. Furthermore, the policy of the
Labor Code, under which R.A. No. 6727 is premised, is to include all
establishments, except a few specific classes, under the coverage of the law. As the
petitioner failed to apply for an exemption, and it is undisputed that the
respondents are MPRB's employees and are paid less than the prescribed
minimum wage, the petitioner's liability for wage differential cannot be denied.
V. WAGE ENFORCEMENT AND RECOVERY
TIGER CONSTRUCTION AND DEVELOPMENT CORP vs. ABAY ET AL.
[GR No. 164141 February 26, 2010]
FACTS
A complaint was filed by respondents Reynaldo Abay and fifty-nine (59) others
before the Regional Office of the Department of Labor and Employment (DOLE),
an inspection was conducted by DOLE officials at the premises of petitioner
TCDC. Several labor standard violations were noted, such as deficiencies in record
keeping, non-compliance with various wage orders, non-payment of holiday pay,
and underpayment of 13th month pay. The case was then set for summary hearing
Consistent with Article 129 of the Labor Code of the Philippines in relation to
Article 217 of the same Code, this instant case should be referred back to the
National Labor Relations Commission (NLRC) Sub-Arbitration Branch V, Naga
City, on the ground that the aggregate money claim of each worker exceeds the
jurisdictional amount of this Office [which] is (sic) Five Thousand Pesos Only
(P5,000.00).
Page | 111
Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas
(Secretary Sto. Tomas), in an apparent reversal of Director Manalo’s endorsement,
issued another inspection authority on August 2, 2002 in the same case. Pursuant
to such authority, DOLE officials conducted another investigation of petitioner’s
premises and the same violations were discovered.
According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on
the ground of lack of jurisdiction, which dismissal had attained finality; hence, all
proceedings before the DOLE regional office after July 25, 2002 were null and void
for want of jurisdiction. Having the case in her office once more, Director Manalo
finally issued an Order dated January 29, 2003 denying petitioner’s motion for
reconsideration for lack of merit.
ISSUE: Whether 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.
The petition lacks merit. Petitioner admits that it failed to appeal the January
29, 2003 Order within the period prescribed by law. It likewise admits that the
case was already in the execution process when it resorted to a belated appeal to
the DOLE Secretary. Petitioner, however, excuses itself from the effects of the
finality of the Order by arguing that it was allegedly issued without jurisdiction
and may be assailed at any time.
Director Manalo’s initial endorsement of the case to the NLRC, on the mistaken
opinion that the claim was within the latter’s jurisdiction, did not oust or deprive
her of jurisdiction over the case. She therefore retained the jurisdiction to decide
the case when it was eventually returned to her office by the DOLE Secretary.
Jurisdiction or authority to try a certain case is conferred by law and not by the
interested parties, much less by one of them, and should be exercised precisely by
the person in authority or body in whose hands it has been placed by the law.
We also cannot accept petitioner’s theory that Director Manalo’s initial

endorsement of the case to the NLRC served as a dismissal of the case, which
prevented her from subsequently assuming jurisdiction over the same. The said
endorsement was evidently not meant as a final disposition of the case; it was a
Page | 112
mere referral to another agency, the NLRC, on the mistaken belief that jurisdiction
was lodged with the latter. It cannot preclude the regional director from
subsequently deciding the case after the mistake was rectified and the case was
returned to her by the DOLE Secretary, particularly since it was a labor case where
procedural lapses may be disregarded in the interest of substantial justice.
In view of the Court’s ruling above that the January 29, 2003 Order was rendered
with jurisdiction and can no longer be questioned (as it is final and executory), we
can no longer entertain petitioner’s half-hearted and unsubstantiated arguments
that the said Order was allegedly based on erroneous computation and included
non-employees. Likewise, we find no more need to address petitioner’s contention
that the CA erred in dismissing its petition on the ground of its belated compliance
with the requirement of certification against forum-shopping.
PEOPLE’S BROADCASTING (BOMBO RADYO PHILS) VS. SEC. OF DOLE

ET AL.
[GR NO. 179652, MARCH 6, 2012 RESOLUTION ON THE MAIN DECISION

OF MAY 8, 2009]
FACTS
Jandeleon Juezan (“Juezan”) filed a complaint before the DOLE against Bombo
Radyo Philippines (“Bombo Radyo”) for illegal deduction, non-payment of service
incentive leave, 13th month pay, premium pay for holiday and rest day and illegal
diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-
IBIG and PhilHealth. Based on the complaint, the DOLE conducted a plant level
inspection.
The Labor Inspector in his report wrote, Management representative informed

that (Juezan) complainant is a drama talent hired on a per drama ‘participation
basis’ hence no employer-employer relationship existed between them. As proof
of this, management presented photocopies of cash vouchers, billing statement,
employments of specific undertaking, etc. The management has no control of the
talent if he ventures into another contract with other broadcasting industries.
ISSUE: Whether the Secretary of Labor has the power to determine the existence
of an employer-employee relationship.
Page | 113
Yes. No limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No procedure
was laid down where the DOLE would only make a preliminary finding, that
the power was primarily held by the NLRC.
The law did not say that the DOLE would first seek the NLRC’s determination of
the existence of an employer-employee relationship, or that should the existence
of the employer-employee relationship be disputed, the DOLE would refer the
matter to the NLRC. The DOLE must have the power to determine whether or not
an employer-employee relationship exists, and from there to decide whether or
not to issue compliance orders in accordance with Art. 128(b) of the Labor Code,
as amended by RA 7730.
The DOLE, in determining the existence of an employer-employee relationship,

has a ready set of guidelines to follow, the same guide the courts themselves use.
The elements to determine the existence of an employment relationship are: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; (4) the employer’s power to control the employee’s conduct.
The use of this test is not solely limited to the NLRC. The DOLE Secretary, or his
or her representatives, can utilize the same test, even in the course of inspection,
making use of the same evidence that would have been presented before the
NLRC.
The determination of the existence of an employer-employee relationship by the

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

relationship, it takes cognizance of the matter, to the exclusion of the NLRC. The
DOLE would have no jurisdiction only if the employer-employee relationship has
Page | 114
already been terminated, or it appears, upon review, that no employer-employee
relationship existed in the first place.
It must also be remembered that the power of the DOLE to determine the existence
of an employer-employee relationship need not necessarily result in an affirmative
finding. The DOLE may will make the determination that no employer-employee
relationship exists, thus divesting itself of jurisdiction over the case. It must not
be precluded from being able to reach its own conclusions, not by the parties, and
certainly not by this Court.
Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully
empowered to decide as to the existence of an employer-employee relationship in
the exercise of its visitorial and enforcement power, subject to judicial review, not
review by the NLRC.
To recapitulate, if a complaint is brought before the DOLE to give effect to the

labor standards provisions of the Labor Code or other labor legislation, and there
is a finding by the DOLE that there is an existing employer-employee relationship,
the DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds
that there is no employer-employee relationship, the jurisdiction is properly with
the NLRC. If a complaint is filed with the DOLE, and it is accompanied by a claim
for reinstatement, the jurisdiction is properly with the Labor Arbiter, under Art.
217(3) of the Labor Code, which provides that the Labor Arbiter has original and
exclusive jurisdiction over those cases involving wages, rates of pay, hours of
work, and other terms and conditions of employment, if accompanied by a claim
for reinstatement.
If a complaint is filed with the NLRC, and there is still an existing employer-
employee relationship, the jurisdiction is properly with the DOLE. The findings
of the DOLE, however, may still be questioned through a petition for certiorari
under Rule 65 of the Rules of Court.
Superior Packaging Corp., vs. Balagsay et al.
[G.R. No. 178909, October 10, 2012]
FACTS
Petitioner engaged services of Lancer Staffing and Services (provided respondents

as laborers for petitioner). Herein respondents were engaged for 4 months and
Page | 115
included tasks such as loading, unloading and segregation of boxes. Pursuant to a
complaint filed by respondents against petitioner Superior Package, DOLE
conducted an inspection of petitioners workplace and found several violations
(non-presentation of payrolls and daily time records; non-submission of annual
report of safety organization; medical/illness reports; no trained first aid) Because
petitioners failed to appear in the summary investigations conducted by DOLE,
an order was issued ordering petitioners to pay PHP840,463.38.
Petitioners moved to reconsider, stating that the respondents are not their
employees, but of Lancer Staffing and Services, but this was denied. The DOLE
stated that petitioners failed to support their claim and even if they were
employees of Lancer they could not escape liability as Section 13 of the
Department Order No. 10, Series of 1997, makes a principal jointly and severally
liable with the contractor to contractual employees to the extent of the work
performed when the contractor fails to pay its employees' wages. The appeal to
the SOLE, motion for reconsideration to the SOLE, petition for certiorari to the CA
and motion for reconsideration to the CA were all denied, hence the present
petition. The petitioner objects to the finding that it is engaged in labor-only
contracting and is consequently an indirect employer, considering that it is beyond
the visitorial and enforcement power of the DOLE to make such conclusion.
According to the petitioner, such conclusion may be made only upon
consideration of evidentiary matters and cannot be determined solely through a
labor inspection.
ISSUE: 1.) Whether or not DOLE has the jurisdiction to inspect in petitioner’s
workplace, pursuant to its visitorial and enforcement power; 2.) Whether or not
Superior Package Corp. may be held solidarily liable with Lancer Staffing for
respondents’ unpaid money claims;
Petition is denied. DOLE may inspect the petitioner’s workplace pursuant to its
visitorial and enforcement power; Petitioner may be held solidarily liable.
First Issue:
The DOLE clearly acted within its authority when it determined the existence of
an employer-employee relationship between the petitioner and respondents as it
Page | 116
falls within the purview of its visitorial and enforcement power under Article 128
(b) of the Labor Code. In People's Broadcasting (Bombo Radyo Phils., Inc.) v.
Secretary of the Department of Labor and Employment, the Court stated that it
can be assumed that the DOLE in the exercise of its visitorial and enforcement
power somehow has to make a determination of the existence of an employer-
employee relationship. Such determination, however, is merely preliminary,
incidental and collateral to the DOLE's primary function of enforcing labor
standards provisions. Also, the existence of an employer-employee relationship is
ultimately a question of fact. The determination made in this case by the DOLE,
albeit provisional, and as affirmed by the Secretary of DOLE and the CA is beyond
the ambit of a petition for review on certiorari.
Second Issue:
At the time of the respondents' employment in 1998, the applicable regulation was
DOLE Department Order No. 10, Series of 1997. (“Labor-only contracting is
prohibited and the person acting as contractor [Lancer] shall be considered merely
as an agent or intermediary of the employer [Superior Package] who shall be
responsible to the workers in the same manner and extent as if the latter [Superior
Package] were directly employed by him”)
The marked disparity between the petitioner's actual capitalization (P25,000.00)

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

declaring that there is an employer-employee relationship between the principal
and the employees of the supposed contractor, and the "labor-only" contractor is
considered as a mere agent of the principal, the real employer. The former becomes
solidarily liable for all the rightful claims of the employees. Superior Package,
therefore, being the principal employer and Lancer, being the labor-only
contractor, are solidarily liable for respondents' unpaid money claims.
DOLE vs. KENTEX MANUFACTURING CORPORATION
Page | 117
[G.R. No. 233781]
Facts
On May 13, 2015, a fire broke out in the factory located in Valenzuela City owned
by Kentex, which claimed 72 lives and injured a number of workers. As part of its
standard procedures, personnel of the DOLE Caloocan, Malabon, Navotas and
Valenzuela (DOLE-CAMANAVA) Field Office went to Kentex's premises. DOLE-
NCR also assessed Kentex's compliance with the occupational health and safety
standards.
In the course of the investigation, it was discovered that Kentex had contracted
with CJC Manpower Services (CJC) for the deployment of workers. The DOLE-
NCR directed Kentex and CJC to attend the mandatory conference set on May 18
and 20, 2015 at the DOLE-NCR Office. Kentex, its Chairman and Chief Executive
Officer Beato Ang, and the corporation's Chief Finance Officer Ong, were made
parties to this case before the DOLE-NCR. In the meantime, the DOLE Regional
Office No. III (DOLE-RO III) conducted its own Joint Assessment of CJC. The
DOLE-RO III discovered that CJC was an unregistered private recruitment and
placement agency and was non-compliant with the occupational health and safety
standards as well as with labor standards, such as underpayment of wages and
nonpayment of statutory benefits. As a result, the DOLE-RO III issued a
Compliance Order which effectively declared CJC as a labor-only contractor with
Kentex as its principal.
Meanwhile, during the mandatory conference set by the DOLE-NCR, CJC's

representatives admitted, among others, that there was no service contract
between CJC and Kentex, that CJC had deployed 99 workers at the Kentex factory
on the day of the unfortunate incident, and that there were no employment
contracts between CJC and the workers. Kentex and its corporate officers, through
counsel, refuted CJC's claims. They alleged that CJC's workers were originally
engaged by Panday Management and Labor Consultancy which CJC later
absorbed. They contended that while the corporate/business and employment
records had all been gutted by fire, Kentex nevertheless complied with the labor
standards particularly on the minimum wage requirement and with the
occupational health and safety standards, as evidenced by a Certificate of
Compliance (COC) signed by the DOLE-NCR Regional Director Alex Avila. In its
June 26, 2015 Order, the DOLE-NCR rejected the aforementioned arguments of
Kentex and declared that the latter could not invoke the COC because this only
Page | 118
attested to the findings of the compliance officer at the time of the
assessment/inspection, even as Kentex was duty-bound to observe continuing
compliance with the labor standards as well as the occupational health and safety
standards. It also found that CJC was a mere labor-only contractor considering
that it was unregistered with the DOLE Regional Office where it operated. Lastly,
it found that the workers were underpaid, and computed the monetary claims due
them.
Only Ong moved for reconsideration of the foregoing order. However, in a letter
from DOLE-NCR Regional Director Avila, the latter explained that an appeal to
the DOLE Secretary should have been made within 10 days from receipt of the
Order pursuant to Section 1, Rule 11 of Department Order No. 131, Series of 2013.
Moreover, since Ong received the June 26, 2015 Order on the same day, he had
only until July 6, 2015 within which to appeal to the DOLE Secretary. However,
Ong never did; thus, the Compliance Order had attained finality. Hence, this
Petition.
ISSUE: Whether the June 26, 2015 Order had already become final and executory
in view of the failure of respondents Kentex and Ong to appeal therefrom to the
Secretary of Labor.
Yes. Notice ought to be taken of the fact that, at the time the DOLE-NCR
rendered its ruling, Department Order No. 131-13 Series of 2013 was the
applicable rule of procedure.
The pertinent provision states:
Rule 11, Section 1. Appeal. — The Compliance Order may be appealed to the O􏰉ce of the
Secretary of Labor and Employment by 􏰉ling a Memorandum of Appeal, furnishing the
other party with a copy of the same, within ten (10) days from receipt thereof. No further
motion for extension of time shall be entertained.
A mere notice of appeal shall not stop the running of the period within which to
file an appeal. Here, instead of filing an appeal with the DOLE Secretary, Ong
moved for a reconsideration of the subject Order; needless to say, this did not halt
or stop the running of the period to elevate the matter to the DOLE Secretary.
Indeed, the DOLE- NCR took no action at all on Ong's motion for reconsideration;
Page | 119
in fact, it categorically informed Ong that his resort to the 􏰆ling of a motion for
reconsideration was procedurally in􏰆firm. The June 26, 2015 Order having become
final, it could no longer be altered or modified by discharging or releasing Ong
from his accountability.

WAGES
SHS Perforated Materials, Inc. et al., vs. Diaz
[G.R. No. 185814. October 13, 2010.]
FACTS
Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized

and existing under the laws of the Republic of the Philippines and registered with
the Philippine Economic Zone Authority. Petitioner Winfried Hartmannshenn
(Hartmannshenn), a German national, is its president. Thus, the wages of SHS
employees are paid out by ECCP, through its Accounting Services Department
headed by Juliet Taguiang (Taguiang). Manuel F. Diaz (respondent) was hired by
petitioner SHS as Manager for Business Development on probationary status.
During respondent’s employment, Hartmannshenn was often abroad and,

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

and on November 22 and 24, 2005, notified respondent of his arrival through
electronic mail messages and advised him to get in touch with him. Respondent
claimed that he never received the messages. Hartmannshenn instructed Taguiang
not to release respondent’s salary.
Respondent served on SHS a demand letter and a resignation letter. It is precisely

because of illegal and unfair labor practices such as these that I offer my
resignation with neither regret nor remorse.
Page | 120
Appealing for the release of his salary respondent filed a Complaint against the
petitioners for illegal dismissal; non-payment of salaries/wages and 13th month
pay with prayer for reinstatement and full back wages; exemplary damages, and
attorney’s fees, costs of suit, and legal interest.
ISSUES: Whether the temporary withholding of respondent’s salary/wages by

petitioners was a valid exercise of management prerogative.
Withholding respondent’s salary was not a valid exercise of management

prerogative.
Although management prerogative refers to “the right to regulate all aspects of

employment,” it cannot be understood to include the right to temporarily
withhold salary/wages without the consent of the employee. Any withholding of
an employee’s wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as
set forth below:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to check-
off has been recognized by the employer or authorized in writing by the individual
worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.
There is constructive dismissal if an act of clear discrimination, insensibility, or

disdain by an employer becomes so unbearable on the part of the employee that it
would foreclose any choice by him except to forego his continued employment. It
exists where there is cessation of work because continued employment is rendered
impossible, unreasonable or unlikely, as an offer involving a demotion in rank and
a diminution in pay.
Page | 121
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. (otherwise

known as NIÑA MANUFACTURING AND METAL ARTS, INC.) and ELISEA
B. ABELLA, Petitioners, vs. MADELINE C. MONTECILLO and LIZA M.
TRINIDAD, Respondents.
[G.R. No. 188169, November 28, 2011]
FACTS
Respondents were employed as goldsmiths by the petitioner Niña Jewelry

Manufacturing of Metal Arts, Inc. There were incidents of theft involving
goldsmiths in Niña Jewelry's employ.
The petitioner imposed a policy for goldsmiths, which were intended to answer
for any loss or damage which Niña Jewelry may sustain by reason of the
goldsmiths' fault or negligence in handling the gold entrusted to them, requiring
them to post cash bonds or deposits in varying amounts but in no case exceeding
15% of the latter's salaries per week.
The petitioner alleged that the goldsmiths were given the option not to post
deposits, but to sign authorizations allowing the former to deduct from the latter's
salaries amounts not exceeding 15% of their take home pay should it be found that
they lost the gold entrusted to them. The deposits shall be returned upon
completion of the goldsmiths' work and after an accounting of the gold received.
The respondents claimed otherwise insisting that petitioner left the goldsmiths
with no option but to post the deposits. The next day after the policy was imposed,
the respondents no longer reported for work and signified their defiance against
the new policy which at that point had not even been implemented yet. The
respondents alleged that they were constructively dismissed by the petitioner as
their continued employments were made dependent on their readiness to post the
required deposits. The respondents then filed a complaint for illegal dismissal and
Page | 122
for the award of separation pay against the petitioner, and later filed their
amended complaint which excluded their earlier prayer for separation pay but
sought reinstatement and payment of back wages, attorney's fees and 13th month
pay.
ISSUES: 1.) Whether or not Niña Jewelry Manufacturing of Metal Arts, Inc. may
impose the policy for their goldsmiths requiring them to post cash bonds or
deposits; 2.) Whether or not there is constructive dismissal.
NO, the Niña Jewelry may not impose the policy. Articles 113 and 114 of the Labor
Code are clear as to what are the exceptions to the general prohibition against
requiring deposits and effecting deductions from the employees' salaries.
ART. 113. Wage Deduction — No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:
(a)In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium
on the insurance;
(b)For union dues, in cases where the right of the worker or his union to 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 appropriate rules and regulations.
The petitioners failed to prove that their imposition of the new policy upon the
goldsmiths under Niña Jewelry's employ falls under the exceptions specified in
Articles 113 and 114 of the Labor Code.
Page | 123
2) There is NO constructive dismissal. Constructive dismissal occurs when there
is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or diminution in pay
or both; or when a clear discrimination, insensibility, or disdain by an employer
becomes unbearable to the employee. The petitioners did not whimsically or
arbitrarily impose the policy to post cash bonds or make deductions from the
workers' salaries.
LOCSIN II, petitioner, vs. MEKENI FOOD CORP, respondent.
[GR No. 192105 December 9, 2013]
FACTS
Petitioner Antonio Locsin II was the Regional Sales Manager of respondent

Mekeni Food Corporation. He was hired on February 2004 to oversee the NCR and
Luzon operation. In addition to his compensation and benefit package, a car was
offered to him under which one-half of the cost of the vehicle is to be paid by the
company and the other half to be deducted from petitioner's salary. The car valued
at 280,000 which Locsin paid through salary deductions of 5,000 per month
On February 2006, Locsin resigned. A total of 112,500.00 had already been

deducted from his monthly salary and applied as part of his share in the car plan.
Upon resignation, petitioner made personal and written follow-ups regarding his
unpaid salaries, commissions, benefits, and offer to purchase his service vehicle.
Mekeni replied that the company car plan benefit applied only to employees who
have been with the company for five years; for this reason, the balance that
petitioner should pay on his service vehicle stood at P116,380.00 if he opts to
purchase the same.
On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S.
Garcia, a Complaint for the recovery of monetary claims consisting of unpaid
salaries, commissions, sick/vacation leave benefits, and recovery of monthly salary
deductions which were earmarked for his cost- sharing in the car plan.
Page | 124
ISSUE: Whether petitioner is entitled to a refund of all the amounts applied to the
cost of the service vehicle under the car plan.
SURPEME COURT RULING
Any benefit or privilege enjoyed by petitioner from using the service vehicle was
merely incidental and insignificant, because for the most part the vehicle was
under Mekeni's control and supervision.
Free and complete disposal is given to the petitioner only after the vehicle's cost is
covered or paid in full. Until then, the vehicle remains at the beck and call of
Mekeni. Given the vast territory petitioner had to cover to be able to perform his
work effectively and generate business for his employer, the service vehicle was
an absolute necessity, or else Mekeni's business would suffer adversely. Thus, it is
clear that while petitioner was paying for half of the vehicle's value, Mekeni was
reaping the full benefits from the use thereof.
Under Article 22 of the Civil Code, “every person who through an act of
performance by another, or any other means, acquires or comes into possession of
something at the expense of the latter without just or legal ground, shall return the
same to him." Article 2142 of the same Code likewise clarifies that there are certain
lawful, voluntary and unilateral acts which give rise to the juridical relation of
quasi-contract, to the end that no one shall be unjustly enriched or benefited at the
expense of another. In the absence of specific terms and conditions governing the
car plan arrangement between the petitioner and Mekeni, a quasi-contractual
relation was created between them. Consequently, Mekeni may not enrich itself
by charging petitioner for the use of its vehicle which is otherwise absolutely
necessary to the full and effective promotion of its business. It may not, under the
claim that petitioner's payments constitute rents for the use of the company
vehicle, refuse to refund what petitioner had paid, for the reasons that the car plan
did not carry such a condition; the subject vehicle is an old car that is
substantially, if not fully, depreciated; the car plan arrangement benefited Mekeni
for the most part; and any personal benefit obtained by petitioner from using the
vehicle was merely incidental.
Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart

contribution to the cost of the vehicle; that is not property or money that belongs
to him, nor was it intended to be given to him in lieu of the car plan. Mekeni's
Page | 125
share of the vehicle's cost was not part of petitioner's compensation package. The
vehicle is an asset that belonged to Mekeni. Just as Mekeni is unjustly enriched by
failing to refund petitioner's payments, so should petitioner not be awarded the
value of Mekeni's counterpart contribution to the car plan, as this would unjustly
enrich him at Mekeni's expense.
Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's
payments under the car plan agreement amounting only to the extent of the
contribution Locsin made, totaling to the amount of P112, 500.00.
T & H SHOPFITTERS CORPORATION/GIN QUEEN CORPORATION,

STINNES HUANG, BEN HUANG and ROGELIO MADRIAGA, Petitioners,
vs. T & H SHOPFITTERS CORPORATION/GIN QUEEN WORKERS UNION,
ELPIDIO ZALDIVAR, et. al. Respondents.
[G.R. No. 191714 February 26, 2014]
FACTS
On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen Corporation

workers union (THS-GQ Union) filed their Complaint for Unfair Labor Practice
(ULP) by way of union busting, and Illegal Lockout, with moral and exemplary
damages and attorney’s fees, against T&H Shopfitters Corporation (T&H
Shopfitters) and Gin Queen Corporation before the Labor Arbiter (LA).
1ST CAUSE
In their desire to improve their working conditions, respondents and other

employees of held their first formal meeting on November 23, 2003 to discuss the
formation of a union. The following day, seventeen (17) employees were barred
from entering petitioners’ factory premises located in Castillejos, Zambales, and
ordered to transfer to T&H Shopfitters’ warehouse at Subic Bay Freeport Zone
(SBFZ) purportedly because of its expansion. Afterwards, the said seventeen (17)
employees were repeatedly ordered to go on forced leave due to the unavailability
of work.
Respondents contended that the affected employees were not given regular work
assignments, while subcontractors were continuously hired to perform their
functions. Respondents sought the assistance of the National Conciliation and
Mediation Board. Subsequently, an agreement between petitioners and THS-GQ
Page | 126
Union was reached. Petitioners agreed to give priority to regular employees in the
distribution of work assignments. Respondents averred, however, that petitioners
never complied with its commitment but instead hired contractual workers.
Instead, Respondents claimed that the work weeks of those employees in the SBFZ
plant were drastically reduced to only three (3) days in a month.
2ND CAUSE
On March 24, 2004, THS-GQ Union filed a petition for certification election and an
order was issued to hold the certification election in both T&H Shopfitters and Gin
Queen.
On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its
employees. The officers and members of the THS-GQ Union were purportedly
excluded from the field trip. On the evening of the field trip, a certain Angel
Madriaga, a sales officer of petitioners, campaigned against the union in the
forthcoming certification election.
When the certification election was scheduled on October 11, 2004, the employees
were escorted from the field trip to the polling center in Zambales to cast their
votes. The remaining employees situated at the SBFZ plant cast their votes as well.
Due to the heavy pressure exerted by petitioners, the votes for "no union"
prevailed.
3RD CAUSE
A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin
Queen, informed its employees of the expiration of the lease contract between Gin
Queen and its lessor in Castillejos, Zambales and announced the relocation of its
office and workers to Cabangan, Zambales.
When the respondents, visited the site in Cabangan, discovered that it was a
"talahiban" or grassland. The said union officers and members were made to work
as grass cutters in Cabangan, under the supervision of a certain Barangay Captain
Greg Pangan. Due to these circumstances, the employees assigned in Cabangan
did not report for work. The other employees who likewise failed to report in
Cabangan were meted out with suspension.
In its defense, Petitioners also stress that they cannot be held liable for ULP
because there is no employer-employee relationship between the former and
respondents. Further, Gin Queen avers that its decision to implement an enforced
Page | 127
rotation of work assignments for respondents was a management prerogative
permitted by law, justified due to the decrease in orders from its customers; they
had to resort to cost cutting measures to avoid anticipated financial losses. Thus,
it assigned work on a rotational basis. It explains that its failure to present concrete
proof of its decreasing orders was due to the impossibility of proving a negative
assertion. It also asserts that the transfer from Castillejos to Cabangan was made
in good faith and solely because of the expiration of its lease contract in Castillejos.
It was of the impression that the employees, who opposed its economic measures,
were merely motivated by spite in filing the complaint for ULP against it.
ISSUE: Whether ULP acts were committed by petitioners against respondents.
ULP were committed by petitioners against respondents.
Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article
257 (formerly Article 248) of the Labor Code,13 to wit:
Article 257. Unfair labor practices of employers. –– It shall be unlawful for an employer
to commit any of the following unfair labor practices:
(a) To interfere with, restrain or coerce employees in the exercise of their right to
self-organization;
xxxx
(c) To contract out services or functions being performed by union members when
such will interfere with, restrain, or coerce employees in the exercise of their right
to self-organization;
xxxx
(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership in any
labor organization.
The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales

for its employees, to the exclusion of union members, before the scheduled
certification election; 2) the active campaign by the sales officer of petitioners
Page | 128
against the union prevailing as a bargaining agent during the field trip; 3)
escorting its employees after the field trip to the polling center; 4) the continuous
hiring of subcontractors performing respondents’ functions; 5) assigning union
members to the Cabangan site to work as grass cutters; and 6) the enforcement of
work on a rotational basis for union members, taken together, reasonably support
an inference that, indeed, such were all orchestrated to restrict respondents’ free
exercise of their right to self-organization.
The Court is of the considered view those petitioners’ undisputed actions prior
and immediately before the scheduled certification election, while seemingly
innocuous, unduly meddled in the affairs of its employees in selecting their
exclusive bargaining representative.
WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner, vs. WESLEYAN

UNIVERSITY-PHILIPPINES FACULTY and STAFF ASSOCIATION,
Respondent.
[G.R. No. 181806 March 12, 2014]
FACTS
Petitioner Wesleyan University Philippines is a non-stock, non-profit educational

institution duly organized and existing under the laws of the Philippines. On the
other hand, Respondent Wesleyan University - Philippines Faculty and Staff
Association is a duly registered labor organization acting as the sole and exclusive
bargaining agent of all rank-and-file faculty and staff employees of petitioner.
In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May
31, 2008.
On August 16, 2005, petitioner, through its President, Atty. Maglaya, issued a
Memorandum providing guidelines on the implementation of vacation and sick
leave credits as well as vacation leave commutation which stipulated that (1)
vacation and sick leave credits are not automatic as leave credits and that they
would have to be earned monthly and (2) only the vacation leave is commuted or
monetized to cash which is effected after the second year of continuous service of
an employee.
Respondents questioned the guidelines for being violative of existing practices

and the CBA which provide that all covered employees are entitled to 15 days SL
Page | 129
and 15 days VL with pay every year and that after the second year of service, all
unused vacation leave shall be converted to cash and paid to the employee at the
end of each school year, not later than August 30 of each year. Respondent filed a
grievance complaint on the implementation of the vacation and sick leave policy.
Petitioner also announced its plan of implementing a one-retirement policy which

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

and the Memorandum dated August 16, 2005 contrary to law. The Court of
Appeals also affirmed the ruling of the Voluntary Arbitrator.
Petitioner argues that there is only one retirement plan as the CBA Retirement Plan
and the PERAA Plan are one and the same. It maintains that there is no established
company practice or policy of giving two retirement benefits to its employees.
Respondent belies the claims of petitioner and asserts that there are two retirement
plans as the PERAA Retirement Plan, which has been implemented for more than
30 years, is different from the CBA Retirement Plan. Respondent further avers that
it has always been a practice of petitioner to give two retirement benefits and that
this practice was established by substantial evidence as found by both the
Voluntary Arbitrator and the CA.
ISSUE: Whether the respondents are entitled to two retirement plans.
Under Article 100 of the Labor Code, the Principle of Non-Diminution of Benefits
explicitly prohibits employers from eliminating or reducing the benefits received
by their employees.
This rule, however, applies only if the benefit is based on an express policy, a
written contract, or has ripened into company practice. To be considered as a
company practice, it must be consistently and deliberately made by the employer
over a long period of time. In the instant case, respondent was able to present
substantial evidence in the form of affidavits to support its claim that there are two
retirement plans already established in the establishment. Based on the affidavits,
Page | 130
petitioner has been giving two retirement benefits as early as 1997. Petitioner, on
the other hand, failed to present any evidence to rebut the veracity of the presented
affidavits. Petitioner's assertion that there is only one retirement plan as the CBA
Retirement Plan and the PERAA Plan are one and the same is not supported by
any evidence.
The Memorandum dated August 16, 2005 is contrary to the existing CBA because
it limits the available leave credits of an employee at the start of the school year.
The Memorandum imposes a limitation not agreed upon by the parties nor stated
in the CBA, so it must be annulled. Therefore, the petition is denied.
BLUER THAN BLUE JOINT VENTURES COMPANY/MARY ANN DELA

VEGA, Petitioners, vs. GLYZA ESTEBAN, Respondent.
[G.R. No. 192582 April 7, 2014 citing 2011 Nina Jewelry Manufacturing of Metal
Arts Inc. vs. Montecillo]
FACTS
The respondent was employed as a salesclerk and assigned at the petitioner’s

boutique. Her primary tasks were attending to all customer needs, ensuring
efficient inventory, coordinating orders from clients, cashiering and reporting to
the accounting department. The petitioner learned that some of their employees
had access to their POS system with the use of a universal password given to them
by a certain Elmer Flores, who in turn learned of the password from the
respondent. The petitioner then conducted an investigation and asked the
petitioner to explain why she should not be disciplinarily dealt with.
During the investigation the respondent was placed under preventive suspension.
After investigation the petitioner terminated the respondent on the grounds of loss
of trust or confidence. This respondent was given her final wage and benefits less
the inventory variance incurred by the store. This urged the respondent to file a
complaint for illegal dismissal, illegal suspension, holiday pay, rest day and
separation pay.
The labor arbiter ruled in her favor awarding her back wages. The petitioner
appealed the decision in the NLRC, and the decision was reversed. However, upon
the respondent’s petition for certiorari in the court of appeals the decision was
reinstated. Hence, this petition.
Page | 131
ISSUE: Whether the negative sales variance could be validly deducted from the
respondent’s wage.
No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that no employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his employees,
except in cases where the employer is authorized by law or regulations issued by
the Secretary of Labor and Employment, among others. The Omnibus Rules
Implementing the Labor Code, meanwhile, provides:
SECTION 14. Deduction for loss or damage. — Where the employer is engaged in a
trade, occupation or business where the practice of making deductions or
requiring deposits is recognized to answer for the reimbursement of loss or
damage to tools, materials, or equipment supplied by the employer to the
employee, the employer may make wage deductions or require the employees to
make deposits from which deductions shall be made, subject to the following
conditions:
1. That the employee concerned is clearly shown to be responsible for the loss or
damage;
2. That the employee is given reasonable opportunity to show cause why

deduction should not be made;
3. That the amount of such deduction is fair and reasonable and shall not exceed
the actual loss or damage; and
4. That the deduction from the wages of the employee does not exceed 20 percent
of the employee's wages in a week.
In this case, the petitioner failed to sufficiently establish that Esteban was
responsible for the negative variance it had in its sales for the year 2005 to 2006
and that Esteban was given the opportunity to show cause the deduction from her
last salary should not be made.
Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v.
Montecillo, that:
Page | 132
[T]he petitioners should first establish that the making of deductions from the
salaries is authorized by law, or regulations issued by the Secretary of Labor.
Further, the posting of cash bonds should be proven as a recognized practice in
the jewelry manufacturing business, or alternatively, the petitioners should seek
for the determination by the Secretary of Labor through the issuance of
appropriate rules and regulations that the policy the former seeks to implement is
necessary or desirable in the conduct of business. The petitioners failed in this
respect. It bears stressing that without proofs that requiring deposits and effecting
deductions are recognized practices, or without securing the Secretary of Labor's
determination of the necessity or desirability of the same, the imposition of new
policies relative to deductions and deposits can be made subject to abuse by the
employers. This is not what the law intends.
NETLINK COMPUTER INCORPORATED, Petitioner, vs. ERIC DELMO,

Respondent
[G.R. No. 160827 June 18, 2014]
FACTS
Since November 3, 1991, Mr. Eric Delmo was hired as an account manager for
Netlink Computer, Inc. Products and Services. His job requires him to canvass
and source clients. His performance is compensated by commissions of both
Philippine Peso and U.S Dollars. Mr. Delmo was able to generate sales which
entitled him to those commissions. Mr. Delmo’s work required him in the field
most of the time and with his colleagues they are not required to accomplish
timecards. His request for his commissions was denied by Netlink. Instead, they
gave him partial cash advances chargeable to the commissions. Then, Netlink
forced to Mr. Delmo to resign by issuing several memoranda detailing his
infractions of the company’s attendance policy.
On November 28, 1996, Mr. Delmo was refused entry into the company premises.
He filed, then, a complaint for illegal dismissal. As a response, the company
countered that Mr. Delmo is required to have his attendance recorded per
company policies. The company, furthermore, stated that his performance is
dismal, and he is outperformed by other account managers.
ISSUE: Whether the payment of commission by U.S Dollar as a company

practice/policy is protected by the non-diminution rule.
Page | 133
As a general rule, all obligations shall be paid in Philippine currency. However,

the contracting parties may stipulate that foreign currencies may be used for
settling obligations. This is pursuant to Republic Act No. 8183, which provides as
follows:
1. All monetary obligations shall be settled in the Philippine currency which is

legal tender in the Philippines. However, the parties may agree that the obligation
or transaction shall be settled in any other currency at the time of payment.
As established in Asia World Recruitment, Inc. v. NLRC, the real value of the
foreign exchange-incurred obligation up to the date of its payment should be
preserved. Though there was no written contract for the U.S Dollars commission,
the payment of which is still mandated because it is an established practice as a
company policy which is protected by the non-diminution rule. The principle of
non-diminution of benefits, which has been incorporated in Article 100of the
Labor Code, forbade Netlink from unilaterally reducing, diminishing,
discontinuing or eliminating the practice. Verily, the phrase "supplements, or
other employee benefits" in Article 100 is construed to mean the compensation and
privileges received by an employee aside from regular salaries or wages.
Regarding the length of time the company practice should have been observed to
constitute a voluntary employer practice that cannot be unilaterally reduced,
diminished, discontinued or eliminated by the employer, we find that
jurisprudence has not laid down any rule requiring a specific minimum number
of years. Several jurisprudences vary on the number of required years for a
practice to ripen.
With the payment of US dollar commissions having ripened into a company

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

Tumimbang, Petitioners, v. Henry Estranero
Page | 134
[GR No. 192518, October 15, 2014]
FACTS
On July 1, 1995, PLDT employed the respondent as an Auto-Mechanic/Electrician

Helper with a monthly salary of P15, 000 at the time of his separation from the
service in 2003.
In the year 1995, PLDT adopted a company-wide Manpower Reduction Program

(MRP), aimed at reducing its work force. To commence with its program, PLDT
offered the affected employees an attractive redundancy pay consisting of 100% of
their basic monthly salary for every year of service, in addition to their retirement
benefits, if entitled. For those who were not qualified to the retirement benefits,
they were offered separation or redundancy package of 200% of their basic
monthly salary for every year of service. Among those gravely affected by the
MRP was the Fleet Management Division where the respondent was assigned.
Attracted by the separation pay offered by the company, the respondent expressed
his conformity to his inclusion in the MRP in April 25, 2003. He was then made to
sign a deed denominated as a Receipt, Release and Quitclaim for his severance
from employment, thus availed of the offered personnel reduction program.
Thereafter, PLDT proceeded to compute the respondent's redundancy/separation
benefits.
Since his length of service was seven (7) years, eleven (11) months and fifteen (15)
days, which was rounded to 8 years, the respondent was entitled to 200% of his
basic monthly salary for every year of service by way of redundancy pay
equivalent to P240, 000.00 plus other benefits and bonuses equivalent to P27,
028.37 for a total of P267,028.37.
However, the respondent had outstanding liabilities arising from various loans he
obtained from different entities, namely: The Home Development Mutual Fund
(HDMF), PLDT Employees Credit Cooperative, Inc., PLDT Service Cooperative,
Inc., Social Security System (SSS), and the Manggagawa ng Komunikasyon sa
Pilipinas, which summed to P267, 028.37. Thus, PLDT deducted the said amount
from the payment that the respondent was supposed to receive as his redundancy
pay. As a result, his take home pay was in the amount of “zero pesos”. This
prompted the respondent to retract his availment of the separation pay package
offered to him through a letter addressed to the company dated May 8, 2003.
Page | 135
Despite said retraction, however, the respondent was no longer allowed to report
for work.
The respondent filed a complaint for illegal dismissal with reinstatement, as well
as moral and exemplary damages plus attorney's fees against PLDT and Ernani
Tumimbang (petitioners), the Division Head of the Fleet Management Division
where the respondent was assigned.
The Labor Arbiter (LA) rendered a decision in favor of Estrañero ordering PLDT
to pay him P267,038.37 as separation pay. The LA sustained the validity of PLDT's
redundancy program as an authorized cause to terminate the employment of the
respondent, and his entitlement to the redundancy/separation pay pursuant to the
MRP, being more advantageous than the benefits allowed under the law. The LA,
however, ruled that the office lacks jurisdiction to pass upon the issue of PLDT's
act in deducting the total outstanding loans which the respondent obtained from
different entities since the same does not involve an employer-employee
relationship, and may only be enforced by PLDT through a separate civil action in
the regular courts. On appeal to the NLRC and eventually to the CA, the decision
of the LA was also affirmed.
ISSUE: Whether PLDT can validly deduct the respondent's outstanding loan
obligation from his redundancy pay.
It is clear in Article 113 of the Labor Code that no employer, in his own behalf or
in behalf of any person, shall make any deduction from the wages of his
employees, except in cases where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment, among others.
The Omnibus Rules Implementing the Labor Code, meanwhile, provides that
deductions from the wages of the employees may be made by the employer when
such deductions are authorized by law, or when the deductions are with the
written authorization of the employees for payment to a third person. Thus, any
withholding of an employee's wages by an employer may only be allowed in the
form of wage deductions under the circumstances provided in Article 113 of the
Labor Code, as well as the Omnibus Rules implementing it. Further, Article 116 of
the Labor Code clearly provides that it is unlawful for any person, directly or
Page | 136
indirectly, to withhold any amount from the wages of a worker without the
worker's consent.
In this case, the deductions made to the respondent's redundancy pay do not fall
under any of the circumstances provided under Article 113, nor was it established
with certainty that the respondent has consented to the said deductions or that the
petitioners had authority to make such deductions. Furthermore, the petitioners
may not offset the outstanding loans of the respondent against the latter's
monetary benefits. The records expressly revealed that the respondent has
obtained various loans from different entities and not with PLDT. Accordingly,
set-off or legal compensation cannot take place between PLDT and the respondent
because they are not mutually creditor and debtor of each other. Thus, there can
be no valid set-off because the respondent's creditor is not PLDT.
The Court further agrees with the labor tribunals that the petitioners cannot offset
the outstanding balance of the respondent's loan obligation with his redundancy
pay because the balance on the loan does not come within the scope of jurisdiction
of the LA. The demand for payment of the said loans is not a labor, but a civil
dispute. It involves debtor-creditor relations, rather than employee-employer
relations. Evidently, the respondent's unpaid balance on his loans cannot be offset
against the redundancy pay due to him.
The Court rules that PLDT has no legal right to withhold the respondent's
redundancy pay and other benefits to recompense for his outstanding loan
obligations to different entities. The respondent's entitlement to his redundancy
pay is mandated by law which the petitioners cannot unjustly deny.
EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO

DAVID, BONIFACIO MATUNDAN, NORA MENDOZA, et al., Petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION, ·SOLID MILLS, INC.,
and/or PHILIP ANG, Respondents.
[G.R. No. 202961 February 4, 2015]
FACTS
Petitioners are respondent Solid Mills, Inc.'s (Solid Mills) employees. They are
represented by the National Federation of Labor Unions (NAFLU), their collective
Page | 137
bargaining agent. As Solid Mills' employees, petitioners and their families were
allowed to occupy SMI Village, a property owned by Solid Mills. According to
Solid Mills, this was "out of liberality and for the convenience of its employees and
on the condition that the employees would vacate the premises anytime the
Company deems fit."
In September 2003, petitioners were informed that effective October 10, 2003, Solid
Mills would cease its operations due to serious business losses. The memorandum
of agreement provided for Solid Mills' grant of separation pay less
accountabilities, accrued sick leave benefits, vacation leave benefits, and 13th
month pay to the employees. By October 10, 2003, petitioners were no longer
allowed to report for work. They were required to sign a memorandum of
agreement with release and quitclaim before their vacation and sick leave benefits,
13th month pay, and separation pay would be released. Petitioners refused to sign
the documents and demanded to be paid their benefits and separation pay.
Hence, petitioners filed complaints before the Labor Arbiter for alleged non-
payment of separation pay, accrued sick and vacation leaves, and 13th month pay.
They argued that their accrued benefits and separation pay should not be withheld
because their payment is based on company policy and practice. On the other
hand, Solid Mills argued that petitioners' complaint was premature because they
had not vacated its property. The Labor Arbiter ruled in favor of petitioners.
According to the Labor Arbiter, Solid Mills illegally withheld petitioners' benefits
and separation pay.
Solid Mills appealed to the National Labor Relations Commission. The National
Labor Relations Commission ruled that because of petitioners' failure to vacate
Solid Mills' property, Solid Mills was justified in withholding their benefits and
separation pay. Solid Mills granted the petitioners the privilege to occupy its
property on account of petitioners' employment. It had the prerogative to
terminate such privilege. The Court of Appeals likewise agreed with the National
Labor Relations Commission's deletion of interest since it found that Solid Mills'
act of withholding payment of benefits and separation pay was proper. Petitioners'
terminal benefits and pay were withheld because of petitioners' failure to vacate
Solid Mills' property.
Page | 138
ISSUE: Whether employer Solid Mill’s withholding of terminal pay and benefits
of respondent-employees valid pending return of the employee’s properties
Yes. The Court held that requiring clearance before the release of last payments
to the employee is a standard procedure among employers, whether public or
private. Clearance procedures are instituted to ensure that the properties, real or
personal, belonging to the employer but are in the possession of the separated
employee, are returned to the employer before the employee's departure.
As a general rule, employers are prohibited from withholding wages from

employees. The Labor Code provides:
Art. 116. Withholding of wages and kickbacks prohibited. The Labor Code also
prohibits the elimination or diminution of benefits.
The Labor Code also prohibits the elimination or diminution of benefits. Thus:
Art. 100. Prohibition against elimination or diminution of benefits. — Nothing in this

Book shall be construed to eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time of promulgation of this Code.
However, our law supports the employers' institution of clearance procedures

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

meaning of the term "accountability" does not limit the definition of accountability
to those incurred in the worksite. As long as the debt or obligation was incurred
by virtue of the employer-employee relationship, generally, it shall be included in
the employee's accountabilities that are subject to clearance procedures. What can
Page | 139
be gathered from the findings of the Labor Arbiter, National Labor Relations
Commission, and the Court of Appeals is that respondent Solid Mills allowed the
use of its property for the benefit of petitioners as its employees. The return of the
property's possession became an obligation or liability on the part of the
employees when the employer-employee relationship ceased. Withholding of
payment by the employer does not mean that the employer may renege on its
obligation to pay employees their wages, termination payments, and due benefits.
The employees' benefits are also not being reduced. It is only subjected to the
condition that the employees return properties properly belonging to the
employer. This is only consistent with the equitable principle that "no one shall be
unjustly enriched or benefited at the expense of another."
For these reasons, we cannot hold that petitioners are entitled to interest of their
withheld separation benefits. These benefits were properly withheld by
respondent Solid Mills because of their refusal to return its property. Clearly, in
this case, it is for the workers to return their housing in exchange for the release of
their benefits. This is what they agreed upon. It is what is fair in the premises.
ERNESTO GALANG and MA. OLGA JASMIN CHAN v. BOIE TAKEDA

CHEMICALS
[GR No. 183934, July 20, 2016]
FACTS
Respondent pharmaceutical company Boie Takeda Chemicals, Inc. (BTCI) hired

petitioners Ernesto Galang and Ma. Olga Jasmin Chan. Through the years,
petitioners rose from the ranks and were promoted to Regional Sales Managers in
2000. Petitioners held these positions until their separation from BTCI on May 1,
2004.
As Regional Sales Managers, they belong to the sales department of BTCI. They
primarily managed regional sales budget and target and were responsible for
market share and company growth within their respective regions. Within the
organizational hierarchy, they reported to the National Sales Director. In 2002,
when the National Sales Director position became vacant (alter the retirement of
Melchor Barretto), petitioners assumed and shared (with the general manager) the
Page | 140
functions and responsibilities of this higher position and reported directly to the
General Manager.
Petitioners were informed that BTCI promoted Villanueva as National Sales

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

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

under existing laws, a collective bargaining agreement or employment contract, or
an established employer policy. Based on both parties' evidence, petitioners are
not covered by any agreement. There is also no dispute that petitioners received
more than what is mandated by Article 287 of the Labor Code. Petitioners,
however, claim that they should have received a larger pay because BTCI has
given more than what they received to previous retirees. In essence, they claim
that they were discriminated against because BTCI did not give them the package
Page | 141
of 150% of monthly salary for every year of service on top of the normal retirement
package.
To prove that their claim on the additional grant of 150% of salary, petitioners
presented evidence showing that former employees received significantly larger
retirement benefits. However, the cases of Ducay, Arada, and Rafael cannot be
used as precedents to prove this specific company practice because these
employees were not shown to be similarly situated in terms of rank, nor are the
applicable retirement packages corresponding to their ranks alike. Also, these
employees, including Sarmiento, all retired in the same year of 2001, or only within
a one-year period. Definitely, a year cannot be considered long enough to
constitute the grant of retirement benefits to these employees as company practice.
It cannot therefore be disputed that petitioners already received the benefits as
specified in the CBA between BTC1 and BTCI Supervisory Union.
Petitioner Chan, for her 21 years of service, received a total of P1,764,000.00 as

retirement benefits following the formula of P70,000.00 x 120% x 21 years.
Petitioner Galang, for his 29 years of service, received a total of P3,248,000.00 as
retirement benefits following the formula of P70,000.00 x 160% x 29 years.
COCA-COLA BOTTLERS PHILIPPINES, INC., petitioner, vs. CCBPI STA.

ROSA PLANT EMPLOYEES UNION, respondent
[G.R. No. 197494]
Facts
CCBPI is engaged in the business of manufacturing, distributing, and marketing

beverage products while CCBPI Sta. Rosa Plant Employees' Union is a recognized
labor union organized and registered with the DOLE and the sole representative
of all regular daily paid employees and monthly paid non-commission earning
employees within petitioner's Sta. Rosa, Laguna plant. A dispute arose when
petitioner implemented a policy which limits the total amount of loan which its
employees may obtain from the company and other sources to 50% of their
respective monthly pay. As interpreted by the Union this is violative of the CBA,
which states that petitioner shall process all SSS loans of its employees, despite
any outstanding company loan of said employees, subject to SSS rules and
regulations. After conciliation efforts failed, respondent Union submitted the
matter before the Voluntary Arbitrator on October 5, 2009.
Page | 142
Petitioner argued that the company policy follows the Labor Code considering
that it ensures that the employees' wages are directly paid to the employees
themselves and not to third party creditors. The Voluntary Arbitrator, in ruling in
favor of the respondent Union, maintained that Section 2, Article 14 of the CBA is
clear when it if petitioner shall process all SSS loans, subject only to SSS rules and
regulations.
ISSUE: Whether petitioner's company policy which limits the availment of loans
depending on the average take home pay of its employees violates a provision in
the CBA.
It such limitation violated a provision in the CBA. It is a familiar and

fundamental doctrine in labor law that the CBA is the law between the parties,
and they are obliged to comply with its provisions.
As in all contracts, the parties in a CBA may establish such stipulations, clauses,
terms and conditions as they may deem convenient provided these are not
contrary to law, morals, good customs, public order, or public policy. Thus, where
the CBA is clear and unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the law.
The concerned CBA provision provides:
Article XIII
SECTION 2. SSS Salary Loans. — The COMPANY shall process all SSS loan
applications, notwithstanding the fact that the employee concerned may have
outstanding COMPANY loans, subject to SSS rules and regulations.
On the other hand, the company policy puts a cap relative to the loan availment
by the employees depending on the employees' monthly basic net pay. In other
words, petitioner shall disapprove the loan application of an employee whose net
take home pay falls below 50% of his average monthly basic pay.
A plain reading of the CBA provision provides for the commitment of the
petitioner to process SSS salary loans, in particular, of its employees. The only
limitation is the application of SSS rules and regulations pertaining to the same.
Undoubtedly, the company policy is not an SSS rule or regulation. Hence, it is
important to discuss whether said company policy is sanctioned under SSS rules
and regulations.
Page | 143
Based on the Terms and Conditions of a Member Loan Application, pursuant to
Social Security Commission Regulation No. 669, which is stipulated at the back of
every SSS loan application, the qualification of a member-borrower is dependent
on the amount of loan to be taken, updated it does not appear that the employer
has the prerogative to impose other conditions which does not involve its duty to
collect and remit amortizations. The 50% net take home pay requirement, in effect,
further adds a condition for an employee to obtain an SSS salary loan, on top of
the requirements issued by the SSS. Hence, when petitioner requires that the
employee should have at least 50% net take home pay before it processes a loan
application, the same violates the CBA provision when a qualified employee
chooses to apply for an SSS loan.
VII. PAYMENT OF WAGES
DOMINICO C. CONGSON, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, NOE BARGO, ROGER HIMENO, RAYMUNDO BADAGOS,
PATRICIO SALVADOR, SR., NEHIL BARGO, JOEL MENDOZA, and
EMMANUEL CALIXIHAN, respondents.
[G.R. No. 114250 April 5, 1995]
FACTS
Dominico C. Congson is the registered owner of Southern Fishing Industry.

Respondents were hired as piece-rate employees uniformly paid at a rate of P1.00
per tuna weighing thirty (30) to eighty (80) kilos per movement. They work for 7
days a week. Due to alleged scarcity of tuna, Congson notified his proposal to
reduce the rate-per-tuna movement. When they reported the following day, they
found out that they were already replaced with new set of workers. They wanted
to have a dialogue with the management, but they waited in vain. Thus, they filed
a case before NLRC for underpayment of wages (violation of the minimum wage
Page | 144
law) and non-payment of overtime pay, 13th month pay, holiday pay, rest day
pay, and five (5)-day service incentive leave pay; and for constructive dismissal.
Petitioner conceded that his payment of wages falls below the minimum wage law.
He averred that NLRC should have considered as forming a substantial part of
private respondents' total wages the cash value of the tuna liver and intestines
private respondents were entitled to retrieve. He argued that the combined value
of the cash wage and monetary value of the tuna liver and intestines clearly
exceeded the minimum wage fixed by law. Both the Labor Arbiter and the NLRC
ruled in favor of the respondents.
ISSUE: Whether the form of payment by Congson is valid pursuant to Article 102
of the Labor Code.
Petitioner's practice of paying the private respondents the minimum wage by

means of legal tender combined with tuna liver and intestines runs counter to
the above cited provision of the Labor Code.
The fact that said method of paying the minimum wage was not only agreed upon
by both parties in the employment agreement but even expressly requested by
private respondents, does not shield petitioner.
Article 102 of the Labor Code is clear.
ARTICLE 102. Forms of Payment. — No employer shall pay the wages of an

employee by means of promissory notes, vouchers, coupons, tokens, tickets,
chits, or any object other than legal tender, even when expressly requested by the
employee. Payment of wages by check or money order shall be allowed when
such manner of payment is customary on the date of effectivity of this Code or is
necessary because as specified in appropriate regulations to be issued by the
Secretary of Labor or as stipulated in a collective bargaining agreement.
Wages shall be paid only by means of legal tender. The only instance when an
employer is permitted to pay wages informs other than legal tender, that is, by
checks or money order, is when the circumstances prescribed in the second
paragraph of Article 102 are present.
Page | 145
NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION
TRUST, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION,
LABOR ARBITER ANTONIO M. VILLANUEVA and WILFREDO
GUILLEMA, respondents.
[G.R. No. 112546 March 13, 1996]
FACTS
Due to financial losses, North Davao Mining Corporation laid off workers.
Respondent Wilfredo Guillema is one among several employees of North Davao
who were separated by reason of the company’s closure on May 31, 1992. It
appears that, during the life of the petitioner corporation, from the beginning of
its operations in 1981 until its closure in 1992, it had been giving separation pay
equivalent to thirty (30) days’ pay for every year of service.
Moreover, inasmuch as the region where North Davao operated was plagued by
insurgency and other peace and order problems, the employees had to collect their
salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their
workplace and about 2 ½hours’ travel time by public transportation; this
arrangement lasted from 1981 up to 1990.
ISSUE: Whether time spent in collecting wages in a place other than the place of
employment is compensable notwithstanding that the same is done during official
time.
The Supreme Court, affirming the decision of the Labor Arbiter, finds that the
hours spent by complainants in collecting salaries at a bank in Tagum, Davao del
Norte shall be considered compensable hours worked.
Considering further the distance between Amacan, Maco to Tagum which is 2½

hours by travel and the risks in commuting all the time in collecting complainants’
salaries, would justify the granting of backwages equivalent to two (2) days in a
month as prayed for. Corollary, we likewise hold respondents liable for the
transportation expenses incurred by complainants at P40.00 round trip fare during
pay days.
Page | 146
HEIRS OF SARA LEE, Petitioner, vs. CYNTHIA F. REY, Respondent.
[G.R. No. 149013 August 31, 2006]
FACTS
The House of Sara Lee is engaged in the direct selling of a variety of product lines
for men and women, including cosmetics, intimate apparels, perfumes, ready to
wear clothes and other novelty items, through its various outlets nationwide. In
the pursuit of its business, the petitioner engages and contracts with dealers to sell
the aforementioned merchandise. These dealers, known either as “Independent
Business Managers” (IBMs) or “Independent Group Supervisors” (IGSs),
depending on whether they sell individually or through their own group, would
obtain at discounted rates the merchandise from the petitioner on credit or then
sell the same products to their own customers at fixed prices also determined by
the petitioner.
The dealers under this system earn income through a profit margin between the
discounted purchase price they pay on credit to the petitioner and the fixed selling
price their customers will have to pay. On top of this margin, the dealer is given
the Service Fee, a sales commission, based on the volume of sales generated by
him or her. Due to the sheer volume of sales generated by all of its outlets, the
petitioner has found the need to strictly monitor the 38- or 52-day “rolling due
date” of each of its IBMs and IGSs through the employment of “Credit
Administration Supervisors” (CAS) for each branch. The primary duty of the CAS
is to strictly monitor each of these deadlines, to supervise the credit and collection
of payments and outstanding accounts due to the petitioner from its independent
dealers and various customers, and to screen prospective IBMs. To discharge
these responsibilities, the CAS is provided with a computer equipped with control
systems through which data is readily generated. Under this organizational setup,
the CAS is under the direct and immediate supervision of the Branch Operations
Manager (BOM).
Cynthia Rey at the time of her dismissal from employment, held the position of
Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of
the petitioner. She was first employed by the petitioner as an Accounts Receivable
Page | 147
Clerk at its Caloocan City branch. In November 1993, respondent was transferred
to the Cagayan de Oro City branch retaining the same position. In January 1994,
respondent was elevated to the position of CAS. At that time, the Branch
Operations Manager or BOM of the Cagayan de Oro City branch was a certain Mr.
Jeremiah Villagracia. In March 1995, respondent was temporarily assigned to the
Butuan City branch.
Sometime in June 1995, while respondent was still working in Butuan City, she
allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet
to change the credit term of one of the IBMs of the petitioner who happens to be
respondent’s sister-in-law, from the 52-day limit to an “unauthorized” term of 60
days. The respondent made the instruction just before the computer data for the
computation of the Service Fee accruing to Ms. Rey-Petilla was about to be
generated. Ms. Mendoza then reported this allegedly unauthorized act of
respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the
report, as the petitioner alleges, BOM Villagracia discreetly verified the records
and discovered that it was not only the 52-day credit term of IBM Rey-Petilla that
had been extended by the respondent, but there were several other IBMs whose
credit terms had been similarly extended beyond the periods allowed by company
policy. BOM Villagracia then summoned the respondent and required her to
explain the unauthorized credit extensions.
Issue: Whether the respondent is entitled to 13th month pay.
The award of 13th month pay must be deleted.
Respondent is not a rank-and-file employee and is, therefore, not entitled to

thirteenth month pay. However, the NLRC and the CA are correct in refusing to
award 14th and 15th month pay as well as the “monthly salary increase of 10
percent per year for two years based on her latest salary rate.” The respondent
must show that these benefits are due to her as a matter of right. Mere allegations
by the respondent do not suffice in the absence of proof supporting the same. With
respect to salary increases in particular, the respondent must likewise show that
she has a vested right to the same, such that her salary increases can be made a
component in the computation of back wages. What is evident is that salary
increases are a mere expectancy. They are by nature volatile and dependent on
Page | 148
numerous variables, including the company’s fiscal situation, the employee’s
future performance on the job, or the employee’s continued stay in a position. In
short, absent any proof, there is no vested right to salary increases.
VIII. CONDITIONS OF EMPLOYMENT
SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA.

CONSUELO MACQUILING LEONARDO MARTINEZ, DOMINGO ELA, JR.,
RODOLFO CALUCIN, JR., PERLA MENDOZA, REX RAPHAEL REYES,
ROGELIO BELMONTE, and 375 other EMPLOYEE-UNION MEMBERS,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, and SAN
JUAN DE DIOS HOSPITAL, respondents.
[G.R. No. 126383 November 28, 1997]
FACTS
Petitioners, the rank-and-file employee-union officers and members of San Juan

De Dios Hospital Employees Association sent a letter requesting and pleading for
the expeditious implementation and payment by respondent Juan De Dios
Hospital of the ’40 HOURS/5-DAY WORKWEEK’ with compensable weekly two
(2) days off provided for by Republic Act 5901 as clarified for enforcement by the
Secretary of Labor’s Policy Instructions No. 54. RA 5901 seeks to reduce the
number of hospital personnel, considering the nature of their work, and at the
same time guarantee the payment to them of a full weekly wage for seven (7) days.
Respondent hospital failed to give a favorable response; thus, petitioners filed a

complaint regarding their claims for statutory benefits under the above-cited law
and policy issuance. Both Labor Arbiter and NLRC dismissed the complaint.
ISSUE: Whether the Policy Instructions No. 54 issued by then Labor Secretary
(now Senator) Franklin M. Drilon is valid.
The interpretation of Labor Secretary Drilon is not valid.
Page | 149
A cursory reading of Article 83 of the Labor Code betrays petitioners’ position that
“hospital employees” are entitled to “a full weekly salary with paid two (2) days’
off if they have completed the 40-hour/5-day workweek”.
What Article 83 merely provides are:
(1) the regular office hour of eight hours a day, five days per week for health
personnel, and
(2) where the exigencies of service require that health personnel work for six days
or forty-eight hours then such health personnel shall be entitled to an additional
compensation of at least thirty percent of their regular wage for work on the sixth
day.
There is nothing in the law that supports then Secretary of Labor’s assertion that
“personnel in subject hospitals and clinics are entitled to a full weekly wage for
seven (7) days if they have completed the 40-hour/5-day workweek in any given
workweek”.
Needless to say, the Secretary of Labor exceeded his authority by including a two
days off with pay in contravention of the clear mandate of the statute. Such act
the Court shall not countenance. Administrative interpretation of the law, we
reiterate, is at best merely advisory, and the Court will not hesitate to strike down
an administrative interpretation that deviates from the provision of the statute.
SIME DARBY PILIPINAS INC, petitioner, vs. NLRC (2nd Division) and SIME
DARBY SALARIED EMPLOYEES ASSOCIATION (ALCU0TUCP),
respondents.
[G.R. No. 119205 April 15, 1998]
FACTS
Prior to the present controversy, the factory employees of Sime Darby Pilipinas,
Inc. enjoyed a 30-minute paid “on call” lunch break in their daily work schedule
of 7:45 am to 3:45 pm. The petitioner company passed a memorandum dated Aug
12 1992 advising all factory-based workers, except those in the Warehouse and
Quality Assurance Department, of a change in work schedule that discontinued
the 30-minute paid “on call” lunch break and set an uninterrupted 1 hour lunch
break in lieu thereof.
Page | 150
Private respondents then filed a complaint for unfair labor practice,
discrimination, and evasion of liability with the Labor Arbiter who dismissed the
complaint, ruling that the elimination of the 30-minute lunch break was a valid
exercise of management prerogative. Appeal was made to respondent NLRC who
reversed the decision of the Labor Arbiter, declaring that the new work schedule
deprived the employees of the benefits of a time-honored company practice and
that such change also resulted in an unjust diminution of employee benefits.
The OSG recommended the present petition to be granted, alleging that the new
memorandum containing the work schedule was not discriminatory not did it
constitute unfair labor practice.
ISSUE: Whether the memorandum dated Aug 14, 1992 discontinuing the 30-
minute paid “on call” lunch break constituted unfair labor practice and diminution
of benefits
The Supreme Court sustained petitioner, holding that it is clearly a management

prerogative to fix the work schedules of company employees.
Under the old schedule, the employees are compensated during their 30-minute
lunch break, but in essence it is still working time since the workers could be called
upon to work. Whereas in the new schedule, the employees are given a longer
break of 1 hour, though uncompensated, it is uninterrupted as workers on their
break are no longer “on call”. The change in schedule would improve company
productivity as well as enhance the comfort of workers who could enjoy an
uninterrupted break.
The Supreme Court also reiterated the policy that while social justice and the
protection of the working class is ensured by the Constitution, the same
fundamental law also protects the right of the management to regulate all aspects
of employment as well as to retain the prerogative of changing work schedules
according to the exigencies of the enterprise. So long as this prerogative is
exercised in good faith, the Court upholds such exercise.
Page | 151
PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, LABOR ARBITER ROMULUS PROTACIO and
DR. HERMINIO A. FABROS, respondents.
[G.R. No. 132805 February 2, 1999]
FACTS
Dr. Fabros (private respondent) was employed as flight surgeon at petitioner

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

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

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

stay in the company premises for not less than eight (8) hours. Hence, he may not
leave the company premises during such time, even to take his meals.
ISSUE: Whether being a full-time employee, private respondent is obliged to stay

in the company premises for not less than eight (8) hours.
Page | 152
NO. Employees are not prohibited from going out of the premises as long as they
return to their post on time.
Articles 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work. —The normal hours of work of any employee shall
not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least one

million (1,000,000) or in hospitals and clinics with a bed capacity of at least one
hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5)
days a week, exclusive of time for meals, except where the exigencies of the service
require that such personnel work for six (6) days or forty-eight (48) hours, in which
case they shall be entitled to an additional compensation of at least thirty per cent
(30%) of their regular wage for work on the sixth day. For purposes of this Article,
“health personnel” shall include resident physicians, nurses, nutritionists,
dieticians, pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or clinic
personnel.
Art. 85. Meal periods. —Subject to such regulations as the Secretary of Labor may
prescribe, it shall be the duty of every employer to give his employees not less
than sixty (60) minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code
further states:
Sec. 7. Meal and Rest Periods.—Every employer shall give his employees,
regardless of sex, not less than one (1) hour time-off for regular meals, except in
the following cases when a meal period of not less than twenty (20) minutes may
be given by the employer provided that such shorter meal period is credited as
compensable hours worked of the employee:
1. Where the work is non-manual work in nature or does not involve strenuous
physical exertion;
2. Where the establishment regularly operates not less than sixteen hours a day;
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3. In cases of actual or impending emergencies or there is urgent work to be
performed on machineries, equipment or installations to avoid serious loss which
the employer would otherwise suffer; and
4. Where the work is necessary to prevent serious loss of perishable goods.
Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be
considered as compensable working time.
Thus, the eight-hour work period does not include the meal break. Nowhere in
the law may it be inferred that employees must take their meals within the
company premises. Employees are not prohibited from going out of the premises
as long as they return to their posts on time.
Private respondent’s act, therefore, of going home to take his dinner does not
constitute abandonment.
LINTON COMMERCIAL CO., INC. and DESIREE ONG, Petitioners, vs. ALEX
A. HELLERA, et. al. Respondents.
[G.R. No. 163147 October 10, 2007]
FACTS
On 17 December 1997, Linton issued a memorandum addressed to its employees

informing them of the company's decision to suspend its operations from
December 18, 1997 to January 5, 1998 due to the currency crisis that affected its
business operations. Linton submitted an establishment termination report to the
Department of Labor and Employment (DOLE) regarding the temporary closure
of the establishment covering the said period. The company's operation was to
resume on January 6, 1998.
On January 7, 1997, Linton issued another memorandum informing them that

effective January 12, 1998, it would implement a new compressed workweek of
three (3) days on a rotation basis. In other words, each worker would be working
on a rotation basis for three working days only instead for six days a week. On the
same day, Linton submitted an establishment termination report concerning the
rotation of its workers. Linton proceeded with the implementation of the new
policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68)
workers (workers) filed a Complaint for illegal reduction of workdays.
Page | 154
ISSUE: Whether there was an illegal reduction of work when Linton implemented
a compressed workweek by reducing from six to three the number of working
days with the employees working on a rotation basis.
The compressed workweek arrangement was unjustified and illegal
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin

providing for in determining when an employer can validly reduce the regular
number of working days. The said bulletin states that a reduction of the number
of regular working days is valid where the arrangement is resorted to by the
employer to prevent serious losses due to causes beyond his control, such as when
there is a substantial slump in the demand for his goods or services or when there
is lack of raw materials. Although the bulletin stands more as a set of directory
guidelines than a binding set of implementing rules, it has one main consideration,
consistent with the ruling in Philippine Graphic Arts Inc., in determining the
validity of reduction of working hours — that the company was suffering from
losses.
Certainly, management has the prerogative to come up with measures to ensure

profitability or loss minimization. However, such privilege is not absolute.
Management prerogative must be exercised in good faith and with due regard to
the rights of labor. As previously stated, financial losses must be shown before a
company can validly opt to reduce the work hours of its employees. However, to
date, no definite guidelines have yet been set to determine whether the alleged
losses are sufficient to justify the reduction of work hours. If the standards set in
determining the justifiability of financial losses under Article 283 (i.e.,
retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to
be considered, petitioners would end up failing to meet the standards. On the one
hand, Article 286 applies only when there is a bona fide suspension of the
employer's operation of a business or undertaking for a period not exceeding six
(6) months.
Records show that Linton continued its business operations during the effectivity
of the compressed workweek, which spanned more than the maximum period. On
the other hand, for retrenchment to be justified, any claim of actual or potential
business losses must satisfy the following standards: (1) the losses incurred are
substantial and not de minimis; (2) the losses are actual or reasonably imminent;
Page | 155
(3) the retrenchment is reasonably necessary and is likely to be effective in
preventing the expected losses; and (4) the alleged losses, if already incurred, or
the expected imminent losses sought to be forestalled, are proven by sufficient and
convincing evidence. Linton failed to comply with these standards.
BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union

President, JOSELITO LARIÑO, VIVENCIO B. BARTE, SATURNINO EGERA
and SIMPLICIO AYA-AY, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, TRYCO PHARMA CORPORATION, and/or WILFREDO C.
RIVERA, respondents.
[G.R. No. 151309 October 15, 2008]
FACTS
Petitioners Larino, Barte, Egera and Aya-ay are Tryco Pharma Corporation’s
regular employees. The petitioners are members of Bisig Manggagawa sa
Tryco(BMT), the exclusive bargaining representative of the rank-and-file
employes. Tryco and petitioners then signed a Memorandum of Agreement
providing for a compressed workweek schedule to be implemented in the
company pursuant to Department of Labor and Employment Department Order
(D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed
Workweek.
As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be
considered as the regular working hours, and no overtime pay shall be due and
payable to the employee for work rendered during those hours. The MOA
specially stated that the employee waives the right to claim overtime pay for work
rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that
the compressed workweek schedule is adopted in lieu of the regular workweek
schedule which also consists of 46 hours. However, should an employee be
permitted or require working beyond 6:12 pm, such employee shall be entitled to
overtime pay. Tryco informed the Bureau of Working Conditions of the
Department of Labor and Employment of the implementation of a compressed
workweek in the company. Tryco then received a letter from the Bureau of Animal
Industry of the Department of Agriculture that its production should be
conducted in Bulacan and not in Caloocan. Tryco then issued a Memorandum
ordering petitioner to report to the company’s plant site in Bulacan. However,
Page | 156
petitioners refused. BMT opposed the transfer contending that it constitutes unfair
labor practice declared a strike.
Petitioners then filed separate complaints for illegal dismissal, underpayment of

wages, nonpayment of OT pay and service incentive leave and refusal to bargain
against Tryco alleging that it acted in bad faith in ordering the transfer of
petitioners to paralyze the union.
Respondent in its defense aver that petitioners were not dismissed but they
refused to comply with the management directive for them to report to Bulacan
due to the letter reminder from the Bureau of Animal Industry.
ISSUE: Whether the Memorandum of Agreement providing for compressed

workweek is unenforceable as it is contrary to law.
No, the MOA is enforceable and binding against the petitioners.
D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits
that the employees will derive from the adoption of a compressed workweek
scheme, thus:
“The compressed workweek scheme was originally conceived for establishments

wishing to save on energy costs, promote greater work efficiency and lower the
rate of employee absenteeism, among others. Workers favor the scheme
considering that it would mean savings on the increasing cost of transportation
fares for at least one (1) day a week; savings on meal and snack expenses; longer
weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure,
family responsibilities, studies and other personal matters, and that it will spare
them for at least another day in a week from certain inconveniences that are the
normal incidents of employment, such as commuting to and from the workplace,
travel time spent, exposure to dust and motor vehicle fumes, dressing up for work,
etc. Thus, under this scheme, the generally observed workweek of six (6) days is
shortened to ve (5) days but prolonging the working hours from Monday to Friday
without the employer being obliged for pay overtime premium compensation for
work performed in excess of eight (8) hours on weekdays, in exchange for the
benefits above cited that will accrue to the employees.”
Page | 157
Moreover, the adoption of a compressed workweek scheme in the company will
help temper any inconvenience that will be caused the petitioners by their transfer
to a farther workplace.
Notably, the MOA complied with the following conditions set by the DOLE, under
D.O. No. 21, to protect the interest of the employees in the implementation of a
compressed workweek scheme:
1.The employees voluntarily agree to work more than eight (8) hours a day the
total in a week of which shall not exceed their normal weekly hours of work prior
to adoption of the compressed workweek arrangement;
2. There will not be any diminution whatsoever in the weekly or monthly take
home pay and fringe benefits of the employees;
3. If an employee is permitted or required to work in excess of his normal weekly

hours of work prior to the adoption of the compressed workweek scheme, all such
excess hours shall be considered overtime work and shall be compensated in
accordance with the provisions of the Labor Code or applicable Collective
Bargaining Agreement (CBA);
4. Appropriate waivers with respect to overtime premium pay for work performed
in excess of eight (8) hours a day may be devised by the parties to the agreement.
5. The effectivity and implementation of the new working time arrangement shall
be by agreement of the parties.
Thus, the MOA is enforceable and a valid undertaking.
HILARIO DASCO, REYMIR PARAFINA, RICHARD PARAFINA,

EDILBERTO ANIA, MICHAEL ADANO, JAIME BOLO, RUBEN E. GULA,
ANTONIO CUADERNO and JOVITO CATANGUI, Petitioners, vs.
PHILTRANCO SERVICE ENTERPRISES INC./CENTURION SOLANO,
Manager, Respondents.
[G.R. No. 211141 June 29, 2016]
FACTS
The petitioners were employed by the respondents (on various dates from 2006 to
2010) as bus drivers and/or conductors with travel routes of Manila (Pasay) to
Page | 158
Bicol, Visayas and Mindanao, and vice versa. On July 4, 2011, the petitioners filed
a case against the respondents alleging that: (1) they were already qualified for
regular employment status since they have been working with the respondents for
several years; (2) they were paid only P404.00 per round trip, which lasts from two
to five days, without overtime pay and below the minimum wage rate; (3) they
cannot be considered as field personnel because their working hours are controlled
by the respondents from dispatching to end point and their travel time is
monitored and measured by the distance because they are in the business of
servicing passengers where time is of the essence; and (4) they had not been given
their yearly five-day SIL since the time they were hired by the respondents.
In response, the respondents asserted that: (1) the petitioners were paid on a fixed
salary rate of P0.49 centavos per kilometer run, or minimum wage, whichever is
higher; (2) the petitioners are seasonal employees since their contracts are for a
fixed period and their employment was dependent on the exigency of the
extraordinary public demand for more buses during peak months of the year; and
(3) the petitioners are not entitled to overtime pay and SIL pay because they are
field personnel whose time outside the company premises cannot be determined
with reasonable certainty since they ply provincial routes and are left alone in the
field unsupervised.
The Labor Arbiter ruled in favor of the respondents who were able to prove that
petitioners were paid with a fixed salary or minimum wage, whichever is higher.
It also held that employees were not entitled to holiday pay and SIL as field
personnel.
The NLRC held that the petitioners are not field personnel considering that they
ply specific routes with fixed time schedules determined by the respondents; thus,
they are entitled to minimum wage, SIL pay, and overtime benefits. The CA
reversed the NLRC and reinstated the Labor Arbiter.
ISSUE: Whether the petitioners as bus drivers and/or conductors are field
personnel, and thus entitled to overtime pay and SIL pay.
The bus drivers and/or conductors are regular employees.
Page | 159
It is necessary to stress that the definition of a "field personnel" is not merely
concerned with the location where the employee regularly performs his duties but
also with the fact that the employee's performance is unsupervised by the
employer. Field personnel are those who regularly perform their duties away from
the principal place of business of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty.
Thus, in order to conclude whether an employee is a field employee, it is also

necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to
whether or not the employee's time and performance are constantly supervised by
the employer
The NLRC properly concluded that they are not field personnel but regular
employees who perform tasks usually necessary and desirable to the respondents'
business. Evidently, the petitioners are not field personnel as defined above and
the NLRC's finding in this regard is supported by the established facts of this case:
(1) the petitioners, as bus drivers and/or conductors, are directed to transport their
passengers at a specified time and place; (2) they are not given the discretion to
select and contract with prospective passengers; (3) their actual work hours could
be determined with reasonable certainty, as well as their average trips per month;
and (4) the respondents supervised their time and performance of duties.
Thus, they are consequently entitled to the benefits accorded to regular employees
of the respondents, including overtime pay and SIL pay.
HSY MARKETING LTD. CO., petitioner, v. VIRGILIO 0. VILLASTIQUE,

respondent.
[G.R. No. 219569 August 17, 2016]
FACTS
On January 3, 2003, petitioner hired respondent as a field driver for Fabulous Jeans
& Shirt & General Merchandise (Fabulous Jeans), tasked to deliver ready-to-wear
items and/or general merchandise for a daily compensation of P370.00
On January 10, 2011, respondent figured in an accident when the service vehicle
(a 2010-model Mitsubishi Strada pick up) he was driving in Iligan City bumped a
pedestrian, Ryan Dorataryo (Dorataryo). Fabulous Jeans shouldered the
Page | 160
hospitalization and medical expenses of Dorataryo in the amount of P64,157.15,
which respondent was asked to reimburse, but to no avail.
On February 24, 2011, respondent was allegedly required to sign a resignation

letter, which he refused to do. A couple of days later, he tried to collect his salary
for that week but was told that it was withheld because of his refusal to resign.
Convinced that he was already terminated on February 26, 2011, he lost no time in
filing a complaint for illegal dismissal with money claims against petitioner,
Fabulous Jeans, and its owner, Alexander G. Arqueza.
The Labor Arbiter dismissed the complaint for illegal dismissal as there was no
substantial evidence presented that respondent was dismissed. The Labor Arbiter
ruled however that because there was strained relationship between petitioner
and respondent, reinstatement was no longer feasible, and petitioner was asked to
deliver separation pay and service incentive leave pay to respondent. NLRC and
CA affirmed the Labor Arbiter’s RULING.
ISSUE: Whether Villatisque, as a company driver, falls under the definition of a

regular employee and is thus entitled to service incentive leave pay.
Yes, respondent Villatisque is a regular employee and should be awarded his SIL.
A regular employee’s task is necessary and desirable to the usual trade and
business of the company and is thus entitled to the benefits including SIL.
Villatisque is not a field employee but rather a regular since he is expected to
deliver goods at a specified time and place and is under the control and
supervision of HSY Marketing. Company drivers who are under the control and
direct supervision of management officers – like respondent herein – are regular
employees entitled to benefits including SIL.
The Court likewise upholds the unanimous conclusion of the lower tribunals that
respondent had not been dismissed at all. Other than the latter's unsubstantiated
allegation of having been verbally terminated from his work, no substantial
evidence was presented to show that he was indeed dismissed or was prevented
from returning to his work. In the absence of any showing of an overt or positive
act proving that petitioner had dismissed respondent, the latter's claim of illegal
Page | 161
dismissal cannot be sustained, as such supposition would be self-serving,
conjectural, and of no probative value.
Hence, since there is no dismissal or abandonment to speak of, the appropriate

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

Petitioners, v. ELIAS V. ARANGO, EDWIN M. MAPUSAO, JORGE C.
CARIÑO, JERMIE MAPUSAO, WILSON A. NATE, EDGAR A. NATE,
MICHAEL A. MONTALES, CELSO A. NATE, BENJES A. LLONA AND
ALLAN A. MONTALES, Respondent.
G.R. No. 192282 October 05, 2016
FACTS
Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate Casket
Maker. They employed respondents on various dates as carpenters, mascilladors
and painters in their casket-making business from 1998 until their alleged
termination in March 2007. Petitioners alleged that respondents are pakyaw
workers who are paid per job order. On February 3, 2007, they met with
respondents in order to present a proposed employment agreement which would
change the existing pakyaw system to "contractual basis" and would provide for
vacation leave and sick leave pay and other benefits given to regular employees.
On the other hand, respondents then alleged that when they were adamant and
eventually refused to sign the contract, petitioners told them to go home because
their employment has been terminated.
Page | 162
Respondents filed a Complaint for illegal dismissal and non-payment of
separation pay against petitioners including claims for underpayment of wages,
non-payment of overtime pay, holiday pay, 5-day service incentive leave pay and
13th month pay.
The Labor Arbiter dismissed the complaint for lack of merit. While the Labor
Arbiter acknowledged that respondents being pakyaw workers are considered
regular employees, he ruled that petitioners did not terminate the services of
respondents. On the issue of underpayment, the Labor Arbiter held that
respondents were earning more than the minimum wage per day; and as pakyaw
workers, though they are deemed regular workers, they are not entitled to
overtime pay, holiday pay, service incentive leave pay and 13th month pay citing
the case of field personnel and those paid on purely commission basis. The
decision of the Labor Arbiter was affirmed by the NLRC. The CA reversed and set
aside the decision of the NLRC.
ISSUE: Whether respondents, being pakyaw workers, are considered regular

employees which would not warrant their dismissal without payment of back
wages and other benefits.
Yes. Respondents being pakyaw workers are considered regular employees and
their dismissal is illegal and they must be paid with their back wages and
corresponding benefits.
There is no dispute that the tasks performed by respondents as carpenters,

painters, and mascilladors were necessary and desirable in the usual business of
petitioners who are engaged in the manufacture and selling of caskets. We have to
also consider the length of time that respondents worked for petitioners,
commencing on various dates from 1998 to 2007. In addition, the power of control
of petitioners over respondents is clearly present in this case. Respondents follow
the steps in making a casket, as instructed by the petitioners, like carpentry,
mascilla, rubbing and painting. They had their own notebooks where they listed
the work completed with their signature and the date finished. The same would
Page | 163
be checked by petitioners as basis for the compensation for the day. Thus,
petitioners wielded control over the respondents in the discharge of their work.
Hence, pakyaw workers are considered regular employees for as long as their
employers exercise control over them. Thus, while respondents' mode of
compensation was on a per-piece basis, the status and nature of their employment
was that of regular employees.
As regular employees, respondents were entitled to security of tenure and could

be dismissed only for just or authorized causes and after the observance of due
process. Petitioners violated respondents' rights to security of tenure and
constitutional right to due process in not even serving them with a written notice
of termination which would recite any valid or just cause for their dismissal.
Respondents were merely told that their services are terminated. Thus, the Court
of Appeals correctly ruled that private respondents were illegally dismissed.
Under Article 279 of the Labor Code, an employee unjustly dismissed from work
is entitled to reinstatement and backwages, among others. Reinstatement restores
the employee who was unjustly dismissed to the position from which he was
removed, that is, to his status quo ante dismissal, while the grant of backwages
allows the same employee to recover from the employer that which he had lost by
way of wages as a result of his dismissal.
These twin remedies — reinstatement and payment of back wages — make the
dismissed employee whole who can then look forward to continued employment.
Thus, do these two remedies give meaning and substance to the constitutional
right of labor to security of tenure. Respondents are, therefore, entitled to
reinstatement with full back wages pursuant to Article 279 of the Labor Code, as
amended by R.A. No. 6715.
IX. MINIMUM LABOR STANDARD BENEFITS
SAN MIGUEL CORPORATION, petitioner, vs. THE HONORABLE COURT

OF APPEALS-FORMER THIRTEENTH DIVISION, HON.
UNDERSECRETARY JOSE M. ESPAÑOL, JR., Hon. CRESENCIANO B.
TRAJANO, and HON. REGIONAL DIRECTOR ALLAN M. MACARAYA,
respondents.
G.R. No. 146775 January 30, 2002
Page | 164
FACTS
On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan

District Office, conducted a routine inspection in the premises of San Miguel
Corporation (SMC) in Sta. Filomena, Iligan City. It was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees. DOLE
sent a copy of the inspection result to SMC and it was received by and explained
to its personnel officer Elena dela Puerta.
SMC contested the findings and DOLE conducted summary hearings on 19

November 1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit
proof that it was paying regular Muslim holiday pay to its employees. Hence, Alan
M. Macaraya, Director IV of DOLE Iligan District Office issued a compliance order,
dated 17 December 1993, directing SMC to consider Muslim holidays as regular
holidays and to pay both its Muslim and non-Muslim employees holiday pay
within thirty (30) days from the receipt of the order.
SMC appealed to the DOLE main office in Manila. However, the appeal was
dismissed for lack of merit and the order of Director Macaraya was affirmed. SMC
went to SC for relief via a petition for certiorari, which the Court referred to the
Court of Appeals. The appellate court modified the order with regards the
payment of Muslim holiday pay from 200% to 150% of the employee's basic salary.
Its motion for reconsideration having been denied for lack of merit, SMC filed a
petition for certiorari before the SC
ISSUES: 1.) Whether or not public respondents seriously erred and committed
grave abuse of discretion when they granted Muslim Holiday Pay to non-Muslim
employees of SMC. 2.) Whether or not SMC was not accorded with due process
of law in the issuance of the compliance order. 3.) Whether or not regional director
Macaraya, undersecretary Trajano and undersecretary Espanol have jurisdiction
in issuing the assailed compliance orders.
The court ruled the issued in the 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:
Page | 165
Art. 169. Official Muslim holidays. - The following are hereby recognized as legal
Muslim holidays:
a) ‘Amun Jadīd (New Year), which falls on the first day of the first lunar month of
Muharram;
b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the

twelfth day of the third lunar month of Rabi-ul-Awwal;
c) Lailatul Isrā Wal Mi’rāj (Nocturnal Journey and Ascension of the Prophet
Muhammad), which falls on the twenty-seventh day of the seventh lunar month
of Rajab;
d) ‘Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar
month of Shawwal, commemorating the end of the fasting season; and
e) ‘Īd-ūl-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth lunar
month of Dhū’l-Hijja.
Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be
officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur,
Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in
such other Muslim provinces and cities as may hereafter be created; (2) Upon
proclamation by the President of the Philippines, Muslim holidays may also be
officially observed in other provinces and cities.
The foregoing provisions should be read in conjunction with Article 94 of the

Labor Code, which provides:
Art. 94. Right to holiday pay. –
a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten (10)
workers;
b) The employer may require an employee to work on any holiday, but such
employee shall be paid a compensation equivalent to twice his regular rate.
Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that
"the provisions of this Code shall be applicable only to Muslims." However, there
should be no distinction between Muslims and non-Muslims as regards payment
of benefits for Muslim holidays. Wages and other emoluments granted by law to
the working man are determined on the basis of the criteria laid down by laws and
Page | 166
certainly not on the basis of the worker’s faith or religion. In addition, the 1999
Handbook on Workers’ Statutory Benefits, categorically stated: Considering that
all private corporations, offices, agencies, and entities or establishments operating
within the designated Muslim provinces and cities are required to observe Muslim
holidays, both Muslim and Christians working within the Muslim areas may not
report for work on the days designated by law as Muslim holidays.
On the question regarding the jurisdiction of the Regional Director Allan M.

Macaraya, Article 128, Section B of the Labor Code, as amended by Republic Act
No. 7730, provides: Article 128. Visitorial and enforcement power.
(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall
have the power to issue compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based on the findings of labor
employment and enforcement officers or industrial safety engineers made in the
course of the inspection. The Secretary or his duly authorized representative shall
issue writs of execution to the appropriate authority for the enforcement of their
orders, except in cases where the employer contests the findings of the labor
employment and enforcement officer and raises issues supported by documentary
proofs which were not considered in the course of inspection.
In the case before us, Regional Director Macaraya acted as the duly authorized
representative of the Secretary of Labor and Employment and it was within his
power to issue the compliance order to SMC. In addition, the Court agrees with
the Solicitor General that the petitioner did not deny that it was not paying Muslim
holiday pay to its non-Muslim employees. Indeed, petitioner merely contends that
its non-Muslim employees are not entitled to Muslim holiday pay. Hence, the issue
could be resolved even without documentary proofs. In any case, there was no
indication that Regional Director Macaraya failed to consider any documentary
proof presented by SMC in the course of the inspection.
Anent the allegation that petitioner was not accorded due process, the court finds
that SMC was furnished a copy of the inspection order and it was received by and
explained to its Personnel Officer. Further, a series of summary hearings were
conducted by DOLE on 19 November 1992, 28 May 1993 and 4 and 5 October 1993.
Thus, SMC could not claim that it was not given an opportunity to defend itself.
Page | 167
ROLANDO Y. TAN, petitioner, vs. LEOVIGILDO LAGRAMA and THE
HONORABLE COURT OF APPEALS, respondents.
[G.R. No. 151228 August 15, 2002]
FACTS
Petitioner Rolando Tan is the president of Supreme Theater Corporation and the
general manager of Crown and Empire Theaters in Butuan City. Private
respondent Leovigildo Lagrama is a painter, making ad billboards and murals for
the motion pictures shown at the Empress, Supreme, and Crown Theaters for more
than 10 years, from September 1, 1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan and
upbraided: "Nangihi na naman ka sulod sa imong drawinganan." ("You again
urinated inside your work area.") When Lagrama asked what Tan was saying, Tan
told him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan
karon, wala nay drawing. Gawas." ("Don't say anything further. I don't want you
to draw anymore. From now on, no more drawing. Get out.")
Lagrama denied the charge against him. He claimed that he was not the only one
who entered the drawing area and that, even if the charge was true, it was a minor
infraction to warrant his dismissal. However, everytime he spoke, Tan shouted
"Gawas" ("Get out"), leaving him with no other choice but to leave the premises.
Lagrama filed a complaint with the National Labor Relations Commission (NLRC)
in Butuan City. He alleged that he had been illegally dismissed and sought
reinvestigation and payment of 13th month pay, service incentive leave pay, salary
differential, and damages.
As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi

directed the parties to file their position papers. It declared that the dismissal
illegal and order the payment of monetary benefits. Tan appealed to the NLRC
and reversing the decision of the Labor Arbiter.
ISSUE: Whether the respondent was illegally dismissed and thus entitled to
payment of benefits provided by law.
Page | 168
The respondent was illegally dismissed and entitled to benefits.
The Implementing Rules of the Labor Code provide that no worker shall be
dismissed except for a just or authorized cause provided by law and after due
process. This provision has two aspects: (1) the legality of the act of dismissal, that
is, dismissal under the grounds provided for under Article 282 of the Labor Code
and (2) the legality in the manner of dismissal. The illegality of the act of dismissal
constitutes discharge without just cause, while illegality in the manner of dismissal
is dismissal without due process.
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to
get out of his sight as the latter tried to explain his side, petitioner made it plain
that Lagrama was dismissed. Urinating in a work place other than the one
designated for the purpose by the employer constitutes violation of reasonable
regulations intended to promote a healthy environment under Art. 282(1) of the
Labor Code for purposes of terminating employment, but the same must be shown
by evidence. Here there is no evidence that Lagrama did urinate in a place other
than a rest room in the premises of his work.
Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code,
the Labor Arbiter found that the relationship between the employer and employee
has been so strained that the latter's reinstatement would no longer serve any
purpose. The parties do not dispute this finding. Hence, the grant of separation
pay in lieu of reinstatement is appropriate.
This is of course in addition to the payment of backwages which, in accordance

with the ruling in Bustamante v. NLRC should be computed from the time of
Lagrama's dismissal up to the time of the finality of this decision, without any
deduction or qualification. The Bureau of Working Conditions classifies workers
paid by results into two groups, namely; (1) those whose time and performance is
supervised by the employer, and (2) those whose time and performance is
unsupervised by the employer. The first involves an element of control and
supervision over the manner the work is to be performed, while the second does
not. If a piece worker is supervised, there is an employer-employee relationship,
as in this case. However, such an employee is not entitled to service incentive leave
pay since, as pointed out in Makati Haberdashery v. NLRC 33 and Mark Roche
International v. NLRC, he is paid a fixed amount for work done, regardless of the
time he spent in accomplishing such work.
Page | 169
AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs. LABOR
RELATIONS COMMISSION and J.C. TAILOR SHOP and/or JOHNNY CO,
respondents.
[G.R. No. 111042 October 26, 1999]
FACT
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by

private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and
March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. As in the case of the other 100 employees of
private respondents, petitioners were paid on a piece-work basis, according to the
style of suits they made. Regardless of the number of pieces they finished in a day,
they were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for
illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay
on holiday and rest day, service incentive leave pay, separation pay, 13th month
pay, and attorney’s fees. After hearing, Labor Arbiter found private respondents
guilty of illegal dismissal and accordingly ordered them to pay petitioners’ claims.
On appeal, the NLRC reversed the decision of the Labor Arbiter. The NLRC held
petitioners guilty of abandonment of work and accordingly dismissed their claims
except that for 13th month pay.
Petitioners allege that they were dismissed by private respondents as they were
about to file a petition with the Department of Labor and Employment (DOLE) for
the payment of benefits such as Social Security System (SSS) coverage, sick leave
and vacation leave. They deny that they abandoned their work.
ISSUE: Whether the petitioners are entitled to the minimum benefits provided by
law?
Yes. The petitioners are entitled to the minimum benefits provided by law.
There is no dispute that petitioners were employees of private respondents

although they were paid not based on time spent on the job but according to the
Page | 170
quantity and the quality of work produced by them. There are two categories of
employees paid by results:
(1) Those whose time and performance are supervised by the employer. Here,
there is an element of control and supervision over the manner as to how the work
is to be performed. A piece-rate worker belongs to this category especially if he
performs his work in the company premises.
(2) Those whose time and performance are unsupervised. Here, the employer’s
control is over the result of the work. Workers on pakyao and takay basis belong
to this group. Both classes of workers are paid per unit accomplished.
Piece-rate payment is generally practiced in garment factories where work is done

in the company premises, while payment on pakyao and takay basis is commonly
observed in the agricultural industry, such as in sugar plantations where the work
is performed in bulk or in volumes difficult to quantify. The petitioners belong to
the first category, i.e., supervised employees.
In this case, private respondents exercised control over the work of petitioners. As
tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m.
daily, including Sundays and holidays. The mere fact that they were paid on a
piece-rate basis does not negate their status as regular employees of private
respondents. The term "wage" is broadly defined in Art. 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of money whether
fixed or ascertained on a time, task, piece or commission basis. Payment by the
piece is just a method of compensation and does not define the essence of the
relations. Nor does the fact that petitioners are not covered by the SSS affect the
employer-employee relationship.
As petitioners were illegally dismissed, they are entitled to reinstatement with

back wages. The Arbiter applied the rule in the Mercury Drug case, according to
which the recovery of back wages should be limited to three years without
qualifications or deductions. Any award in excess of three years is null and void
as to the excess. The Labor Arbiter correctly ordered private respondents to give
separation pay. Considerable time has elapsed since petitioners’ dismissal, so that
reinstatement would now be impractical and hardly in the best interest of the
parties. In lieu of reinstatement, separation pay should be awarded to petitioners
at the rate of one-month salary for every year of service, with a fraction of at least
Page | 171
six (6) months of service being considered as one (1) year. The awards for overtime
pay, holiday pay and 13th month pay is in accordance with our finding that
petitioners are regular employees, although paid on a piece-rate basis. Hence,
decision of the NLRC is set aside.
R & E TRANSPORT, INC., and HONORIO ENRIQUEZ, petitioners, vs.

AVELINA P. LATAG, representing her deceased husband, PEDRO M.
LATAG, respondents.
[G.R. No. 155214 February 13, 2004]
FACTS
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961.
However, he was transferred to the petitioner R & E Transport, Inc. upon cessation
of La Mallorca’s business operations. In January 1995, he got sick and was forced
to apply for partial disability with the SSS, which was then granted. Upon
recovery, he reported back to work in September 1998 but was no longer allowed
on account of his old age. Latag asked the petitioner, through its administrative
officer for his retirement pay pursuant to Republic Act 7641 but he was ignored.
Latag filed a case for payment of his retirement pay before the NLRC.
Upon Pedro Latag’s death on April 30, 1999, he was substituted by his wife, the
respondent Avelina Latag. Labor Arbiter rendered a decision in favour of Latag.
Petitioner filed the quitclaim and motion to dismiss where the Labor Arbiter
issued an order for Writ of Execution. Petitioners interposed an appeal before
NLRC. Appeal was dismissed for failure to post a cash or surety bond, as
mandated by law.
ISSUE: Whether Latag is entitled to retirement benefits considering she signed a

waiver of quitclaim.
The Supreme Court ruled that the respondent is entitled to retirement benefits
despite of the waiver of quitclaims.
This is not to say that all quitclaims are invalid per se. Courts, however, are wary
of schemes that frustrate workers' rights and benefits and look with disfavor upon
Page | 172
quitclaims and waivers that bargain these away. Undisputedly, Pedro M. Latag
was credited with 14 years of service with R & E Transport, Inc. Article 287 of the
Labor Code, as amended by Republic Act No. 7641, 30 provides: Retirement. — In
the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year. Unless the parties provide for
broader inclusions, the term one half-month salary shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more
than five (5) days of service incentive leaves.
The rules implementing the New Retirement Law similarly provide the above-
mentioned formula for computing the one-half month salary. Since Pedro was
paid according to the "boundary" system, he is not entitled to the 13th month 32
and the service incentive pay; hence, his retirement pay should be computed on
the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages but retain only those
sums in excess of the "boundary" or fee they pay to the owners or operators of their
vehicles. Thus, the basis for computing their benefits should be the average daily
income. In this case, the CA found that Pedro was earning an average of five
hundred pesos (P500) per day. We thus compute his retirement pay as follows:
P500 x 15 days x 14 years of service equals P105,000. Hence, the late Pedro M. Latag
is entitled to retirement benefits.
ASIAN TRANSMISSION CORPORATION, petitioner, vs. The Hon. COURT

OF APPEALS, Thirteenth Division, HON. FROILAN M. BACUNGAN as
Voluntary Arbitrator, KISHIN A. LALWANI, Union, Union representative to
the Panel Arbitrators; BISIG NG ASIAN TRANSMISSION LABOR UNION
(BATLU); HON. BIENVENIDO T. LAGUESMA in his capacity as Secretary of
Labor and Employment; and DIRECTOR CHITA G. CILINDRO in her
capacity as Director of Bureau of Working Conditions, respondents.
[G.R. No. 144664 March 15, 2004]
FACTS
Page | 173
The Department of Labor and Employment (DOLE), through Undersecretary
Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993
wherein it clarified, inter alia, that employees are entitled to 200% of their basic
wage on April 9, 1993, whether unworked, which[,] apart from being Good Friday
[and, therefore, a legal holiday], is also Araw ng Kagitingan [which is also a legal
holiday]. Said bulletin was reproduced on January 23, 1998, when April 9, 1998
was both Maundy Thursday and Araw ng Kagitingan. Despite the explanatory
bulletin, petitioner, Asian Transmission Corporation, opted to pay its daily paid
employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng
Asian Transmission Labor Union (BATLU) protested.
The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union
(BATLU), and held that Article 94 of the Labor Code provides for holiday pay for
every regular holiday, the computation of which is determined by a legal formula
which is not changed by the fact that there are two holidays falling on one day,
like on April 9, 1998 when it was Araw ng Kagitingan and at the same time was
Maundy Thursday. In the assailed decision, the Court of Appeals upheld the
findings of the Voluntary Arbitrator.
ISSUE: Whether daily-paid employees are entitled to be paid for two regular
holidays which fall on the same day.
The Court dismissed the petition and ruled that petitioners should pay its
employees “200% and not just 100% of their regular daily wages for the unworked
April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and
Maundy Thursday.”
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative

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

monthly or daily basis. Unlike a bonus, which is a management prerogative,
holiday pay is a statutory benefit demandable under the law.
Page | 174
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO
BAUTISTA, respondent.
[G.R. No. 156367 May 16, 2005]
FACTS
Respondent Antonio Bautista has been employed by petitioner Auto Bus

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

by the parties, Labor Arbiter decided that the complaint be dismissed where the
respondent must pay to the complainant
ISSUE: Whether respondent is entitled to service incentive leave.
The respondent is entitled to service incentive leave.
The disposition of the issue revolves around the proper interpretation of Article
95 of the Labor Code vis-à-vis Section 1(D), Rule V, Book III of the Implementing
Page | 175
Rules and Regulations of the Labor Code which provides: RIGHT TO SERVICE
INCENTIVE LEAVE, (a) Every employee who has rendered at least one year of
service shall be entitled to a yearly service incentive leave of five days with pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule
shall apply to all employees except: (d) Field personnel and other employees
whose performance is unsupervised by the employer including those who are
engaged on task or contract basis, purely commission basis, or those who are paid
in a fixed amount for performing work irrespective of the time consumed in the
performance thereof;
A careful examination of said provisions of law will result in the conclusion that
the grant of service incentive leave has been delimited by the Implementing Rules
and Regulations of the Labor Code to apply only to those employees not explicitly
excluded by Section 1 of Rule V. According to the Implementing Rules, Service
Incentive Leave shall not apply to employees classified as "field personnel."
The phrase "other employees whose performance is unsupervised by the

employer" must not be understood as a separate classification of employees to
which service incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field personnel under the
Labor Code as those "whose actual hours of work in the field cannot be determined
with reasonable certainty."
The same is true with respect to the phrase "those who are engaged on task or
contract basis, purely commission basis." Said phrase should be related with "field
personnel," applying the rule on ejusdem generis that the general and unlimited
terms are restrained and limited by the particular terms that they follow. Hence,
employees engaged on task or contract basis or paid on purely commission basis
are not automatically exempted from the grant of service incentive leave, unless,
they fall under the classification of field personnel.
What must be ascertained in order to resolve the issue of propriety of the grant of service
incentive leave to respondent is whether or not he is field personnel?
According to Article 82 of the Labor Code, "field personnel" shall refer to non-
agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty. This
definition is further elaborated in the Bureau of Working Conditions (BWC),
Page | 176
Advisory Opinion to Philippine Technical-Clerical Commercial Employees
Association 10 which states that:
As a general rule, field personnel are those whose performance of their job/service
is not supervised by the employer or his representative, the workplace being away
from the principal office and whose hours and days of work cannot be determined
with reasonable certainty; hence, they are paid specific amount for rendering
specific service or performing specific work. If required to be at specific places at
specific times, employees including drivers cannot be said to be field personnel
despite the fact that they are performing work away from the principal office of
the employee.
At this point, it is necessary to stress that the definition of a "field personnel" is not
merely concerned with the location where the employee regularly performs his
duties but also with the fact that the employee's performance is unsupervised by
the employer. As discussed above, field personnel are those who regularly
perform their duties away from the principal place of business of the employer
and whose actual hours of work in the field cannot be determined with reasonable
certainty. Thus, in order to conclude whether an employee is a field employee, it
is also necessary to ascertain if actual hours of work in the field can be determined
with reasonable certainty by the employer. In so doing, an inquiry must be made
as to whether or not the employee's time and performance are constantly
supervised by the employer. Respondent is not a field personnel but a regular
employee who performs tasks usually necessary and desirable to the usual trade
of petitioner's business. Accordingly, respondent is entitled to the grant of service
incentive leave.
The clear policy of the Labor Code is to grant service incentive leave pay to
workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book
III of the Implementing Rules and Regulations provides that "every employee who
has rendered at least one year of service shall be entitled to a yearly service
incentive leave of five days with pay."
Service incentive leave is a right which accrues to every employee who has served
"within 12 months, whether continuous or broken reckoned from the date the
employee started working, including authorized absences and paid regular
holidays unless the working days in the establishment as a matter of practice or
policy, or that provided in the employment contracts, is less than 12 months, in
which case said period shall be considered as one year." It is also "commutable to
Page | 177
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.
SAN MIGUEL CORPORATION, Petitioner, vs. CAROLINE C. DEL

ROSARIO, Respondent.
[G.R. Nos. 168194 & 168603 December 13, 2005
FACT
On April 17, 2000, respondent was employed by petitioner as key account

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

employment may exceed six months when the parties so agree, such as when the
same is established by company policy, or when it is required by the nature of the
work, none of these exceptional circumstance were proven in the present case.
Hence, respondent whose employment exceeded six months is undoubtedly a
regular employee of petitioner.
Page | 178
Moreover, even assuming that the employment of respondent from April 7, 2000
to September 3, 2000, is only temporary, and that the reckoning period of her
probationary employment is September 4, 2000, she should still be declared a
regular employee because by the time she was dismissed on March 12, 2001, her
alleged probationary employment already exceeded six months, i.e., six months
and eight days to be precise. A worker was found to be a regular employee
notwithstanding the presentation by the employer of a Payroll Authority
indicating that said employee was hired on probation, since it was shown that he
was terminated four days after the 6th month of his purported probationary
employment.
Neither will petitioner’s belated claim that respondent became a probationary

employee starting October 1, 2000 work against respondent. As earlier stated, the
payroll authorities indicating that respondent’s probationary status became
effective as of such date are of scant evidentiary value since it does not show the
conformity of respondent. At any rate, in the interpretation of employment
contracts, whether oral or written, all doubts must be resolved in favor of labor.
Hence, the contract of employment in the instant case, which appears to be an oral
agreement since no written form was presented by petitioner, should be construed
as one vesting respondent with a regular status and security of tenure.
Regarding the argument of redundancy, Redundancy, for purposes of the Labor

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

sustainable and, therefore, properly terminable is an exercise of business judgment
of the employer. The wisdom or soundness of this judgment is not subject to
discretionary review of the Labor Arbiter and the NLRC, provided there is no
violation of law and no showing that it was prompted by an arbitrary or malicious
act. In other words, it is not enough for a company to merely declare that it has
become overmanned. It must produce adequate proof of such redundancy to
justify the dismissal of the affected employees.
Page | 179
The following evidence may be proffered to substantiate redundancy: the new
staffing pattern, feasibility studies/proposal, on the viability of the newly created
positions, job description and the approval by the management of the
restructuring.
In the case at bar, petitioner presented an affidavit of its Sales Manager and a
memorandum of the company both to the effect that there is a need to redeploy its
regular employees and terminate the employment of temporary employees, in
view of an excess in manpower. These documents, however, do not satisfy the
requirement of substantial evidence that a reasonable mind might accept as
adequate to support a conclusion.
Moreover, the lingering doubt as to the existence of redundancy or of petitioner’s

so called “restructuring, realignment or reorganization” which resulted in the
dismissal of not only probationary employees but also of regular employees, is
highlighted by the non-presentation by petitioner of the required notice to the
DOLE and to the separated employees. If there was indeed a valid redundancy
effected by petitioner, these notices and the proof of payment of separation pay to
the dismissed regular employees should have been offered to establish that there
was excess manpower in petitioner’s GMA-KAG caused by a decline in the sales
volume.
In balancing the interest between labor and capital, the prudent recourse in
termination cases is to safeguard the prized security of tenure of employees and
to require employers to present the best evidence obtainable, especially so because
in most cases, the documents or proof needed to resolve the validity of the
termination, are in the possession of employers. A contrary ruling would
encourage employers to prevent the regularization of an employee by simply
invoking a feigned or unsubstantiated redundancy program.
Granting that petitioner was able to substantiate the validity of its reorganization
or restructuring, it nevertheless, failed to effect a fair and reasonable criterion in
dismissing respondent. The criteria in implementing a redundancy are: (a) less
preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority.
It is evident from the foregoing that the criterion allegedly used by petitioner in
reorganizing its sales unit was the employment status of the employee. However,
in the implementation thereof, petitioner erroneously classified respondent as a
Page | 180
probationary employee, resulting in the dismissal of the latter. Verily, the absence
of criteria and the erroneous implementation of the criterion selected, both render
invalid the redundancy because both have the ultimate effect of illegally
dismissing an employee.
Considering that respondent was illegally dismissed, she is entitled not only to
reinstatement but also to payment of full back wages, computed from the time her
compensation was withheld from her on March 13, 2001, up to her actual
reinstatement. As a regular employee of petitioner from the date of her
employment on April 17, 2000, she is likewise entitled to other benefits, i.e., service
incentive leave pay and 13th month pay computed from such date also up to her
actual reinstatement.
Respondent is not, however, entitled to holiday pay because the records reveal
that she is a monthly paid regular employee. Under Section 2, Rule IV, Book III of
the Omnibus Rules Implementing the Labor Code, employees who are uniformly
paid by the month, irrespective of the number of working days therein, shall be
presumed to be paid for all the days in the month whether worked or not.
Anent attorney’s fees, in actions for recovery of wages or where an employee was
forced to litigate and thus incurred expenses to protect his rights and interests, a
maximum of 10% of the total monetary award by way of attorney’s fees is
justifiable under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its
Implementing Rules, and paragraph 7, Article 2208 of the Civil Code. The award
of attorney’s fees is proper and there need not be any showing that the employer
acted maliciously or in bad faith when it withheld the wages. There need only be
a showing that the lawful wages were not paid accordingly, as in the instant
controversy.
CHARLITO PEÑARANDA, Petitioner, vs. BAGANGA PLYWOOD

CORPORATION and HUDSON CHUA, Respondents.
[G.R. No. 159577 May 3, 2006]
FACTS
Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee

of Baganga Plywood Corporation (BPC) to take charge of the operations and
maintenance of its steam plant boiler. In May 2001, Peñaranda filed a Complaint
for illegal dismissal with money claims against BPC and its general manager,
Page | 181
Hudson Chua, before the NLRC. After the parties failed to settle amicably, the
labor arbiter directed the parties to file their position papers and submit
supporting documents.
Peñaranda alleges that he was employed by respondent Banganga on March 15,

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

Philippine laws and is represented herein by its General Manager HUDSON
CHUA, the individual respondent. Respondents allege that complainant's
separation from service was done pursuant to Art. 283 of the Labor Code. The
respondent BPC was on temporary closure due to repair and general maintenance
and it applied for clearance with the Department of Labor and Employment,
Regional Office No. XI, to shut down and to dismiss employees. And due to the
insistence of herein complainant he was paid his separation benefits.
Consequently, when respondent BPC partially reopened in January 2001,
Peñaranda failed to reapply.
The labor arbiter ruled that there was no illegal dismissal and that petitioner's
Complaint was premature because he was still employed by BPC. Petitioner’s
money claims for illegal dismissal was also weakened by his quitclaim and
admission during the clarificatory conference that he accepted separation benefits,
sick and vacation leave conversions and thirteenth month pay.
ISSUE: Whether Peñaranda is a regular, common employee entitled to monetary

benefits under Art. 82 of the Labor Code and is entitled to the payment of overtime
pay and other monetary benefits.
The petitioner is not entitled to overtime pay and other monetary benefits.
Page | 182
The Court disagrees with the NLRC's finding that petitioner was a managerial
employee. However, petitioner was a member of the managerial staff, which also
takes him out of the coverage of labor standards. Like managerial employees,
officers and member of the managerial staff are not entitled to the provisions of
law on labor standards.
The Implementing Rules of the Labor Code define members of a managerial staff as those
with the following duties and responsibilities:
1. The primary duty consists of the performance of work directly related to

management policies of the employer;
2. Customarily and regularly exercise discretion and independent judgment;
3. Regularly and directly assist a proprietor or a managerial employee whose

primary duty consists of the management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under general supervision work
along specialized or technical lines requiring special training, experience, or
knowledge; or (iii) execute under general supervision special assignments and
tasks; and
4. Who do not devote more than 20 percent of their hours worked in a workweek
to activities which are not directly and closely related to the performance of the
work described in paragraphs (1), (2), and (3) above.
The petitioner’s work involves:
1. To supply the required and continuous steam to all consuming units at

minimum cost.
2. To supervise, check and monitor manpower workmanship as well as operation

of boiler and accessories.
3. To evaluate performance of machinery and manpower.
4. To follow-up supply of waste and other materials for fuel.
5. To train new employees for effective and safety white working.
6. Recommend parts and suppliers purchases.
7. To recommend personnel actions such as: promotion, or disciplinary action.
Page | 183
8. To check water from the boiler, feedwater and softener, regenerate softener if
beyond hardness limit.
9. Implement Chemical Dosing.
10. Perform other task as required by the superior from time to time.
The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that

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

Paper, he stated that he was the foreman responsible for the operation of the boiler.
The term foreman implies that he was the representative of management over the
workers and the operation of the department. Petitioner's evidence also showed
that he was the supervisor of the steam plant. His classification as supervisors is
further evident from the manner his salary was paid. He belonged to the 10% of
respondent's 354 employees who were paid on a monthly basis; the others were
paid only daily.
Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU
[G.R. No. 1577745. October 19, 2007. Citing Wellington Investment vs. Trajano,
245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004]
FACTS
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV

Employees Union-ALU (respondent) entered into a Collective Bargaining
Agreement (CBA) covering petitioner rank-and-file employees, for a period of five
(5) years effective January 1, 1998. On June 7, 2000, respondent, through its
Regional Vice-President, Vicente P. Casilan, sent a letter to petitioner demanding
Page | 184
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 Leyte IV Electric Cooperative is liable for underpayment of

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

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

Court ruled that the use of a divisor that was less than 365 days cannot make the
employer automatically liable for underpayment of holiday pay. Thus, the
minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays
Page | 185
and less 26 Saturdays (or 52 half Saturdays). Any divisor below 287 days meant
that the employees were deprived of their holiday pay for some or all of the ten
legal holidays. The 304-day divisor used by the employer was clearly above the
minimum of 287 days.
In this case, the employees are required to work only from Monday to Friday.
Thus, the minimum allowable divisor is 263, which is arrived at by deducting 51
un-worked Sundays and 51 un-worked Saturdays from 365 days. Considering that
petitioner used the 360-day divisor, which is clearly above the minimum,
indubitably, petitioner's employees are being given their holiday pay. Thus, the
Voluntary Arbitrator should not have simply brushed aside petitioner's divisor
formula. In granting respondent's claim of non-payment of holiday pay, a "double
burden" was imposed upon petitioner because it was being made to pay twice for
its employees' holiday pay when payment thereof had already been included in
the computation of their monthly salaries.
BAHIA SHIPPING SERVICES, INC., petitioner, vs. REYNALDO CHUA,

respondent
[G.R. No. 162195 April 8, 2008 citing Cagampan vs. NLRC, 195 SCRA 533 (1998)]
FACTS
Reynaldo Chua, herein respondent, was under the employ of Bahia Shipping
Services, Inc., herein petitioner, as a restaurant waiter on board the M/S Black
Watch , a luxury cruise ship liner. His employment is pursuant to a Philippine
Overseas Employment Administration (POEA) approved employment contract
dated October 9, 1996 for a period of nine (9) months from October 18, 1996 to July
17, 1997.
On October 18, 1996, respondent, on board the cruise ship, left Manila for
Heathrow, England. About four months into his employment, or on February 15,
1997, responded reported to work an hour and a half (1 ½) late. Due to the
incident, respondent was issued a warning-termination form by the master of the
cruise ship, Thor Fleten on February 17, 1997, who likewise conducted an
inquisitorial hearing to investigate the incident on March 8, 1997. Thereafter, on
March 9, 1997, respondent was dismissed from service on the strength of an
Page | 186
unsigned and undated notice of dismissal. Attached to the dismissal notice is the
alleged minutes or records of the investigation and hearing.
On March 24, 1997, respondent filed a complaint for illegal dismissal and other
monetary claims. He claims that he was underpaid in the amount of US$110.00
per month for a period of five (5) months, since he was only paid US$300.00 per
month, instead of US$410.00 per month, which was stipulated in his contract.
Aside from underpayment, he alleged that US$20.00 per month was also deducted
from his salary by petitioner for union dues.
ISSUE: In the computation of the award, should the “guaranteed overtime” pay
per month be included as part of his salary?
There is no factual or legal basis in the inclusion of his "guaranteed overtime"

pay into his monthly salary computation for the entire unexpired period of his
contract.
The Court ruled in Cagampan v. National Labor Relations Commission, that

although an overseas employment contract may guarantee the right to overtime
pay, entitlement to such benefit must first be established, otherwise the same
cannot be allowed. Petitioner’s contention that there is no factual or legal basis for
the inclusion of said amount since respondent ‘s repatriation is well-taken.
PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION

WORKERS ORGANIZATION (PSTMSDWO), represented by its President,
RENE SORIANO, Petitioner, vs. PNCC SKYWAY CORPORATION,
Respondent.
G.R. No. 171231 February 17, 2010][
FACT
Petitioner PNCC Skyway Corporation Traffic Management and Security Division

Workers' Organization (PSTMSDWO) is a labor union duly registered with the
Department of Labor and Employment (DOLE). Respondent PNCC Skyway
Corporation is a corporation duly organized and operating under and by virtue of
the laws of the Philippines. On November 15, 2002, petitioner and respondent
Page | 187
entered into a Collective Bargaining Agreement (CBA) incorporating the terms
and conditions of their agreement which included vacation leave and expenses for
security license provisions.
A memorandum was passed by the respondents scheduling the leaves of the

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

DOMINGO Z. YBAROLA, JR. and ALFONSO E. RIVERA, JR., Respondents.
[G.R. No. 198662 September 12, 2012]
ACTS
Page | 188
Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June
15, 1977 and June 1, 1983, respectively, by RMN. They eventually became account
managers, soliciting advertisements and servicing various clients of RMN. The
respondents’ services were terminated as a result of RMN’s
reorganization/restructuring; they were given their separation pay – P 631,250.00
for Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002, they
executed release/quitclaim affidavits. Dissatisfied with their separation pay, the
respondents filed separate complaints (which were later consolidated) against
RMN and its President, Eric S. Canoy, for illegal dismissal with several money
claims, including attorney’s fees. They indicated that their monthly salary rates
were P 60,000.00 for Ybarola and P 40,000.00 for Rivera. The respondents argued
that the release/quitclaim they executed should not be a bar to the recovery of the
full benefits due them; while they admitted that they signed release documents,
they did so due to dire necessity.
The petitioners denied liability, contending that the amounts the respondents
received represented a fair and reasonable settlement of their claims, as attested to
by the release/quitclaim affidavits which they executed freely and voluntarily.
They belied the respondents’ claimed salary rates, alleging that they each received
a monthly salary of P 9,177.00, as shown by the payrolls.
The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint but
ordered the payment of additional separation pay to the respondents – P
490,066.00 for Ybarola and P 429,517.55 for Rivera. On appeal by the petitioners to
the National Labor Relations Commission (NLRC), the NLRC set aside the labor
arbiter’s decision and dismissed the complaint for lack of merit. It ruled that the
withholding tax certificate cannot be the basis of the computation of the
respondents’ separation pay as the tax document included the respondents’ cost-
of-living allowance and commissions; as a rule, commissions cannot be included
in the base figure for the computation of the separation pay.
The CA granted the petition and set aside the assailed NLRC dispositions. It
reinstated the labor arbiter’s separation pay award, rejecting the NLRC’s ruling
that the respondents’ commissions are not included in the computation of their
separation pay. It pointed out that in the present case, the respondents earned their
commissions through actual market transactions attributable to them; these
commissions, therefore, were part of their salary.
Page | 189
The appellate court declared the release/quitclaim affidavits executed by the
respondents invalid for being against public policy, citing two reasons: (1) the
terms of the settlement are unconscionable; the separation pay the respondents
received was deficient by at least P 400,000.00 for each of them; and (2) the absence
of voluntariness when the respondents signed the document, it was their dire
circumstances and inability to support their families that finally drove them to
accept the amount the petitioners offered. Significantly, they dallied and it took
them three months to sign the release/quitclaim affidavits.
ISSUE: Whether the release/quitclaim affidavits are invalid for being against
public policy.
Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid

for being against public policy for two reasons: (1) the terms of the settlement
are unconscionable; the separation pay for termination due to
reorganization/restructuring was deficient by Php400,000.00 for each employee;
they were given only half of the amount they were legally entitled to; and (2) the
absence of voluntariness when the employees signed the document, it was their
dire circumstances and inability to support their families that finally drove
them to accept the amount offered.
Without jobs and with families to support, they dallied in executing the quitclaim
instrument, but were eventually forced to sign given their circumstances. To be
sure, a settlement under these terms is not and cannot be a reasonable one, given
especially the respondent’s length of service – 25 years for Ybarola and 19 years
for Rivera.
ROBINA FARMS CEBU/UNIVERSAL ROBINA CORPORATION, Petitioner,

vs. ELIZABETH VILLA, Respondent.
[G.R. No. 175869 April 18, 2016]
FACTS
Employer Robina Farms is appealing the decision of the NLRC making it liable for
illegal dismissal of Elizabeth Villa. Respondent Villa brought an action against
Page | 190
petitioner Robina Farms for illegal suspension, illegal dismissal, nonpayment of
overtime benefits and nonpayment of service incentive leave. Respondent was a
salesclerk with the company since August 1981. In the later part of 2001, petitioner
enticed her to avail of the company’s special retirement program. On March 2,
2002 she received a memorandum from Lily Ngochua requiring her to explain her
failure to issue invoices for unhatched eggs for the months of January and
February of that year. She explained that the delivery receipts were delayed and
overlooked; despite her explanation she was suspended for 10 days of March 8,
2002 to March 19, 2002.
When she returned, she was advised to cease working because her application for
retirement had been approved; and then subsequently disapproved; and she was
then advised to tender her resignation with a request for financial assistance. She
manifested her intention to return to work, but petitioner had replaced her with
another employee, confiscated her gate pass and prevented her from entering the
premises ever again.
The petitioner asserts that she violated the company rule on “timely issuance of
the invoices”. She was suspended because the delay resulted in a delay of payment
by the buyers, which depended on the receipt of the invoices. Her application for
retirement was denied because “management did not approve the benefits
equivalent to 86% of her salary rate she applied for, but only 1/2 month for every
year of service.
ISSUE: Whether Villa was 1.) illegally dismissed, 2.) entitled to overtime, and 3.)
entitled to service incentive leave.
1.Yes, she was illegally dismissed.
The advice of Ngochua and De Guzman for Villa to resign and instead to request
for financial assistance was a strong and unequivocal indication of the petitioner’s
desire to sever the employer-employee relationship.
The desire of Villa to retire does not evidence of her intention to sever the
relationship as it was enticed to her as a promo. In that she believed she receive a
greater benefit from petitioner company’s offer. Hence, her consent cannot be
deemed to have been knowingly and freely given.
Page | 191
2. No, she is not entitled to overtime pay.
Entitlement to overtime pay must be “established by proof” that overtime work

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

EDILBERTO ANIA, MICHAEL ADANO, JAIME BOLO, RUBEN E. GULA,
ANTONIO CUADERNO and JOVITO CATANGUI, Petitioners, vs.
PHILTRANCO SERVICE ENTERPRISES INC./CENTURION SOLANO,
Manager, Respondents.
[G.R. No. 211141 June 29, 2016]
FACTS
The petitioners were employed by the respondents (on various dates from 2006 to
2010) as bus drivers and/or conductors with travel routes of Manila (Pasay) to
Bicol, Visayas and Mindanao, and vice versa.On July 4, 2011, the petitioners filed
a case against the respondents alleging that: (1) they were already qualified for
Page | 192
regular employment status since they have been working with the respondents for
several years; (2) they were paid only P404.00 per round trip, which lasts from two
to five days, without overtime pay and below the minimum wage rate; (3) they
cannot be considered as field personnel because their working hours are controlled
by the respondents from dispatching to end point and their travel time is
monitored and measured by the distance because they are in the business of
servicing passengers where time is of the essence; and (4) they had not been given
their yearly five-day SIL since the time they were hired by the respondents.
In response, the respondents asserted that: (1) the petitioners were paid on a fixed
salary rate of P0.49 centavos per kilometer run, or minimum wage, whichever is
higher; (2) the petitioners are seasonal employees since their contracts are for a
fixed period and their employment was dependent on the exigency of the
extraordinary public demand for more buses during peak months of the year; and
(3) the petitioners are not entitled to overtime pay and SIL pay because they are
field personnel whose time outside the company premises cannot be determined
with reasonable certainty since they ply provincial routes and are left alone in the
field unsupervised.
The Labor Arbiter ruled in favor of the respondents who were able to prove that
petitioners were paid with a fixed salary or minimum wage, whichever is higher.
It also held that employees were not entitled to holiday pay and SIL as field
personnel.
The NLRC held that the petitioners are not field personnel considering that they
ply specific routes with fixed time schedules determined by the respondents; thus,
they are entitled to minimum wage, SIL pay, and overtime benefits.
The CA reversed the NLRC and reinstated the Labor Arbiter.
ISSUE: Whether the petitioners as bus drivers and/or conductors are field
personnel, and thus entitled to overtime pay and SIL pay.
The bus drivers and/or conductors are regular employees.
It is necessary to stress that the definition of a "field personnel" is not merely

concerned with the location where the employee regularly performs his duties but
also with the fact that the employee's performance is unsupervised by the
Page | 193
employer. Field personnel are those who regularly perform their duties away from
the principal place of business of the employer and whose actual hours of work in
the field cannot be determined with reasonable certainty.
Thus, in order to conclude whether an employee is a field employee, it is also

necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to
whether or not the employee's time and performance are constantly supervised by
the employer
The NLRC properly concluded that they are not field personnel but regular
employees who perform tasks usually necessary and desirable to the respondents'
business. Evidently, the petitioners are not field personnel as defined above and
the NLRC's finding in this regard is supported by the established facts of this case:
(1) the petitioners, as bus drivers and/or conductors, are directed to transport their
passengers at a specified time and place; (2) they are not given the discretion to
select and contract with prospective passengers; (3) their actual work hours could
be determined with reasonable certainty, as well as their average trips per month;
and (4) the respondents supervised their time and performance of duties.
Thus, they are consequently entitled to the benefits accorded to regular employees
of the respondents, including overtime pay and SIL pay.
HSY MARKETING LTD. CO., petitioner, v. VIRGILIO 0. VILLASTIQUE,

respondent.
[G.R. No. 219569 August 17, 2016]
FACT
On January 3, 2003, petitioner hired respondent as a field driver for Fabulous Jeans
& Shirt & General Merchandise (Fabulous Jeans), tasked to deliver ready-to-wear
items and/or general merchandise for a daily compensation of P370.00.
On January 10, 2011, respondent figured in an accident when the service vehicle
(a 2010-model Mitsubishi Strada pick up) he was driving in Iligan City bumped a
pedestrian, Ryan Dorataryo (Dorataryo). Fabulous Jeans shouldered the
hospitalization and medical expenses of Dorataryo in the amount of P64,157.15,
which respondent was asked to reimburse, but to no avail.
Page | 194
On February 24, 2011, respondent was allegedly required to sign a resignation
letter, which he refused to do. A couple of days later, he tried to collect his salary
for that week but was told that it was withheld because of his refusal to resign.
Convinced that he was already terminated on February 26, 2011, he lost no time in
filing a complaint for illegal dismissal with money claims against petitioner,
Fabulous Jeans, and its owner, Alexander G. Arqueza. The Labor Arbiter
dismissed the complaint for illegal dismissal as there was no substantial evidence
presented that respondent was dismissed. The Labor Arbiter ruled however that
because there was strained relationship between petitioner and respondent,
reinstatement was no longer feasible, and petitioner was asked to deliver
separation pay and service incentive leave pay to respondent. NLRC and CA
affirmed the Labor Arbiter’s RULING.
ISSUE: Whether Villatisque, as a company driver, falls under the definition of a

regular employee and is thus entitled to service incentive leave pay.
Yes, respondent Villatisque is a regular employee and should be awarded his SIL.
A regular employee’s task is necessary and desirable to the usual trade and
business of the company and is thus entitled to the benefits including SIL.
Villatisque is not a field employee but rather a regular since he is expected to
deliver goods at a specified time and place and is under the control and
supervision of HSY Marketing. Company drivers who are under the control and
direct supervision of management officers – like respondent herein – are regular
employees entitled to benefits including SIL.
The Court likewise upholds the unanimous conclusion of the lower tribunals that
respondent had not been dismissed at all. Other than the latter's unsubstantiated
allegation of having been verbally terminated from his work, no substantial
evidence was presented to show that he was indeed dismissed or was prevented
from returning to his work. In the absence of any showing of an overt or positive
act proving that petitioner had dismissed respondent, the latter's claim of illegal
dismissal cannot be sustained, as such supposition would be self-serving,
conjectural, and of no probative value.
Page | 195
Hence, since there is no dismissal or abandonment to speak of, the appropriate
course of action is to reinstate the employee (in this case, herein respondent)
without, however, the payment of back wages. If respondent voluntarily chooses
not to return to work, he must then be considered as having resigned from
employment. This is without prejudice, however, to the willingness of both parties
to continue with their former contract of employment or enter a new one whenever
they so desire
While petitioner should not be adjudged liable for separation pay, the Court
nonetheless sustains the award of service incentive leave pay in favor of
respondent; in accordance with the finding of the CA that respondent was a
regular employee of petitioner and is, therefore, entitled to such benefit.
DE LA SALLE ARANETA UNIVERSITY, PETITIONER, vs. JUANITO C.

BERNARDO, RESPONDENT.
[G.R. No. 190809, February 13, 2017]
FACTS
On February 26, 2004, Bernardo filed a complaint against DLS-AU and its
owner/manager, Dr. Oscar Bautista (Dr. Bautista), for the payment of retirement
benefits. Bernardo alleged that he started working as a part-time professional
lecturer at DLS-AU (formerly known as the Araneta University Foundation) on
June 1, 1974 for an hourly rate of P20.00. Bernardo taught for two semesters and
the summer for the school year 1974-1975. Bernardo then took a leave of absence
from June 1, 1975 to October 31, 1977 when he was assigned by the Philippine
Government to work in Papua New Guinea.
When Bernardo came back in 1977, he resumed teaching at DLS-AU until October
12, 2003, the end of the first semester for school year 2003-2004. Bernardo's
teaching contract was renewed at the start of every semester and summer.
However, on November 8, 2003, DLS-AU informed Bernardo through a telephone
call that he could not teach at the school anymore as the school was implementing
Page | 196
the retirement age limit for its faculty members. As he was already 75 years old,
Bernardo had no choice but to retire. At the time of his retirement, Bernardo was
being paid P246.50 per hour.
Bernardo immediately sought advice from the DOLE regarding his entitlement to
retirement benefits after 27 years of employment. In letters dated January 20, 2004
and February 3, 200, the DOLE, through its Public Assistance Center and Legal
Service Office, opined that Bernardo was entitled to receive benefits under
Republic Act No. 7641, otherwise known as the "New Retirement Law," and its
Implementing Rules and Regulations.
Yet, Dr. Bautista, in a letter dated February 12, 2004, stated that Bernardo was not
entitled to any kind of separation pay or benefits. Dr. Bautista explained to
Bernardo that as mandated by the DLS-AU's policy and Collective Bargaining
Agreement (CBA), only full-time permanent faculty of DLS-AU for at least five
years immediately preceding the termination of their employment could avail
themselves of the post-employment benefits. As part-time faculty member,
Bernardo did not acquire permanent employment under the Manual of
Regulations for Private Schools, in relation to the Labor Code, regardless of his
length of service.
ISSUES: 1.) Are part-time employees excluded from the coverage of those entitled
to retirement benefits under RA 7641? 2.) Has a claim for retirement benefits filed
beyond the period provided for under Art. 291 of the Labor Code prescribed?
1) Yes. Bernardo’s employment with DLS-AU had always been for a fixed-term
and his contracts of employment with the school were valid, legal, and binding.
Based on RA 7641, its Implementing Rules and Secretary Quisumbing’s Labor

Advisory, Bernardo, as a part-time employee of DLS-AU, is entitled to retirement
benefits. The general coverage of RA 7641 is broad enough to encompass all
private sector employees, and part-time employees are not among those
specifically exempted from the law.
2) Bernardo’s right to retirement benefits and the obligation of DLS-AU to pay

such benefits are already established under Article 302 [287] of the Labor Code, as
amended by RA 7641.
Page | 197
However, there was a violation of Bernardo’s right only after DLS-AU informed
him that the university no longer intended to offer him another contract of
employment, and already accepting his separation from service, Bernardo sought
his retirement benefits, but was denied by the school. Therefore, the cause of action
for Bernardo’s retirement benefits only accrued after the refusal of DLS-AU to pay
him the same, clearly expressed in Dr. Bautista’s letter dated February 12, 2004.
Hence, Bernardo’s complaint, filed with the NLRC on February 26, 2004, was filed
within the three-year prescriptive period provided under Article 291 of the Labor
Code.
X. Other Special Benefits

ROGELIO REYES, Petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, Fifth Division, and UNIVERSAL ROBINA CORPORATION
GROCERY DIVISION, Respondents.
[G.R. No. 160233 August 8, 2007 citing Boie Takeda Chemicals vs. Dela Serna,
228 SCRA 329 (1993) & Phil. Duplicators vs. NLRC, 241 SCRA 380 (1995)]
FACTS
Petitioner was employed as a salesman at private respondent's Grocery Division

in Davao City on August 12, 1977. He was eventually appointed as unit manager
of Sales Department-South Mindanao District, a position he held until his
retirement on November 30, 1997. Thereafter, he received a letter regarding the
computation of his separation pay. Insisting that his retirement benefits and 13th
month pay must be based on the average monthly salary of P42,766.19, which
consists of P10,919.22 basic salary and P31,846.97 average monthly commission,
petitioner refused to accept the check issued by private respondent in the amount
of P200,322.21. Instead, he filed a complaint before the arbitration branch of the
NLRC for retirement benefits, 13th month pay, tax refund, earned sick and
vacation leaves, financial assistance, service incentive leave pay, damages and
attorney's fees.
Petitioner contends that the commissions form part of the basic salary, citing the
case of Philippine Duplicators, Inc. v. National Labor Relations Commission,
wherein the Court held that commissions earned by salesmen form part of their
basic salary. Private respondent counters that petitioner knew that the overriding
commission is not included in the basic salary because it had not been considered
Page | 198
as such for a long time in the computation of the 13th month pay, leave
commissions, absences and tardiness.
ISSUE: Whether the overriding commission is included in the computation of the

retirement benefits and 13th month pay?
The Court in the Resolution dated February 15, 1995 in the Philippine Duplicators
case had clarified any seeming inconsistencies between Philippine Duplicators
and Boie-Takeda.
The Court thus clarified that in Philippine Duplicators, the salesmen’s

commissions, comprising a predetermined percentage of the selling price of the
goods sold by each salesman, were properly included in the term basic salary for
purposes of computing the 13th month pay. The salesmen’s commissions are not
overtime payments, nor profit-sharing payments nor any other fringe benefit, but
a portion of the salary structure which represents an automatic increment to the
monetary value initially assigned to each unit of work rendered by a salesman.
Contrarily, in Boie-Takeda, the so-called commissions paid to or received by

medical representatives of Boie-Takeda Chemicals or by the rank and file
employees of Philippine Fuji Xerox Co., were excluded from the term basic salary
because these were paid to the medical representatives and rank-and-file
employees as productivity bonuses, which are generally tied to the productivity,
or capacity for revenue production, of a corporation and such bonuses closely
resemble profit-sharing payments and have no clear direct or necessary relation to
the amount of work actually done by each individual employee. Further,
commissions paid by the Boie-Takeda Company to its medical representatives
could not have been sales commissions in the same sense that Philippine
Duplicators paid the salesmen their sales commissions. Medical representatives
are not salesmen; they do not affect any sale of any article at all.
In this case, SC ruled that commissions should be excluded. The commissions

which Reyes received were not part of his salary structure but were profit-sharing
payments and had no clear, direct or necessary relation to the amount of work he
actually performed. The collection made by the salesmen from the sale
Page | 199
transactions was the profit of private respondent from which petitioner had a
share in the form of a commission.
ARCO METAL PRODUCTS, CO., INC., and MRS. SALVADOR UY,

petitioners, vs. SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL-
NAFLU (SAMARM-NAFLU), respondent.
[G.R. No. 170734 May 14, 2008]
FACTS
Petitioner is a company engaged in the manufacture of metal products, whereas

respondent is the labor union of petitioner’s rank and file employees. Sometime in
December 2003, petitioner paid the 13th month pay, bonus, and leave encashment
of three union members in amounts proportional to the service they rendered in a
year, which is less than a full twelve (12) months. Respondent protested the
prorated scheme, claiming that on several occasions, petitioner did not prorate the
payment of the same benefits to seven (7) employees who had not served for the
full 12 months. According to respondent, the prorated payment violates the rule
against diminution of benefits under Article 100 of the Labor Code. Thus, they
filed a complaint before the National Conciliation and Mediation Board (NCMB).
ISSUE: Whether the grant of 13th month pay, bonus, and leave encashment in full
regardless of actual service rendered constitutes voluntary employer practice and,
consequently, whether or not the prorated payment of the said benefits constitutes
diminution of benefits under Article 100 of the Labor Code.
Any benefit and supplement being enjoyed by employees cannot be reduced,

diminished, discontinued or eliminated by the employer.
The principle of non-diminution of benefits is founded on the Constitutional

mandate to "protect the rights of workers and promote their welfare and to afford
labor full protection. Said mandate in turn is the basis of Article 4 of the Labor
Code which states that all doubts in the implementation and interpretation of this
Code, including its implementing rules and regulations shall be rendered in favor
of labor.
Page | 200
Jurisprudence is replete with cases which recognize the right of employees to
benefits which were voluntarily given by the employer and which ripened into
company practice. Thus in Davao Fruits Corporation v. Associated Labor Unions,
et al. where an employer had freely and continuously included in the computation
of the 13th month pay those items that were expressly excluded by the law, we
held that the act which was favorable to the employees though not conforming to
law had thus ripened into a practice and could not be withdrawn, reduced,
diminished, discontinued or eliminated. In Sevilla Trading Company v. Semana,
we ruled that the employer’s act of including non-basic benefits in the
computation of the 13th month pay was a voluntary act and had ripened into a
company practice which cannot be peremptorily withdrawn.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy
of freely, voluntarily and consistently granting full benefits to its employees
regardless of the length of service rendered. True, there were only a total of seven
employees who benefited from such a practice, but it was an established practice,
nonetheless. Jurisprudence has not laid down any rule specifying a minimum
number of years within which a company practice must be exercised in order to
constitute voluntary company practice. Thus, it can be six (6) years, three (3) years,
or even as short as two (2) years. Petitioner cannot shirk away from its
responsibility by merely claiming that it was a mistake or an error, supported only
by an affidavit of its manufacturing group head. Hence, petition was denied.
UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO)

and/or RENATO CABATI, as Manager, Petitioners, vs. AGRIPINO
CABALLEDA and ALEJANDRO CADALIN, Respondents.
[G.R. No. 156644 July 28, 2008]
FACTS
Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a domestic

corporation engaged in the sugar milling business and petitioner Renato Cabati is
URSUMCO's manager. Respondent Agripino Caballeda (Agripino) worked as
welder for URSUMCO from March 1989 until June 23, 1997 with a salary of P124.00
Page | 201
per day, while respondent Alejandro Cadalin (Alejandro) worked for URSUMCO
as crane operator from 1976 up to June 15, 1997 with a salary of P209.30 per day.
On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a

Memorandum establishing the company policy on “Compulsory Retirement”
(Memorandum) of its employees. The memorandum provides that all employees
corporate-wide who attain 60 years of age on or before April 30, 1991 shall be
considered retired on May 31, 1991.
On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a
legitimate labor organization and the recognized sole and exclusive bargaining
representative of all the monthly and daily paid employees of URSUMCO, of
which Alejandro was a member, entered into a Collective Bargaining Agreement
(CBA). Article XV of the said CBA particularly provided that the retirement
benefits of the members of the collective bargaining unit shall be in accordance
with law. Agripino and Alejandro (respondents), having reached the age of 60,
were allegedly forced to retire by URSUMCO. Agripino averred that URSUMCO
illegally dismissed him from employment on June 24, 1997 when he was forced to
retire upon reaching the age of sixty (60) years old. Upon the termination of his
employment, he accepted his separation pay and applied for retirement benefits
with the Social Security System (SSS). Earlier, on April 15, 1997, Alejandro turned
60 years old. On May 28, 1997, he filed his application for retirement with
URSUMCO, attaching his birth and baptismal certificates. On July 23, 1997, he
accepted his retirement benefits and executed a quitclaim in favor of URSUMCO.
Thereafter, on August 6, 1997, Agripino filed a Complaint for illegal dismissal,
damages and attorney’s fees before the Labor Arbiter (LA) of Dumaguete City. He
alleged that his compulsory retirement was in violation of the provisions of
Republic Act (R.A.) 7641 and, was in effect, a form of illegal dismissal.
On August 26, 1997, Alejandro likewise filed a Complaint for illegal dismissal,
underpayment of retirement benefits, damages and attorney’s fees before the LA,
alleging that he was given only 15 days per year of service by way of retirement
benefits and further assails that his compulsory retirement was discriminatory
considering that there were other workers over sixty (60) years of age who were
allowed to continuously report for work.
ISSUE: Whether respondents were illegally terminated on account of compulsory

retirement or the same voluntarily retired.
Page | 202
SC ruled in favor of the respondents.
Retirement is the result of a bilateral act of the parties, a voluntary agreement

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

instant controversy. Petitioners postulate that respondents voluntarily retired
particularly when Alejandro filed his application for retirement, submitted all the
documentary requirements, accepted the retirement benefits and executed a
quitclaim in favor of URSUMCO. Respondents claim otherwise, contending that
they were merely forced to comply as they were no longer given any work
assignment and considering that the severance of their employment with
URSUMCO is a condition precedent for them to receive their retirement benefits.
Generally, the law looks with disfavor on quitclaims and releases by employees
who have been inveigled or pressured into signing them by unscrupulous
employers seeking to evade their legal responsibilities and frustrate just claims of
Page | 203
employees. They are frowned upon as contrary to public policy. A quitclaim is
ineffective in barring recovery of the full measure of a worker's rights, and the
acceptance of benefits therefrom does not amount to estoppels.
To be precise, only Alejandro was able to claim a partial amount of his retirement
benefit. Thus, it is clear from the decisions of the LA, NLRC and CA that
petitioners are still liable to pay Alejandro the differential on his retirement
benefits. On the other hand, Agripino was actually and totally deprived of his
retirement benefit.
Moreover, the petitioners, not the respondents, have the burden of proving that
the quitclaim was voluntarily entered. In previous cases, we have considered,
among others, the educational attainment of the employees concerned in
upholding the validity of the quitclaims which they have executed in favor of
their employers.
LOURDES A. CERCADO, Petitioner, vs. UNIPROM, INC., Respondent.
[G.R. No. 188154 October 13, 2010]
FACTS
Petitioner Lourdes Cerdaco was an employee of UNIPROM Inc. for 22 years since
December 15, 1978. When respondent came up with a retirement plan, sometime
in 1980 and then amended in 2001, which provides that any employee with a
minimum of 20 years of service, regardless of age, may be retired at the option of
the employer. In December 2000, UNIPROM implemented a company-wide
retirement program, including herein petitioner. She was offered an early
retirement package amounting to P171, 982.90 but Cercado rejected the offer.
UNIPROM exercised its option under the retirement plan and decided to retire
petitioner effective February 15, 2001 so she was no longer given any work
assignment after the said date. This prompted the petitioner to file a complaint for
illegal dismissal before the Labor Arbiter, alleging that UNIPROM did not have a
bona fide retirement plan, and even if there was, she didn’t consent thereto.
Respondent averred that Cercado was automatically covered by the retirement
plan when she agreed to the company’s rules and regulations, and that her
retirement was an exercise of management prerogative.
Page | 204
ISSUES: 1.) Whether or not UNIPROM has a bona fide retirement plan; 2.)
Whether or not petitioner was validly retired pursuant thereto
Petition is meritorious.
Retirement is the result of a bilateral act of the parties, a voluntary agreement

between the employer and the employee whereby the latter, after reaching a
certain age, agrees to sever his or her employment with the former.
1.) Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor Code,
as amended by R.A 7641, pegs the age for compulsory retirement at 65 years old,
while the minimum age for optional retirement is set at 60 years. However, an
employer is free to impose a retirement age earlier than the foregoing mandates.
This has been upheld in numerous cases as a valid exercise of management
prerogative.
In this case, petitioner was retired by UNIPROM at the age of 47, after having
served the company for 22 years, pursuant to the company’s retirement plan,
which provides that employees who have rendered at least 20 years of service can
be retired at the option of the company. Respondent’s retirement plan can be
expediently stamped with validity and justified under the all-encompassing
phrase ―management prerogative.
2.) No, petitioner was not validly retired. Jurisprudence has upheld that it is
axiomatic that a retirement plan giving the employer the option to retire its
employees below the ages provided by law must be assented to and accepted by
the latter, otherwise its adhesive imposition will amount to a deprivation of
property without due process. In decided cases, the retirement plans were either
embodied in the CBA, or established after consultations and negotiations with the
employees’ bargaining representative. The consent of the employees to be retired
even before the statutory retirement age of 65 years was thus clear and
unequivocal. Acceptance by the employees of an early retirement age must be
explicit, voluntary, free and uncompelled.
RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY, Petitioners, vs.

DOMINGO Z. YBAROLA, JR. and ALFONSO E. RIVERA, JR., Respondents.
Page | 205
[G.R. No. 198662 September 12, 2012]
FACTS
Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June
15, 1977 and June 1, 1983, respectively, by Radio Mindanao Network (RMN). They
eventually became account managers, soliciting advertisements and servicing
various clients of RMN. =On September 15, 2002, the respondents' services were
terminated as a result of RMN's reorganization/restructuring; they were given
their separation pay — P631,250.00 for Ybarola, and P481,250.00 for Rivera.
Sometime in December 2002, they executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints
(which were later consolidated) against RMN and its President, Eric S. Canoy, for
illegal dismissal with several money claims, including attorney's fees. They
indicated that their monthly salary rates were P60,000.00 for Ybarola and
P40,000.00 for Rivera.
ISSUE: Whether the amounts the respondents received represented a fair and
reasonable settlement of their claims
The petitioners insist that the respondents' commissions were not part of their
salaries, because they failed to present proof that they earned the commission
due to actual market transactions attributable to them.
They submit that the commissions are profit-sharing payments which do not form
part of their salaries. We are not convinced. If these commissions had been profit-
sharing bonuses to the respondents, they should have received the same amounts.
Yet, as the NLRC itself noted, Ybarola and Rivera received P372,173.11 and
P586,998.50 commissions, respectively, in 2002. The variance in amounts the
respondents received as commissions supports the CA's finding that the salary
structure of the respondents was such that they only received a minimal amount
as guaranteed wage; a greater part of their income was derived from the
commissions they get from soliciting advertisements; these advertisements are the
"products" they sell. As the CA aptly noted, this kind of salary structure does not
detract from the character of the commissions being part of the salary or wage paid
Page | 206
to the employees for services rendered to the company, as the Court held in
Philippine Duplicators, Inc. v. NLRC.
The petitioners' reliance on our ruling in Talam v. National Labor Relations

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

INC. and MARK S. OROPEZA, Respondents.
[G.R. No. 199338 January 21, 2013]
FACTS
On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed by
respondent Rural Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to
liquidity problems which arose sometime in 2003, the Bank took out
retirement/insurance plans with Philippine American Life and General Insurance
Company (Philam Life) for all its employees in anticipation of its possible closure
and the concomitant severance of its personnel.
In this regard, the Bank procured Philam Plan Certificate of Full Payment No.
88204, Plan Type 02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in
favor of Padillo for a benefit amount of P100,000.00 and which was set to mature
on July 11, 2009. During the latter part of 2007, Padillo suffered a mild stroke due
to hypertension which consequently impaired his ability to effectively pursue his
Page | 207
work. On September 10, 2007, he wrote a letter addressed to respondent Oropeza,
the president of the bank, expressing his intention to avail of an early retirement
package. Despite several follow-ups, his request remained unheeded.
On October 3, 2007, Padillo was separated from employment due to his poor and
failing health as reflected in a Certification dated December 4, 2007 issued by the
Bank. Not having received his claimed retirement benefits, Padillo filed with the
NLRC a complaint for the recovery of unpaid retirement benefits.
ISSUE: Whether Padillo is entitled to claim for separation and retirement benefits
under the Labor Code?
The Labor Code provision on termination on the ground of disease under Article
297 does not apply in this case, considering that it was the petitioner and not the
Bank who severed the employment relations. It was Padillo who voluntarily
retired and that he was not terminated by the Bank.
Under article 300 of the labor code, in the absence of any applicable agreement, an
employee must (1) retire when he is at least sixty (60) years of age and (2) serve at
least (5) years in the company to entitle him/her to a retirement benefit of at least
one-half (1/2) month salary for every year of service, with a fraction of at least six
(6) months being considered as one whole year. Notably, these age and tenure
requirements are cumulative and non-compliance with one negates the
employee's entitlement to the retirement benefits under Article 300 of the Labor
Code.
In this case, it is undisputed that there exists no retirement plan, collective

bargaining agreement or any other equivalent contract between the parties which
set out the terms and condition for the retirement of employees, with the sole
exception of the Philam Life Plan which premiums had already been paid by the
Bank. In the absence of any applicable contract or any evolved company policy,
Padillo should have met the age and tenure requirements set forth under Article
300 of the Labor Code to be entitled to the retirement benefits provided therein.
Unfortunately, while Padillo was able to comply with the five (5) year tenure
requirement — as he served for twenty-nine (29) years — he, however, fell short
with respect to the sixty (60) year age requirement given that he was only fifty-five
Page | 208
(55) years old when he retired. Therefore, without prejudice to the proceeds due
under the Philam Life Plan, petitioners' claim for retirement benefits must be
denied.
GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR.

JAMES TAN, Petitioner, vs. FILIPINAS A. LAVANDERA, Respondent.
[G.R. No. 177845 August 20, 2014]
FACTS
Filipinas was employed by petitioner Grace Christian High School (GCHS) as high
school teacher since June 1977, with a monthly salary of 18,662.00 as of May 31,
2001. On August 30, 2001, Filipinas filed a complaint for illegal (constructive)
dismissal, non-payment of service incentive leave (SIL) pay, separation pay,
service allowance, damages, and attorney’s fees against GCHS and/or its principal,
Dr. James Tan. She alleged that on May 11, 2001, she was informed that her
services were to be terminated effective May 31, 2001, pursuant to GCHS’
retirement plan which gives the school the option to retire a teacher who has
rendered at least 20 years of service, regardless of age, with a retirement pay of
one-half (½) month for every year of service. At that time, Filipinas was only 58
years old and still physically fit to work. She pleaded with GCHS to allow her to
continue teaching but her services were terminated, contrary to the provisions of
Republic Act No. (RA) 7641, otherwise known as the “Retirement Pay Law.” The
Labor Arbiter dismissed the illegal dismissal case but found the retirement
benefits payable under GCHS plan to be deficient. NLRC reversed LA’s award and
held that retirement pay should be computed based on her monthly salary at the
time of her retirement. CA modified NLRC’s decision and ruled that the
computation of “one-half month salary” by equating it to”22.5 days”.
ISSUE: Whether or not the multiplier “22.5 days” is to be used in computing the
retirement pay differentials of Filipinas.
Yes. RA 7641, which was enacted on December 9, 1992, amended Article 287 of
the Labor Code, providing for the rules on retirement pay to qualified private
sector employees in the absence of any retirement plan in the establishment.
Page | 209
The said law states that “an employee’s retirement benefits under any collective
bargaining agreement (CBA) and other agreements shall not be less than those
provided” under the same – that is, at least one-half (1/2) month salary for every
year of service, a fraction of at least six (6) months being considered as one whole
year – and that “unless the parties provide for broader inclusions, the term one-
half (1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the
13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.”
Applicability of the 1/2-month salary provision
1. There is no CBA or other applicable agreement providing for retirement benefits

to employees, or
2. There is a CBA or other applicable agreement providing for retirement benefits,

but it is below the requirement set by law.
Verily, the determining factor in choosing which retirement scheme to apply is still
superiority in terms of benefits provided.
In the present case, GCHS has a retirement plan for its faculty and non-faculty
members, which gives it the option to retire a teacher who has rendered at least 20
years of service, regardless of age, with a retirement pay of one-half (1/2) month
for every year of service. Considering, however, that GCHS computed Filipinas’
retirement pay without including one-twelfth (1/12) of her 13th month pay and the
cash equivalent of her five (5) days SIL, both the NLRC and the CA correctly ruled
that Filipinas’ retirement benefits should be computed in accordance with Article
287 of the Labor Code, as amended by RA 7641, being the more beneficent
retirement scheme. They differ, however, in the resulting benefit differentials due
to divergent interpretations of the term “one-half (1/2) month salary” as used
under the law.
Moreover, the Court held that the award of legal interest at the rate of 6% per
annum on the amount of P68,150.00 representing the retirement pay differentials
due Filipinas should be reckoned from the rendition of the LA’s Decision on March
26, 2002 and not from the filing of the illegal dismissal complaint.
Page | 210
GOODYEAR PHILIPPINES, INC. and REMEGIO M. RAMOS, Petitioners, vs.
MARINA L. ANGUS, Respondent.
[G.R. No. 185449 November 12, 2014]
FACTS
Angus was employed by Goodyear on November 16, 1966 and occupied the
position of Secretary to the Manager of Quality and Technology. In order to
maintain the viability of its operations in the midst of economic reversals,
Goodyear implemented cost-saving measures which included the streamlining of
its workforce. Angus’ position was declared as redundant or “no longer
necessary”. In a letter by the HR:
“As Company practice, termination due to redundancy or retrenchment is paid at 45 days'

pay per year of service. Considering, that you have rendered 34.92 years of service to the
Company as of October 18, 2001 and have reached the required minimum age of 55 to
qualify for early retirement, Management has decided to grant you early retirement benefit
at 47 days per year of service.”
“The Company will pay you the following termination benefits on October 18, 2001: 47
days' pay per year of service (which will come from the Pension Fund), fractions of 13th
and 14th month pay, longevity pay, emergency leave and any earned and unused vacation
and/or sick leave. The refund of your contributions to the Goodyear Savings Plan, as well
as the Company's share will be handled separately by Security Bank Corporation, the
Administrator of said Plan.”
Upon receipt, Angus responded through a letter of even date;
Dear Sirs:
With reference to the attached letter dated September 18, 2001, I accept Management
decision to avail early retirement benefit. However, I do not agree on the terms stated
therein. I suggest I be given a premium of additional 3 days for every year of service which
is only 6.3% or a total of 50 days. I gathered it is Philippine industry's practice to give
premium to encourage employees to avail of the early retirement benefit.
Acceptance of this proposal will make my separation from Goodyear pleasant.
Page | 211
On November 20, 2001, Angus accepted the checks which covered payment of her
retirement benefits computed at 47 days' pay per year of service and other
company benefits. However, she put the following annotation in the
acknowledgement receipt thereof:
Received under protest — amount is not acceptable. Acceptance is on condition that I will
be given a premium of additional 3 days for every year of service
Since my service was terminated due to redundancy, I now claim my separation pay as
mandated by law. This is a separate claim from my early retirement benefit.
Allegedly because of the above-quoted annotation, and also of Angus' refusal to

sign a Release and Quitclaim, petitioners took back the checks.
In response, Ramos wrote her a letter explaining that the company has already
offered her the most favorable separation benefits due to redundancy, that is, 47
days' pay per year of service instead of the applicable rate of 45 days' pay per year
of service.
Angus reiterated her claim for both termination pay and early retirement benefits.
On January 17, 2002, Angus finally accepted a check in the amount of P1,958,927.89
purportedly inclusive of all termination benefits computed at 47 days' pay per year
of service. She likewise executed a Release and Quitclaim in favor of Goodyear.
On February 5, 2002, Angus filed with the Labor Arbiter a complaint for illegal
dismissal with claims for separation pay, damages and attorney's fees against
petitioners.
In her Position Paper, Angus claimed that her termination by reason of

redundancy was effected in violation of the Labor Code for it was not timely
reported to the DOLE and no separation pay was given to her; that the separation
pay to which she is entitled by law is entirely different from the retirement benefits
that she received; that nothing in the company's Retirement Plan under the CBA,
the CBA itself or the Employment Contract prohibits the grant of more than one
kind of separation pay; and, that she was only forced to sign a quitclaim after
accepting her retirement benefits.
On the other hand, petitioners asseverated in their Position Paper that Angus was
validly dismissed for an authorized cause; that she voluntarily accepted her
termination benefits and freely executed the corresponding quitclaim; that her
receipt of early retirement benefits equivalent to 47 days' pay for every year of
Page | 212
service, which amount is higher than the regular separation pay, had effectively
barred her from recovering separation pay due to redundancy.
ISSUE: Is the petitioner entitled to separation pay AND early retirement benefit?
Angus is entitled to both separation pay and early retirement benefit due to the
absence of a specific provision in the CBA prohibiting recovery of both.
An employee is entitled to recover both separation pay and retirement benefits in

the absence of a specific prohibition in the Retirement Plan or CBA. An employee's
right to receive separation pay in addition to retirement benefits depends upon the
provisions of the company's Retirement Plan and/or CBA.
Petitioners allege that there is a provision in the last CBA against the recovery of
both retirement benefits and separation pay. To support their claim, petitioners
submitted a copy of what appears to be a portion of the company CBA entitled
"Retirement Plan, Life Insurance, Physical Disability Pay and Resignation Pay."
Section 1, Article XI thereof provides that the availment of retirement benefits
precludes entitlement to any separation pay.
Angus presented the parties' 2001-2004 CBA; it did not contain any restriction on
the availment of benefits under the company's Retirement Plan AND of separation
pay. The amount Angus received from petitioners represented only her retirement
pay and not separation. Petitioners also argue that Angus is not entitled to
retirement pay because she does not meet the requirements enumerated in the
Retirement Plan provision of the CBA. The Court disagrees. While it is obvious
that Angus is not entitled to compulsory retirement as she has not yet reached the
age of 60, there is no denying, that she is qualified for early retirement. Under the
provision of the Retirement Plan of the CBA, a worker who is at least 50 years old
and with at least 15 years of service, and who has been recommended by the
President of the Union for early retirement and duly approved by the Human
Resources Director, shall be entitled to lump sum retirement benefits. Angus has
met all these requirements.
Retirement benefits and separation pay are not mutually exclusive. Retirement
benefits are a form of reward for an employee's loyalty and service to an employer
and are earned under existing laws, CBAs, employment contracts and company
Page | 213
policies. Separation pay is that amount which an employee receives at the time of
his severance from employment, designed to provide the employee with the
wherewithal during the period that he is looking for another employment and is
recoverable only in instances enumerated under Articles 283 and 284 of the Labor
Code or in illegal dismissal cases when reinstatement is not feasible. In the case at
bar, Article 283 clearly entitles Angus to separation pay apart from the retirement
benefits she received from petitioner.
BANCO DE ORO UNIBANK, INC., Petitioner, v. GUILLERMO C.

SAGAYSAY, Respondent.
[G.R. No. 214961, September 16, 2015]
FACTS
On May 16, 2006, respondent Guillermo Sagaysay was hired by petitioner Banco
De Oro Unibank, Inc., (BDO) as Senior Accounting Assistant 5 in its San Jose,
Nueva Ecija, branch as a result of a merger with United Overseas Bank (UOB),
with BDO as the surviving bank. Sagaysay was previously employed in UOB from
2004 to 2006 or for two (2) years. Prior thereto, he worked for Metropolitan Bank
and Trust Co. (Metrobank) from 1976 to 2004 for a period of 28 years
On January 8, 2010 BDO informed Sagaysay that, pursuant to the retirement policy
of the bank which mandated its retirement age to be sixty (60), he would be
formally retired effective September 1, 2010, a few days after his 60th birthday.
Sagaysay sent several requests to extend his employment but these requests were
denied. Sagaysay then signed Release, Waiver and Quitclaim, dated October 22,
2010, for and in consideration of P98,376.14.
On January 10, 2011, Sagaysay filed a complaint for illegal dismissal with prayer
for reinstatement and payment of backwages, moral damages, exemplary
damages, and attorney's fee against BDO before the Labor Arbiter (LA). He
claimed that despite his appeal, BDO compulsory retired him on September 1,
2010. As a result, he and his family suffered damages in the amount of
P2,225,403.00 which he would have received if he was made to retire at the age of
sixty-five.
Page | 214
The Labor Arbiter ruled that Sagaysay was illegally dismissed because he was
forced to avail of an optional retirement at the age of sixty (60) which was contrary
to the provisions of Article 287 of the Labor Code. The NLRC reversed and set
aside the ruling of the LA and concluded that when Sagaysay accepted his
employment with BDO, he assented to the provisions of the retirement plan. The
CA rendered the assailed decision which reversed the NLRC ruling. It opined that
Sagaysay was forced to participate in the retirement plan. Equally, the quitclaim
he executed was not given credence because his subsequent filing of a complaint
for illegal dismissal manifested that he had no intention to relinquish his
employment
ISSUE: Whether the retirement plan is valid and effective and the mandatory
retirement age of 60 is also binding.
The petition essentially centers on whether the June 1, 1994 retirement plan is
valid and effective against Sagaysay. To resolve this issue, a review of the
relevant laws and jurisprudence regarding the compulsory retirement age is
warranted.
Article 287 of the Labor Code is the primary provision which governs the age of
retirement. Doubtless, under this provision, the retirement age is primarily
determined by the existing agreement or employment contract. Only in the
absence of such an agreement shall the retirement age be fixed. Retirement plans
allowing employers to retire employees who have not yet reached the compulsory
retirement age of 65 years are not per se repugnant to the constitutional guaranty
of security of tenure. By its express language, the Labor Code permits employers
and employees to fix the applicable retirement age at 60 years or below, provided
that the employees' retirement benefits under any CBA and other agreements shall
not be less than those provided therein. After a judicious study of records, the
Court is convinced that Sagaysay was undeniably informed and had consented to
the retirement plan of BDO before his compulsory retirement.
For four years, from the time he was employed until his retirement and having
actual knowledge of the BDO retirement plan, Sagaysay had every opportunity to
question the same, if indeed he knew it would not be beneficial to him. Yet, he did
not express his dissent. In fact, he recognized in one of his emails that "the time
Page | 215
has come that BDO Retirement Program will be implemented to those reaching
the age of sixty (60).
The NLRC ruling is reinstated.
MAUREEN P. PEREZ, Petitioner, v. COMPARTS INDUSTRIES, INC.,

Respondent.
[G.R. No. 197557, October 05, 2016]
FACTS
Perez (petitioner) started her employment with CII (respondent) on 16 July 1988
and became a regular employee thereof on 01 September 1988. After years of
working and after several promotions, she was eventually appointed as Marketing
Manager. She held this position from 1998 up to 10 January 2009, the date when
she resigned from her work. CII has a retirement program for its managerial
employees or officers covered by "Comparts Industries, Inc. Employees
Retirement Plan" (Retirement Plan) that took effect on 01 June 1999 and was
amended on 25 January 2001. Included therein are provisions relating to optional
or early retirement and optional retirement benefits.
Prior to her resignation, Perez manifested to CII sometime in November 2007 her
intention to avail of the optional retirement program since she was already
qualified to retire under it. Her application was denied. In January 2008, while
vacationing in the United States of America (USA), she again filed an application
for optional retirement to take advantage of a job offered to her in the said country.
Still, her application was denied. CII justified its denial of Perez's application
saying that, under the Retirement Plan, it has the option to grant or deny her
application for optional retirement and considering that it is experiencing financial
crisis, it has no choice but to disallow her intention.
Perez maintains that she is entitled to separation pay: (1) primarily through the
optional retirement program under the Retirement Plan having rendered more
than twenty (20) years of service to CII, (2) through a similar optional retirement
program under the CBA which has been likewise extended to other
managerial/middle management employees in several instances, or (3) a
retrenchment program undertaken by CII because of the global financial crisis.
ISSUE: Whether petitioner is entitled to optional retirement program.
Page | 216
First and foremost, the Court emphasized that termination of employment by

the employee, as in this instance, does not entitle the employee to separation
pay.
Separation pay is that amount which an employee receives at the time of his
severance from employment, designed to provide the employee with the
wherewithal during the period that he is looking for another employment and is
recoverable only in instances enumerated under Articles 283 and 284 of the Labor
Code or in illegal dismissal cases when reinstatement is not feasible. Second, in the
matter of Perez's entitlement to optional retirement benefits, the Court agrees with
the NLRC and the appellate court that as a managerial employee, she is covered
by the Retirement Plan for CII Officers which took effect in 1999 and was amended
in 2001.
A Retirement Plan in a company partakes the nature of a contract, with the

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

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

or employment contract. In the absence of such agreement, the retirement age shall
be fixed by law. Under the law, the mandated compulsory retirement age is set at
65 years, while the minimum age for optional retirement is set at 60 years.
Page | 217
DE LA SALLE ARANETA UNIVERSITY, PETITIONER, vs. JUANITO C.
BERNARDO, RESPONDENT.
G.R. No. 190809, February 13, 2017
FACTS
On February 26, 2004, Bernardo filed a complaint against DLS-AU and its
owner/manager, Dr. Oscar Bautista (Dr. Bautista), for the payment of retirement
benefits. Bernardo alleged that he started working as a part-time professional
lecturer at DLS-AU (formerly known as the Araneta University Foundation) on
June 1, 1974 for an hourly rate of P20.00. Bernardo taught for two semesters and
the summer for the school year 1974-1975. Bernardo then took a leave of absence
from June 1, 1975 to October 31, 1977 when he was assigned by the Philippine
Government to work in Papua New Guinea. When Bernardo came back in 1977,
he resumed teaching at DLS-AU until October 12, 2003, the end of the first
semester for school year 2003-2004. Bernardo's teaching contract was renewed at
the start of every semester and summer. However, on November 8, 2003, DLS-AU
informed Bernardo through a telephone call that he could not teach at the school
anymore as the school was implementing the retirement age limit for its faculty
members. As he was already 75 years old, Bernardo had no choice but to retire. At
the time of his retirement, Bernardo was being paid P246.50 per hour.
Bernardo immediately sought advice from the DOLE regarding his entitlement to
retirement benefits after 27 years of employment. In letters dated January 20, 2004
and February 3, 200, the DOLE, through its Public Assistance Center and Legal
Service Office, opined that Bernardo was entitled to receive benefits under
Republic Act No. 7641, otherwise known as the "New Retirement Law," and its
Implementing Rules and Regulations.
Yet, Dr. Bautista, in a letter dated February 12, 2004, stated that Bernardo was not
entitled to any kind of separation pay or benefits. Dr. Bautista explained to
Bernardo that as mandated by the DLS-AU's policy and Collective Bargaining
Agreement (CBA), only full-time permanent faculty of DLS-AU for at least five
years immediately preceding the termination of their employment could avail
themselves of the post-employment benefits. As part-time faculty member,
Bernardo did not acquire permanent employment under the Manual of
Regulations for Private Schools, in relation to the Labor Code, regardless of his
length of service.
Page | 218
ISSUES: 1.) Are part-time employees excluded from the coverage of those entitled
to retirement benefits under RA 7641? 2.) Has a claim for retirement benefits filed
beyond the period provided for under Art. 291 of the Labor Code prescribed?
1) Yes. Bernardo’s employment with DLS-AU had always been for a fixed-term
and his contracts of employment with the school were valid, legal, and binding.
Based on RA 7641, its Implementing Rules and Secretary Quisumbing’s Labor

Advisory, Bernardo, as a part-time employee of DLS-AU, is entitled to retirement
benefits. The general coverage of RA 7641 is broad enough to encompass all
private sector employees, and part-time employees are not among those
specifically exempted from the law.
2) Bernardo’s right to retirement benefits and the obligation of DLS-AU to pay

such benefits are already established under Article 302 [287] of the Labor Code,
as amended by RA 7641.
However, there was a violation of Bernardo’s right only after DLS-AU informed
him that the university no longer intended to offer him another contract of
employment, and already accepting his separation from service, Bernardo sought
his retirement benefits, but was denied by the school. Therefore, the cause of action
for Bernardo’s retirement benefits only accrued after the refusal of DLS-AU to pay
him the same, clearly expressed in Dr. Bautista’s letter dated February 12, 2004.
Hence, Bernardo’s complaint, filed with the NLRC on February 26, 2004, was filed
within the three-year prescriptive period provided under Article 291 of the Labor
Code.
EDITHA M. CATOTOCAN, petitioner, vs. LOURDES SCHOOL OF QUEZON

CITY, INC./LOURDES SCHOOL, INC. AND REV. FR. CESAR F. ACUIN,
OFM CAP, RECTOR, respondents.
[G.R. No. 213486 April 26, 2017]
FACTS
Page | 219
Petitioner Catotocan started her employment in Lourdes School of Quezon City
(LSQC) in 1971 as a music teacher. By the school year 200-2006, she had already
served for 35 years. LSQC has a retirement plan providing for retirement at 60
years old or separation pay depending on the number of years of service. In
relation to its retirement policy, LSQC issued Administrative Order No. 2003-004.
The said order provides that “An employee may apply for retirement or be retired
by the school when he/she reaches the age of sixty (60) years or when he/she
completes thirty (30) years of service, whichever comes first.”
Petitioner and other co-employees assailed the said order. They argued that they
do not deserve to be retired and be rehired when they are, in fact, very much
capable of doing their duties and responsibilities. LSQC retired Petitioner
sometime in June 2006 after completing 35 years of service. Full retirement benefits
were given to her computed based on the latest salary multiplied by the total years
of service. Under the school's retirement policy, 60% of her retirement benefit was
paid in lump sum by the trustee bank, and the balance was to be paid in equal
monthly pensions over the next three (3) years. 60% of that amount, or Five
Hundred Seventy-One Thousand Seven Hundred and One Philippine Pesos
(Php571,701.00) was credited to her savings account, which she opened in
accordance with the school's retirement policy.
Petitioner was told that if she desires, she may signify in writing her intent to
continue serving the school on a contractual basis. She responded by submitting a
"Letter of Intent" on February 14, 2006. Petitioner was rehired for two school years
as a guidance counselor. When she re-applied for the third time, LSQC no longer
considered her application. Petitioner filed a complaint for illegal dismissal. Both
LA and NLRC dismissed Catotocan’s complaint. Likewise, the CA dismissed the
petition.
ISSUE: Whether the receipt of Catotocan of her retirement benefits will not stop
her from pursuing an illegal dismissal complaint against LSQC.
SC denied the petition. LSQC’s retirement plan is not per se repugnant to the
constitutional guaranty of security of tenure.
Page | 220
By its express language, the Labor Code permits employers and employees to fix
the applicable retirement age at 60 years or below, provided that the employees'
retirement benefits under any CBA and other agreements shall not be less than
those provided therein. Catotocan's subsequent actions after her "retirement" are
actually tantamount to her consent to LSQC's retirement policy of retiring her from
service upon serving the school for at least thirty (30) continuous years.
(1) after being notified that she was being retired from service by LSQC, she
opened a savings account with BDO, the trustee bank;
(2) she accepted all the proceeds of her retirement package: the lump sum and all
the monthly payments credited to her account until June 2009; and
(3) upon acceptance of the retirement benefits, there was no notation that she is
accepting the retirement benefits under protest or without prejudice to the filing
of an illegal dismissal case.
Moreover, petitioner’s correspondence with the respondent following her

"retirement” shows her voluntary assent to the latter’s retirement policy. Said
letter stipulates that “re-hiring was exclusive only for those employees who have
availed of the retirement benefits or who have been retired by the school but who
has not yet reached 65 years of age. Thus, since petitioner has availed of this
contractual employment which is exclusively offered only to LSQC's qualified
retirees for three (3) consecutive years following her retirement, she can no longer
dispute that she has indeed legitimately retired from employment and was not
illegally dismissed. Furthermore, petitioner’s availment of the re-hiring program
of LSQC for qualified retirees for 3 consecutive years is a supervening event that
would reveal that she has already voluntarily and freely signified her consent to
the retirement policy despite her initial opposition to it.
PHILIPPINE AIRLINES, INC., PETITIONER, V. ARJAN T. HASSARAM,

RESPONDENT.
[G. R. No. 217730, June 05, 2017]
FACTS
Hassaram filed a case against PAL for illegal dismissal and the payment of
retirement benefits, damages, and attorney's fees. He claimed that he had applied
for retirement from PAL in August 2000 after rendering 24 years of service as a
Page | 221
pilot, but that his application was denied. Instead, PAL informed him that he had
lost his employment in the company as of 9 June 1998, in view of his failure to
comply with the Return to Work Order Issued by the Secretary of Labor against
members of the Airline Pilots Association of the Philippines (ALPAP) on 7 June
1998. Hassaram argued that he was not covered by the Secretary's Return to Work
Order; hence, PAL had no valid ground for his dismissal. In the course of the trial
it was found that Hassaram's purported receipt of retirement benefits in the
amount of P4,456,817.75 pursuant to the PAL-ALPAP Plan.
PAL likewise alleged that, as a consequence of this newly discovered payment,

any claim made by Hassaram for retirement benefits should be deemed
extinguished.
ISSUES: 1.) Whether the amount received by Hassaram under the PAL-ALPAP
Retirement Plan should be deemed part of his retirement pay together with PAL
Pilots' Retirement Benefit Plan which is another retirement plan aside from PAL-
ALPAP; 2.) Whether Hassaram is entitled to receive retirement benefits under
Article 287 of the Labor Code.
The Supreme Court ruled that Hassaram is entitled to both retirement plans but
seeing Hassaram has received his benefits under the Plan, he is now entitled to
claim only his remaining benefits under the CBA, i.e., the amount of P120,000 (24
years x P5,000) for his 24 years of service to the company.
Since the PAL-ALPAP retirement fund raised from contributions exclusively from
[PAL] of amounts equivalent to 20% of each pilot's gross monthly pay, pilot gets
an amount equivalent to 240% of his gross monthly income for every year of
service he rendered to petitioner. This is in addition to the amount of not less than
P100,000.00 that he shall receive under the 1967 Retirement Plan.
As to the issue of whether or not Hassaram is entitled to receive retirement benefits

under Article 287 of the Labor Code, the petitioner would only be receiving a
retirement pay equivalent to at least one-half (1/2) of his monthly salary for every
year of service, a fraction of at least six (6) months being considered as one whole
year. Which means that, one-half (1/2) month salary means 22.5 days: 15 days plus
Page | 222
2.5 days representing one-twelfth (1/12) of the 13th month pay and the remaining
5 days for service incentive leave.
Comparing the benefits under the two (2) retirement schemes, it can readily be
perceived that the 22.5 days’ worth of salary for every year of service provided
under Article 287 of the Labor Code cannot match the 240% of salary or almost
two and a half worth of monthly salary per year of service provided under the
PAL Pilots' Retirement Benefit Plan, which will be further added to the P125,000.00
to which the petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly
then, it is to the petitioner's advantage that PAL's retirement plans were applied
in the computation of his retirement benefits.
ALFREDO F. LAY A, JR., Petitioner vs. COURT OF APPEALS, NATIONAL

LABOR RELATIONS COMMISSION, PHILIPPINE VETERANS BANK and
RICARDO A. BALBIDO, JR., Respondents.
[GR No. 205813, January 10, 2018]
FACTS
Alfredo was the Chief Legal Counsel of Philippine Veterans Bank with a rank of
Vice President. He was then informed that his retirement would be effective on
July 1, 2007. He then requested for the extension of his tenure for two more years
but it was denied. With the unexpected retirement, he filed a complaint for illegal
dismissal against the Philippine Veterans Bank and to Ricardo Balbido, the
president of the said bank. Laya argued that he was not aware of the existence of
the bank’s retirement plan.
The Labor Arbiter dismissed the complaint but ordered the Philippine Veterans
Bank to pay Laya the amount of Php 200.00 as reasonable indemnity. The National
Labor Relation Commission affirmed the ruling of the Labor Arbiter. The Court of
Appeals ruled that Laya could not have been unaware of the retirement program
which was in effect since January 1, 1996 and the lowering of the retirement age
was a recognized exception under article 287 of the Labor Code.
ISSUE: Whether the petitioner was validly retired by Philippine Veterans Bank at
the age of 60.
Page | 223
No. Aflredo Laya was not validly retired at the age of 60.
The CA simply concluded that the petitioner's acceptance of the employment offer
had carried with it his acquiescence, which implied his knowledge of the plan.
Under article 287 of the Labor Code, the employers and employees may agree to
fix the retirement age in their collective bargaining agreements or their
employment contracts, provided that the retirement benefits are not lower than
those provided by the law. The mere mention of the retirement plan in the letter
of appointment did not sufficiently inform the petitioner of the contents or details
of the retirement program which only stated “Membership in the Provident Fund
Program/Retirement Program, citing Cercado v. Uniprom Inc. “acceptance by the
employees of an early retirement age option must be explicit, voluntary, free, and
uncompelled”.
Having thus automatically become a member of the retirement plan through his
acceptance of employment as Chief Legal Officer of PVB, the petitioner could not
withdraw from the plan except upon his termination from employment. The plan
was a contract of adhesion since it was solely established by the Philippine
Veterans Bank and approved by the president. With the plan being a contract of
adhesion, to consider him to have voluntarily and freely given his consent to the
terms thereof as to warrant his being compulsorily retired at the age of 60 years is
factually unwarranted. Company retirement plans must not only comply with the
standards set by the prevailing labor laws but must also be accepted by the
employees as commensurate to their faithful services to the employer within the
requisite period. With the petitioner having been thus dismissed pursuant to the
retirement provision that he had not knowingly and voluntarily agreed to, PVB
was guilty of illegal dismissal as to him. Being an illegally dismissed employee, he
was entitled to the reliefs provided under Article 279 of the Labor Code. However,
petitioner’s reinstatement is no longer feasible since he reached the compulsory
retirement age of 65 years old, he should be granted separation pay in accordance
to the Philippines Veterans Bank’s retirement plan. Hence, his full back wages
should be computed from July 18, 2007 — the date when he was illegally dismissed
— until his compulsory retirement age of 65 years on June 11, 2012. Philippine
Veterans Bank illegally dismissed the petitioner and he should be paid back
wages; separation pay and costs of the suits.
Page | 224
MARIA DE LEON TRANSPORTATION V. DANIEL MACURAY
G.R. NO 214920 JUNE 6, 2018
FACTS
Daniel Macuray was a bus driver for Maria De Leon Transportation for eighteen
years driving the Laoal-Manila-Laoag route and receives a monthly commission
of Php 20,000.00 per month. On November 11, 2011 he filed a complaint for illegal
dismissal against Maria De Leon Transportation. According to Macuray, the
dispatcher of Maria De Leon Transportation did not assign a bus to him for no
reason which he continually followed up for a month for no avail. When he
returned, the dispatcher informed him that he was considered as AWOL or absent
without leave. He still went back and made follow ups for six months, but nobody
attended to him. He felt betrayed by the company because after serving them for
eighteen years there was no explanation on the status on his employment and he
did not receive any benefits and the transportation company still owed him his
salary for three months in 2009.
The company’s contention was Macuray permanently abandoned his work on

March 31, 2009 and that he was already engaged in driving his family truck.
According to Maria De Leon Transportation, the dispatcher who informed
Macuray that he was considered absent without leave had no power to terminate
or declare him absent without leave, Macuray also did not approach or inquire to
the management regarding his employment status even though Elias Dimaya the
director of the bus company lives in the same compound as him. Furthermore,
Macuray was not dismissed since the company allowed their drivers to stop
reporting for work for short periods of time and would allow them to drive the
buses again if they have a reasonable explanation for their absence. This has been
a company practice to allow the drivers to take time off from the stress and
boredom of driving long trips.
The Labor Arbiter dismissed the case for lack of merit. The National Labor
Relations Commission affirmed the Labor Arbiter’s decision with the modification
of the award of Php 50,000.00 as financial assistance to Macuray. The Court of
Appeals ruled in favor of Macuray
ISSUES: Whether Daniel Macuray was illegally dismissed. Whether Macuray is

entitled to benefits for the service he has rendered to the company for eighteen
years.
Page | 225
Daniel Macuray was not illegally dismissed, and he should be entitled to the
benefits.
Daniel Macuray simply availed of the company practice of taking a break or

sabbatical to recover from the stress of driving long distances and to look for
geener pastures whenever possible. After working for the company for eighteen
years and availing of the said company practice only upon reaching the age of 58
which is approaching the retirement age, he should be rewarded for his loyalty.
Thus, the company should not be should not be help for the monetary claims filed
by Macuray except for those that were due to him such as the retirement benefits
and the unpaid salary/commission for three months. Macuray is entitled for the
retirement benefits since he was not dismissed from work citing Article 287 of the
Labor Code. Macuray is entitled to Php 180,000.00 as retirement benefits should
there be an absence of a retirement plan or agreement. Macuray shoud also be
entitled to atterneys’s fees amounting to Php 20,000.00 citing Article 2208 of the
Civil Code.
XI. JURISDICTION OF LABOR ARBITER

XII. 2011 NLRC RULES OF PROCEDURE
LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC. vs.
UNIVERSITY OF THE PHILIPPINES
[G.R. No. 185918 April 18, 2012]
FACTS
Petitioner Lockheed Detective and Watchman Agency, Inc. entered into a contract
for security services with respondent University of the Philippines. In 1998, several
security guards assigned to UP filed separate complaints against Lockheed and
UP for payment of underpaid wages, 25% overtime pay, premium pay for rest
days and special holidays, holiday pay, service incentive leave pay, night shift
differentials, 13th month pay, refund of cash bond, refund of deductions for the
Mutual Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998,
and attorney’s fees. The Labor Arbiter held Lockheed and UP solidarily liable for
Page | 226
the unpaid legislated salary increases of the latter’s security guards for the years
1996 to 1998, in the total amount of P13,066,794.14.
On appeal, NLRC modified the LA’s decision but only with respect to the amount.
As the parties did not appeal the NLRC decision, the same became final and
executory on October 26, 2002.
Subsequently, a Notice of Garnishment was issued to PNB (Diliman Branch) for

the satisfaction of the award of P12, 142,522.69 (inclusive of execution fee). UP filed
an Urgent Motion to Quash Garnishment but was later denied by LA. Said amount
was then withdrawn by the Sheriff from UP’s PNB account.
UP appealed to CA arguing mainly that NLRC erred in ordering the garnishment

of its funds since it is considered as public funds. CA dismissed the contention of
UP. Citing Republic v. COCOFED, it ruled that the funds sought to be garnished
do not seem to fall within the stated definition. However, upon UP’s Motion for
Reconsideration, CA amended its decision. It held that without departing from its
findings that the funds covered in the savings account sought to be garnished do
not fall within the classification of public funds, it reconsiders the dismissal of the
petition in light of the ruling in the case of NEA v. Morales which mandates that
all money claims against the government must first be filed with the Commission
on Audit (COA). Further, CA cited MIAA v. CA which held that UP ranks with
MIAA, a government instrumentality exercising corporate powers but not
organized as a stock or non-stock corporation. Lockheed moved to reconsider the
amended CA decision, but it was denied.
ISSUE: Whether the funds of UP were properly garnished?
No, the funds of respondent were not properly garnished.
The Court finds that the CA correctly applied the NEA case. Like NEA, UP is a
juridical personality separate and distinct from the government and has the
capacity to sue and be sued. Thus, also like NEA, it cannot evade execution, and
its funds may be subject to garnishment or levy. However, before execution may
be had, a claim for payment of the judgment award must first be filed with the
COA.
Page | 227
The Court also dismissed the argument of Lockheed claiming that that there is
nothing that can be done since the funds of UP had already been garnished, since
the garnishment was erroneously carried out and did not go through the proper
procedure (the filing of a claim with the COA). The Court said that UP is entitled
to reimbursement of the full amount garnished plus interest of 6% per annum, to
be computed from September 12, 2005 up to the finality of the decision, and 12%
interest on the entire amount from date of finality of said decision until fully paid.
MARIETTA N. PORTILLO vs. RUDOLF LIETZ, INC., RUDOLF LIETZ and

COURT OF APPEALS
G.R. No. 196539, October 10, 2012
FACTS
On May 3, 1991, Portillo was hired by the respondent. In their letter of agreement,
the Portillo has been prohibited from engaging “in any other gainful employment
by yourself or with any other company either directly or indirectly without written
consent of [Lietz Inc.] …a breach of which will render you liable to [Lietz Inc.] for
liquidated damages”. Portillo conformed to such agreement. On February 1, 2002,
on her 10th year with the company, she was promoted to Sales Representative and
received a corresponding increase in basic monthly salary and sales quota. In this
regard, Portillo signed another letter agreement containing a "Goodwill Clause:"
It remains understood and you agreed that, on the termination of your

employment by act of either you or [Lietz Inc.], and for a period of three (3) years
thereafter, you shall not engage directly or indirectly as employee, manager,
proprietor, or solicitor for yourself or others in a similar or competitive business
or the same character of work which you were employed by [Lietz Inc.] to do and
perform. Should you breach this good will clause of this Contract, you shall pay
[Lietz Inc.] as liquidated damages the amount of 100% of your gross compensation
over the last 12 months, it being agreed that this sum is reasonable and just.
Page | 228
On June 6, 2005, three years thereafter, Portillo resigned from Lietz Inc. During her
exit interview, she declared that she intended to engage in business—a rice
dealership, selling rice in wholesale. On June 15, 2005, Lietz Inc. accepted her
resignation and reminded her of the terms of the Goodwill Clause in the last
agreement she signed. Portillo noted that no such clause was present when she
signed her latest February 2004 contract. In its answer, Lietz Inc. stated:
The documentation you pertain to is an internal memorandum of your salary

increase, not an employment contract. The absence of the three-year prohibition
clause in this document (or any document for that matter) does not cancel the
prohibition itself. We did not, have not, and will not issue any cancellation of such
in the foreseeable future[.] [T]hus[,] regretfully, it is erroneous of you to believe
otherwise.
Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller
Philippines, Ltd. to head its Pharma Raw Material Department. Ed Keller Ltd. is
purportedly a direct competitor of Lietz Inc.
Meanwhile, Portillo’s demands from Lietz Inc. for the payment of her remaining
salaries and commissions went unheeded. On September 14, 2005, Portillo filed a
complaint with the NLRC for non-payment of 1½ months’ salary, two (2) months’
commission, 13th month pay, plus moral, exemplary and actual damages and
attorney’s fees.
In its position paper, Lietz Inc. admitted liability for Portillo’s money claims in the
total amount of P110,662.16. However, it raised the defense of legal compensation:
Portillo’s money claims should be offset against her liability for liquidated
damages in the amount of ₱869,633.097 for her alleged breach of the "Goodwill
Clause".
The Labor Arbiter ruled in favor of Portillo. NLRC confirmed LA’s decision and
subsequently denied the Motion for Reconsideration of respondent.
On appeal, CA initially dismissed the petition and affirmed NLRC ruling.

However, upon Motion for Reconsideration, the CA ordered legal compensation
or set-off her monetary award against her liability for violation of the Goodwill
Clause.The Court of Appeals anchors its modified ruling on the ostensible causal
connection between Portillo’s money claims and Lietz Inc.’s claim for liquidated
damages, both claims apparently arising from the same employment relations.
Page | 229
ISSUE: Should the claims of Portillo against Lietz for unpaid wages, commissions,
etc. be offset against her liability to Lietz for damages from breach of the “Goodwill
Clause” in the contract?
No, it should not. Upon the facts and issues involved, jurisdiction over the
present controversy must be held to belong to the civil Courts.
Stated differently, petitioner seeks protection under the civil laws and claims no
benefits under the Labor Code. The primary relief sought is for liquidated
damages for breach of a contractual obligation. The other items demanded are not
labor benefits demanded by workers generally taken cognizance of in labor
disputes, such as payment of wages, overtime compensation or separation pay.
The items claimed are the natural consequences flowing from breach of an
obligation, intrinsically a civil dispute. Citing San Miguel Corporation v. NLRC,
the Court noted that the "money claims of workers" referred to in paragraph 3 of
Article 217 (as amended) embraces money claims which arise out of or in
connection with the employer-employee relationship, or some aspect or incident
of such relationship. Put a little differently, that money claims of workers which
now fall within the original and exclusive jurisdiction of Labor Arbiters are those
money claims which have some reasonable causal connection with the employer-
employee relationship.
This "reasonable causal connection with the employer-employee relationship"

is a requirement not only in employees’ money claims against the employer but is,
likewise, a condition when the claimant is the employer.
It is clear, therefore, that while Portillo’s claim for unpaid salaries is a money claim
that arises out of or in connection with an employer-employee relationship, Lietz
Inc.’s claim against Portillo for violation of the goodwill clause is a money claim
based on an act done after the cessation of the employment relationship. And,
while the jurisdiction over Portillo’s claim is vested in the labor arbiter, the
jurisdiction over Lietz Inc.’s claim rests on the regular courts.
The Court of Appeals was misguided. Its conclusion was incorrect.
There is no causal connection between the petitioner employees’ claim for unpaid
wages and the respondent employers’ claim for damages for the alleged "Goodwill
Clause" violation. Portillo’s claim for unpaid salaries did not have anything to do
Page | 230
with her alleged violation of the employment contract as, in fact, her separation
from employment is not "rooted" in the alleged contractual violation. She resigned
from her employment. She was not dismissed. Portillo’s entitlement to the unpaid
salaries is not even contested. Indeed, Lietz Inc.’s argument about legal
compensation necessarily admits that it owes the money claimed by Portillo.
As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks
to recover damages based on the parties' contract of employment as redress for
respondent's breach thereof. Such cause of action is within the realm of Civil Law,
and jurisdiction over the controversy belongs to the regular courts.
For sure, a plain and cursory reading of the complaint will readily reveal that the
subject matter is one of claim for damages arising from a breach of contract, which
is within the ambit of the regular court’s jurisdiction.
BUILDING CARE CORPORATION/LEOPARD SECURITY &

INVESTIGATION AGENCY and/or RUPERTO PROTACIO vs. MYRNA
MACARAEG
[G.R. No. 198357, December 10, 2012]
FACTS
Petitioners are in the business of providing security services to their clients. They
hired respondent as a security guard beginning August 25, 1996 and assigned her
at Genato Building in Caloocan City. On March 9, 2008, respondent was relieved
of her post. She was re-assigned to Bayview Park Hotel from March 9-13, 2008, but
after said period, she was allegedly no longer given any assignment. Thus, on
September 9, 2008, respondent filed a complaint against petitioners for illegal
dismissal, underpayment of salaries, non-payment of separation pay and refund
of cash bond. Conciliation and mediation proceedings failed, so the parties
were ordered to submit their respective position papers.
Respondent claimed that petitioners failed to give her an assignment for more than
nine months, amounting to constructive dismissal, and this compelled her to file
the complaint for illegal dismissal.
Page | 231
On the other hand, petitioners alleged that respondent was relieved from her post
as requested by the client because of her habitual tardiness, persistent borrowing
of money from employees and tenants of the client, and sleeping on the job. She
was directeed to explain why she committed such infractions, but respondent
failed to heed such order. Respondent was nevertheless temporarily assigned to
Bayview Park Hotel from March 9-13, 2008, but she also failed to meet said client's
standards and her posting thereat was not extended.
Respondent filed an administrative complaint against the agency in PNP-Security

Agencies and Guard Supervision Division, but she failed to attend the hearings.
Petitioners brought to the hearing new supposed new assignment order, but it was
not personally delivered to her due to her absence. Petitioners likewise sent her a
letter directing her to report to headquarters for new assignment but respondent
did not comply. Instead, she filed an illegal dismissal complaint with the Labor
Arbiter. LA dismissed her complaint for lack of merit but ordered petitioners to
pay her a P5,000 financial assistance.
NLRC dismissed her appeal because it was filed out of time and declared that the
Labor Arbiter's Decision had become final and executory on June 16, 2009.
CA, on the other hand, reversed NLRC ruling and declared petitioner to have been
illegally dismissed. It likewise directed petitioner to reinstate respondent and pay
her backwages and other monetary benefits.
ISSUE: Whether the CA erred in liberally applying the rules of procedure and
ruling that respondent's appeal should be allowed and resolved on the merits
despite having been filed out of time.
The Court cannot sustain the CA's Decision.
It should be emphasized that the resort to a liberal application, or suspension of

the application of procedural rules, must remain as the exception to the well-
settled principle that rules must be complied with for the orderly administration
of justice. In Marohomsalic v. Cole, the Court stated:
Page | 232
“While procedural rules may be relaxed in the interest of justice, it is well-settled
that these are tools designed to facilitate the adjudication of cases. The relaxation
of procedural rules in the interest of justice was never intended to be a license for
erring litigants to violate the rules with impunity. Liberality in the interpretation
and application of the rules can be invoked only in proper cases and under
justifiable causes and circumstances. While litigation is not a game of
technicalities, every case must be prosecuted in accordance with the prescribed
procedure to ensure an orderly and speedy administration of justice.”
The relaxation of procedural rules in the interest of justice was never intended to
be a license for erring litigants to violate the rules with impunity. Liberality in the
interpretation and application of the rules can be invoked only in proper cases and
under justifiable causes and circumstances. While litigation is not a game of
technicalities, every case must be prosecuted in accordance with the prescribed
procedure to ensure an orderly and speedy administration of justice.
In this case, the justifications given by the CA for its liberality by choosing to
overlook the belated filing of the appeal are, the importance of the issue raised,
i.e., whether respondent was illegally dismissed; and the belief that respondent
should be "afforded the amplest opportunity for the proper and just determination
of his cause, free from the constraints of technicalities," considering that the
belated filing of respondent's appeal before the NLRC was the fault of
respondent's former counsel. Note, however, that neither respondent nor her
former counsel gave any explanation or reason citing extraordinary circumstances
for her lawyer's failure to abide by the rules for filing an appeal. Respondent
merely insisted that she had not been remiss in following up her case with said
lawyer. It is, however, an oft-repeated ruling that the negligence and mistakes of
counsel bind the client. A departure from this rule would bring about never-
ending suits, so long as lawyers could allege their own fault or negligence to
support the client’s case and obtain remedies and reliefs already lost by the
operation of law.The only exception would be, where the lawyer's gross
negligence would result in the grave injustice of depriving his client of the due
process of law. In this case, there was no such deprivation of due process.
Respondent was able to fully present and argue her case before the Labor Arbiter.
She was accorded the opportunity to be heard. Her failure to appeal the Labor
Arbiter's Decision cannot, therefore, be deemed as a deprivation of her right to due
process.
Page | 233
The right to appeal is not a natural right or part of due process; it is merely a
statutory privilege and may be exercised only in the manner and in accordance
with the provisions of law. Thus, one who seeks to avail of the right to appeal must
strictly comply with the requirements of the rules, and failure to do so leads to the
loss of the right to appeal.
It should also be borne in mind that the right of the winning party to enjoy the
finality of the resolution of the case is also an essential part of public policy and
the orderly administration of justice. Hence, such right is just as weighty or equally
important as the right of the losing party to appeal or seek reconsideration within
the prescribed period.When the Labor Arbiter's Decision became final, petitioners
attained a vested right to said judgment.
The Court will not override the finality and immutability of a judgment based only
on the negligence of a party’s counsel in timely taking all the proper recourses
from the judgment. To justify an override, the counsel’s negligence must not only
be gross but must also be shown to have deprived the party the right to due
process.
In sum, the Court cannot countenance relaxation of the rules absent the showing
of extraordinary circumstances to justify the same. In this case, no compelling
reasons can be found to convince this Court that the CA acted correctly by
according respondent such liberality.
ANDREW JAMES MCBURNIE vs. EULALIO GANZON, EGI-MANAGERS,

INC. and E. GANZON, INC.
GR No. 178034/178117, October 17, 2013
FACTS
On October 4, 2002, McBurnie, an Australian national, instituted a complaint for

illegal dismissal and other monetary claims against the respondents. He claimed
that in May 11, 1999, he signed a five-year employment agreement with the
company EGI as an Executive Vice-President who shall oversee the management
of the company’s hotels and resorts within the Philippines. He performed work
for the company until sometime in November 1999, when he figured in an accident
that compelled him to go back to Australia. While in Australia, he was informed
Page | 234
by respondent Ganzon that his services were no longer needed because the project
would no longer push through. The respondents opposed and contended that
their agreement with McBurnie was to jointly invest in and establish a company
for the management of hotels. They did not intend to create an employer-employee
relationship, and the contract that was being invoked by McBurnie was solely for
the purpose of allowing McBurnie to obtain an alien work permit in the
Philippines. At the time McBurnie left for Australia for his medical treatment, he
had not yet obtained a work permit.
On September 30, 2004, the LA declared McBurnie as having been illegally

dismissed from employment and directed respondents to pay him $985,162.00 as
salary and benefits for the unexpired term of their employment contract,
P2,000,000.00 as moral and exemplary damages and 10% attorney’s fees.
Respondent appealed to NLRC, filed a Motion to Reduce Bond and posted an

appeal bond in the amount of P100,000.00. Mainly, they contended in their Motion
to Reduce Bond that the monetary awards of the LA were null and a P60M is
excessive. NLRC denied their motion citing Article 223 of the Labor Code and
required them to post an additional bond of P54,083,910.00. Meanwhile, for their
failure to post the required bond, NLRC dismissed their appeal.
On the other hand, respondents elevated the matter to CA “With Urgent Prayers
for the Immediate Issuance of a Temporary Restraining Order and a Writ of
Preliminary Injunction”. This was granted. On October 27, 2008, it granted the
respondent’s motion to reduce bond – P10M.Ruling on the merits, CA ruled that
the NLRC committed grave abuse of discretion in immediately denying the
motion without fixing an appeal bond in an amount that was reasonable, as it
denied the respondents of their right to appeal from the decision of the LA. The
CA explained that "(w)hile Art. 223 of the Labor Code requiring bond equivalent
to the monetary award is explicit, Section 6, Rule VI of the NLRC Rules of
Procedure, as amended, recognized as exception a motion to reduce bond upon
meritorious grounds and upon posting of a bond in a reasonable amount in
relation to the monetary award."
McBurnie sought reconsideration of the issuance of the writ of preliminary

injunction, but this was denied by the CA. He then filed with the Court a Petition
for Review on Certiorari20 docketed as G.R. Nos. 178034 and 178117, assailing the
Page | 235
CA Resolutions that granted the respondents’ application for the injunctive writ.
These were subsequently denied due to procedural matters.
In the meantime, the NLRC, acting on the CA’s order of remand, accepted the
appeal from the LA’s decision, and in its Decision dated November 17, 2009,
reversed and set aside the Decision of the LA, and entered a new one dismissing
McBurnie’s complaint. It explained that based on records, McBurnie was never an
employee of any of the respondents, but a potential investor in a project that
included said respondents, barring a claim of dismissal, much less, an illegal
dismissal. Granting that there was a contract of employment executed by the
parties, McBurnie failed to obtain a work permit which would have allowed him
to work for any of the respondents. In the absence of such permit, the employment
agreement was void and thus, could not be the source of any right or obligation.
Court Decision dated September 18, 2009
The SC Third Division reversed and set aside the CA Decision dated October 27,
2008. The Court explained that the respondents’ failure to post a bond equivalent
in amount to the LA’s monetary award was fatal to the appeal. Although an appeal
bond may be reduced upon motion by an employer, the following conditions must
first be satisfied: (1) the motion to reduce bond shall be based on meritorious
grounds; and (2) a reasonable amount in relation to the monetary award is posted
by the appellant. Unless the NLRC grants the motion to reduce the cash bond
within the 10-day reglementary period to perfect an appeal from a judgment of the
LA, the employer is mandated to post the cash or surety bond securing the full
amount within the said 10-day period. This decision became final and an Entry of
Judgment has been made.
On September 4, 2012, the Court en banc issued a Resolution accepting the case
from the Third Division. It also issued a temporary restraining order (TRO)
enjoining the implementation of the LA’s Decision dated September 30, 2004.
ISSUES: 1.) Did NLRC erred in denying the respondent’s motion to reduce bond?
2.) Whether or not the respondent’s motion for reconsideration has merit?
1. Yes. Citing Garcia v. KJ Commercial, the Court clarified that that the filing of
a motion to reduce bond, coupled with compliance with the two conditions
Page | 236
namely, (1) a meritorious ground, and (2) posting of a bond in a reasonable
amount, shall suffice to suspend the running of the period to perfect an appeal
from the labor arbiter’s decision to the NLRC.
To require the full amount of the bond within the 10-day reglementary period
would only render nugatory the legal provisions which allow an appellant to seek
a reduction of the bond.
The NLRC has full discretion to grant or deny the motion to reduce bond, and it
may rule on the motion beyond the 10-day period within which to perfect an
appeal. Obviously, at the time of the filing of the motion to reduce bond and
posting of a bond in a reasonable amount, there is no assurance whether the
appellant’s motion is indeed based on "meritorious ground" and whether the bond
he or she posted is of a "reasonable amount." Thus, the appellant always runs the
risk of failing to perfect an appeal.
In any case, the rule that the filing of a motion to reduce bond shall not stop the
running of the period to perfect an appeal is not absolute. In Intertranz Container
Lines, Inc. v. Bautista, the Court held:
"Jurisprudence tells us that in labor cases, an appeal from a decision involving a

monetary award may be perfected only upon the posting of cash or surety bond.
The Court, however, has relaxed this requirement under certain exceptional
circumstances in order to resolve controversies on their merits. These
circumstances include: (1) fundamental consideration of substantial justice; (2)
prevention of miscarriage of justice or of unjust enrichment; and (3) special
circumstances of the case combined with its legal merits, and the amount and the
issue involved.
By such haste of the NLRC in peremptorily denying the respondents’ motion

without considering the respondents’ arguments, it effectively denied the
respondents of their opportunity to seek a reduction of the bond even when the
same is allowed under the rules and settled jurisprudence. It was equivalent to the
NLRC’s refusal to exercise its discretion, as it refused to determine and rule on a
showing of meritorious grounds and the reasonableness of the bond tendered
under the circumstances. Time and again, the Court has cautioned the NLRC to
give Article 223 of the Labor Code, particularly the provisions requiring bonds in
appeals involving monetary awards, a liberal interpretation in line with the
desired objective of resolving controversies on the merits.
Page | 237
At the time of a motion to reduce appeal bond’s filing, the question of what
constitutes "a reasonable amount of bond" that must accompany the motion may
be subject to differing interpretations of litigants.
It is in this light that the Court finds it necessary to set a parameter for the litigants’
and the NLRC’s guidance on the amount of bond that shall hereafter be filed with
a motion for a bond’s reduction. To ensure that the provisions of Section 6, Rule
VI of the NLRC Rules of Procedure that give parties the chance to seek a reduction
of the appeal bond are effectively carried out, without however defeating the
benefits of the bond requirement in favor of a winning litigant, all motions to
reduce bond that are to be filed with the NLRC shall be accompanied by the
posting of a cash or surety bond equivalent to 10% of the monetary award that is
subject of the appeal, which shall provisionally be deemed the reasonable amount
of the bond in the meantime that an appellant’s motion is pending resolution by
the Commission. In conformity with the NLRC Rules, the monetary award, for the
purpose of computing the necessary appeal bond, shall exclude damages and
attorney’s fees.94 Only after the posting of a bond in the required percentage shall
an appellant’s period to perfect an appeal under the NLRC Rules be deemed
suspended.
In all cases, the reduction of the appeal bond shall be justified by meritorious
grounds and accompanied by the posting of the required appeal bond in a
reasonable amount.For the purpose of determining a "meritorious ground", the
NLRC is not precluded from receiving evidence, or from making a preliminary
determination of the merits of the appellant’s contentions. In dismissing outright
the motion to reduce bond filed by petitioners, NLRC abused its discretion. It
should have fixed an appeal bond in a reasonable amount. Said dismissal deprived
petitioners of their right to appeal the Labor Arbiter’s decision.
2. Yes. In finding merit in the respondents’ motion for reconsideration, we also

consider the unwarranted results that will arise from an implementation of the
Court’s Decision dated September 18, 2009.
We emphasize, moreover, that although a remand and an order upon the NLRC
to give due course to the appeal would have been the usual course after a finding
that the conditions for the reduction of an appeal bond were duly satisfied by the
respondents, given such results, the Court finds it necessary to modify the CA’s
order of remand, and instead rule on the dismissal of the complaint against the
respondents.
Page | 238
Without the reversal of the Court’s Decision and the dismissal of the complaint
against the respondents, McBurnie would be allowed to claim benefits under our
labor laws despite his failure to comply with a settled requirement for foreign
nationals.
Considering that McBurnie, an Australian, alleged illegal dismissal and sought to

claim under our labor laws, it was necessary for him to establish, first and
foremost, that he was qualified and duly authorized to obtain employment within
our jurisdiction. A requirement for foreigners who intend to work within the
country is an employment permit, as provided under Article 40, Title II of the
Labor Code. Furthermore, as has been previously discussed, the NLRC has ruled
in its Decision dated November 17, 2009 on the issue of illegal dismissal. It
declared that McBurnie was never an employee of any of the respondents:
All these facts and circumstances prove that McBurnie was never an employee of
Eulalio Ganzon or the respondent companies, but a potential investor in a project
with a group including Eulalio Ganzon and Martinez but said project did not take
off because of lack of funds.
McBurnie further claims that in conformity with the provision of the employment
contract pertaining to the obligation of the respondents to provide housing,
respondents assigned him Condo Unit # 812 of the Makati Cinema Square
Condominium owned by the respondents. He was also allowed to use a Hyundai
car. If it were true that the contract of employment was for working visa purposes
only, why did the respondents perform their obligations to him?
There is no question that respondents assigned him Condo Unit # 812 of the MCS,
but this was not free of charge. If it were true that it is part of the compensation
package as employee, then McBurnie would not be obligated to pay anything, but
clearly, he admitted in his letter that he had to pay all the expenses incurred in the
apartment.
Assuming for the sake of argument that the employment contract is valid between
them, record shows that McBurnie worked from September 1, 1999 until he met
an accident on the last week of October. During the period of employment, the
respondents must have paid his salaries in the sum of US$26,000.00, more or less.
Page | 239
However, McBurnie failed to present a single evidence that [the respondents] paid
his salaries like payslip, check or cash vouchers duly signed by him or any
document showing proof of receipt of his compensation from the respondents or
activity in furtherance of the employment contract. Granting again that there was
a valid contract of employment, it is undisputed that on November 1, 1999,
McBurnie left for Australia and never came back.
More importantly, the NLRC’s findings on the contractual relations between

McBurnie and the respondents are supported by the records.
First, before a case for illegal dismissal can prosper, an employer-employee

relationship must first be established.122 Although an employment agreement
forms part of the case records, respondent Ganzon signed it with the notation "per
my note.Second, McBurnie failed to present any employment permit which would
have authorized him to obtain employment in the Philippines.Third, besides the
employment agreement, McBurnie failed to present other competent evidence to
prove his claim of an employer-employee relationship.Given the parties’
conflicting claims on their true intention in executing the agreement, it was
necessary to resort to the established criteria for the determination of an employer-
employee relationship. The rule of thumb remains: the onus probandi falls on the
claimant to establish or substantiate the claim by the requisite quantum of
evidence. Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto. McBurnie failed in this regard.
As previously observed by the NLRC, McBurnie even failed to show through any
document such as payslips or vouchers that his salaries during the time that he
allegedly worked for the respondents were paid by the company. In the absence
of an employer-employee relationship between McBurnie and the respondents,
McBurnie could not successfully claim that he was dismissed, much less illegally
dismissed, by the latter. Even granting that there was such an employer-employee
relationship, the records are barren of any document showing that its termination
was by the respondents’ dismissal of McBurnie.
INDOPHIL TEXTILE MILLS, INC. vs. ENGR. SALVADOR ADVIENTO
[G.R. No. 171212 August 4, 2014]
FACTS
Page | 240
Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the
business of manufacturing thread for weaving. On August 21, 1990, petitioner
hired respondent Engr. Salvador Adviento as Civil Engineer to maintain its
facilities in Lambakin, Marilao, Bulacan.
On August 7, 2002, respondent consulted a physician due to recurring weakness

and dizziness. Few days later, he was diagnosed with Chronic Poly Sinusitis, and
thereafter, with moderate, severe and persistent Allergic Rhinitis. Accordingly,
respondent was advised by his doctor to totally avoid house dust mite and textile
dust as it will transmute into health problems. Distressed, respondent filed a
complaint against petitioner with the NLRC San Fernando, Pampanga, for alleged
illegal dismissal and for the payment of back wages, separation pay, actual
damages and attorney’s fees. The said case is still pending with NLRC at the time
this instant petition is filed.
Subsequently, respondent filed another Complaint with the RTC of Aparri,

Cagayan, alleging that he contracted such occupational disease by reason of the
gross negligence of petitioner to provide him with a safe, healthy and workable
environment Being the only breadwinner in the family, he made several attempts
to apply for a new job, but to his dismay and frustration, employers who knew of
his present health condition discriminated against him and turned down his
application.
In reply, petitioner moved to dismiss the complaint because RTC has no

jurisdiction over the subject matter because the same falls under the original and
exclusive jurisdiction of the Labor Arbiter under Article 217(a)(4) of the Labor
Code; and there is another action pending with the Regional Arbitration Branch
III of the NLRC in San Fernando City, Pampanga, involving the same parties for
the same cause.
On December 29, 2003, RTC denied petitioner’s motion and sustained its
jurisdiction over the case. On appeal, CA denied likewise dismissed petitioner’s
motion for lack of merit.
ISSUE: Whether the RTC has jurisdiction over the subject matter of respondent’s
complaint praying for moral damages, exemplary damages, compensatory
damages, anchored on petitioner’s alleged gross negligence in failing to provide a
safe and healthy working environment for respondent.
Page | 241
Yes, it has jurisdiction. The Court is not convinced with petitioner’s argument
that “respondent’s claim for damages is anchored on the alleged gross negligence
of petitioner as an employer to provide its employees, including herein
respondent, with a safe, healthy and workable environment; hence, it arose from
an employer-employee relationship”.
The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor
Code, as amended by Section 9 of Republic Act (R.A.) No. 6715. While we have
upheld the present trend to refer worker-employer controversies to labor courts in
light of the said provision, we have also recognized that not all claims involving
employees can be resolved solely by our labor courts, specifically when the law
provides otherwise. For this reason, we have formulated the "reasonable causal
connection rule", wherein if there is a reasonable causal connection between the
claim asserted and the employer-employee relations, then the case is within the
jurisdiction of the labor courts; and in the absence thereof, it is the regular courts
that have jurisdiction.
In the case at bench, we find that such connection is nil. It is obvious from the
complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a
simple action for damages for tortious acts allegedly committed by the defendants.
Such being the case, the governing statute is the Civil Code and not the Labor
Code. True, the maintenance of a safe and healthy workplace is ordinarily a subject
of labor cases. More, the acts complained of appear to constitute matters involving
employee-employer relations since respondent used to be the Civil Engineer of
petitioner. However, it should be stressed that respondent’s claim for damages is
specifically grounded on petitioner’s gross negligence to provide a safe, healthy
and workable environment for its employees −a case of quasi-delict. This is easily
ascertained from a plain and cursory reading of the Complaint, which enumerates
the acts and/or omissions of petitioner relative to the conditions in the workplace.
It is a basic tenet that jurisdiction over the subject matter is determined upon the
allegations made in the complaint, irrespective of whether or not the plaintiff is
entitled to recover upon the claim asserted therein, which is a matter resolved only
after and as a result of a trial.
MANILA MINING CORPORATION vs. LOWITO AMOR, ET. AL.
Page | 242
G.R. No. 182800 April 20, 2015
FACTS
Respondents were regular employees of petitioner Manila Mining Corporation, a

domestic corporation which operated a mining pit for gold and copper ore in
Placer, Surigao del Norte. In compliance with environmental laws, petitioner
maintained TP No. 7, a tailings containment facility required for the storage of
waste materials generated by its mining operations. On December 2000, petitioner
temporarily shut down its operation because TP No. 7 already reached its
maximum level. DENR-EMB issued a 6-month temporary authority to continue its
operation but petitioner failed to renew it after the lapse of 6 months.
On July 27, 2001, petitioner informed its employees and DOLE of the temporary
suspension of its operations for six months and the temporary lay-off of two-thirds
of its employees. After the lapse of said period, petitioner notified the DOLE that
it was extending the temporary shutdown for another six months. Adversely
affected by petitioner’s continued failure to resume its operations, respondents
filed the complaint for constructive dismissal and monetary claims in NLRC
Regional Arbitration Branch.
On October 25, 2004, Executive LA Pelaez rendered a decision in favor of the

respondents. LA ordered petitioner to pay respondents their separation pay,
moral and exemplary damages plus attorney’s fees (P2,138,190.02).
Petitioner appealed to NLRC to reduce the bond, citing financial losses.

Respondents, on the other hand, moved to dismiss the appeal noting the 65-days
lapse of reglementary period for the appeal. Without ruling on the procedural
issue raised by respondents, NLRC reversed LA decision and ruled that under
Article 283 of the Labor Code, respondents were not even entitled to separation
pay considering the eventual closure of their employer’s business due to serious
business losses or financial reverses. On appeal, CA nullified NLRC’s decision and
reinstated LA’s decision.
ISSUE: Whether CA gravely abused its discretion in immediately setting aside the
decision of the NLRC without reviewing the merits of the case.
Page | 243
No. The right to appeal is not a natural right or a part of due process; it is
merely a statutory privilege and may be exercised only in the manner and in
accordance with the provisions of law.
Alongside the requirement that "the appellant shall furnish a copy of the
memorandum of appeal to the other party”, appeals from decisions of the Labor
Arbiter, Article 223 provides that, "(d)ecisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the [NLRC] by any or both
parties within ten (10) calendar days from the receipt of such decisions, awards or
orders." In case of a judgment involving a monetary award, the same provision
mandates that, "an appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the [NLRC] in the amount equivalent to the monetary award in the
judgment appealed from”.
The issue that has be devilled labor litigation for long has been clarified by the
ruling in McBurnie v. Ganzon, et al. which built on and extended the ruling that
while it is true that reduction of the appeal bond has been allowed in meritorious
cases on the principle that substantial justice is better served by allowing appeals
on the merits, it has been ruled that the employer should comply with the
following conditions: (1) the motion to reduce the bond shall be based on
meritorious grounds; and (2) a reasonable amount in relation to the monetary
award is posted by the appellant, otherwise the filing of the motion to reduce bond
shall not stop the running of the period to perfect an appeal. Citing McBurnie, the
Court said:
Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond,
as provided in Section 6, Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby
RESOLVES that henceforth, the following guidelines shall be observed:
(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject
to the following conditions: (1) there is meritorious ground; and (2) a bond in a reasonable
amount is posted;
(b) For purposes of compliance with condition no. (2), a motion shall be accompanied by
the posting of a provisional cash or surety bond equivalent to ten percent (10), of the
monetary award subject of the appeal, exclusive of damages and attorney's fees;
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(c) Compliance with the foregoing conditions shall suffice to suspend the running of the
10-day reglementary period to perfect an appeal from the labor arbiter's decision to the
NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and
determine the final amount of bond that shall be posted by the appellant, still in accordance
with the standards of meritorious grounds and reasonable amount; and
(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that
exceeds the amount of the provisional bond, the appellant shall be given a fresh period of
ten (10) days from notice of the NLRC order within which to perfect the appeal by posting
the required appeal bond.
In this case, we see that with no proof to substantiate its claim, petitioner moved
for a reduction of the appeal bond on the preferred basis of serious losses and
reverses it supposedly sustained in the years prior to the rendition of the Labor
Arbiter's decision.
The first condition may be left for the nonce. As to the second condition, we may
consider that the amount of P100,000.00 supposedly posted was provisional bond
sufficient to suspend the running of the 10-day reglementary period to perfect an
appeal from the Labor Arbiter's decision. That would however not improve
petitioner's position one bit. Respondent correctly called attention to the fact that
the check submitted by petitioner was dishonored upon presentment for payment,
thereby rendering the tender thereof ineffectual. Although the NLRC chose not to
address the issue of the perfection of the appeal as well as the reduction of the
bond in its Resolution dated 25 April 2005, the record shows that petitioner only
manifested its deposit of the funds for the check 24 days before the resolution of
its appeal or 116 days after its right to appeal the Labor Arbiter’s decision had
expired.
Therefore, the CA cannot be faulted for no longer discussing the merits of

petitioner’s case. Although appeal is an essential part of our judicial process, it has
been held, time and again, that the right thereto is not a natural right or a part of
due process but is merely a statutory privilege. Thus, the perfection of an appeal
in the manner and within the period prescribed by law is not only mandatory but
also jurisdictional and failure of a party to conform to the rules regarding appeal
will render the judgment final and executory. Once a decision attains finality, it
becomes the law of the case and can no longer be revised, reviewed, changed or
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altered. The basic rule of finality of judgment is grounded on the fundamental
principle of public policy and sound practice that, at the risk of occasional error,
the judgment of courts and the award of quasi-judicial agencies must become final
at some definite date fixed by law.
TOYOTA ALABANG, INC. vs. EDWIN GAMES
[G.R. No. 206612, August 17, 2015]
FACTS
Respondent Games, worked as a foreman for petitioner, allegedly stole its vehicle
lubricants. Subsequently, it charged him with qualified theft before the trial court.
Two years thereafter, or on 24 August 2007, Games filed a Complainant for illegal
dismissal, non-payment of benefits, and damages against petitioner.
The latter, through counsel, failed to file its Position Paper on the date set on 15
November 2007. On 5 February 2008, the LA ruled against petitioner and ordered
the latter to pay Games P535,553.07 for his separation pay, back wages, service
incentive leave pay and attorney's fees resulting from his illegal dismissal.
Petitioner no longer filed a motion for reconsideration. As a result, the LA's ruling
became final and executory.
The LA issued a Writ of Execution, which petitioner sought to quash. It prayed

that the proceedings be reopened, explaining that it had failed to present evidence
because of its counsel's negligence in filing the appropriate pleadings. The LA
denied the claims of petitioner. Aggrieved, the latter appealed before the NLRC.
The appeal of petitioner was denied due course because it had failed to show proof
of its security deposit for the appeal. According to the NLRC, the bonding
company's mere declaration in the Certification of Security Deposit that the bond
was fully secured was not tantamount to a faithful compliance with the rule,
because there must first be an accompanying assignment of the employer's bank
deposit.
On the merits, the NLRC dismissed the case based on the rule that no appeal may
be taken from an order of execution of a final judgment. For the NLRC, petitioner's
failure to appeal the LA Decision already made the ruling final and executory.
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Petitioner elevated the case to the CA via a Petition for Certiorari, but the action
was dismissed. Firstly, the CA ruled that the NLRC did not gravely abuse its
discretion in denying the appeal, given that petitioner had failed to comply
faithfully with the bond requirement. Secondly, it echoed the ruling of the NLRC
that a final judgment is no longer appealable. Thirdly, the CA found that
petitioner's own negligence had caused it to lose its right to appeal.
Aggrieved, petitioner filed a Petition for Review on Certiorari with Urgent Prayer
for Injunctive Relief before this Court. It disputed the finding that it did not show
proof of its security deposit for the appeal bond. It also insisted that its counsel's
gross negligence justified the reopening of the proceedings below.
ISSUES: 1.) Whether or not CA erred in dismissing the petitioner’s complaint; 2.)
Whether or not the NLRC gravely abused its discretion in requiring petitioner to
post an appeal bond; 3.) Whether or not an appeal bond must be accompanied by
a "proof of security deposit or collateral securing the bond."
This Court maintains that the CA correctly refused to reopen the proceedings
below.
The reopening of a case is an extraordinary remedy, which, if abused, can make a

complete farce of a duly promulgated decision that has long become final and
executory. Hence, there must be good cause on the movant's part before it can be
granted. In this case, petitioner itself was negligent in advancing its case. As found
by the appellate court, petitioner was present during the mandatory conference
hearing in which the latter was informed by the LA of the need to file a Position
Paper on 15 November 2007. However, petitioner not only reneged on the
submission of its Position Paper, but even failed to move for the filing of the
pleading at any point before the LA resolved the case on 5 February 2008.
Moreover, petitioner had failed to exhibit diligence when it did not attend the
hearing on 11 January 2008, or any of the proceedings thereafter, despite its
manifestation that it no longer had any legal representative. Given the instances
of negligence by petitioner itself, the Court finds that the CA justly refused to
reopen the case in the former's favor. Definitely, petitioner cannot now be allowed
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to claim denial of due process when it was petitioner who was less than vigilant
of its rights.
The NLRC did not commit any mistake in requiring petitioner to post an appeal
bond. The paraphrased proposition that "an appeal bond is not required in appeals
from decisions of the LA denying a motion to quash a writ of execution" lacks any
citation sourced from a statute or case law. Article 223 of the Labor Code and
Section 6, Rule VI of the 2011 NLRC Rules of Procedure, uniformly state thus:
In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the
posting of a bond, which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of damages and attorney's
fees. (Emphasis supplied). Evidently, the above rules do not limit the appeal bond
requirement only to certain kin ds of rulings of the LA. Rather, these rules
generally state that in case the ruling of the LA involves a monetary award, an
employer's appeal may be perfected only upon the posting of a bond. Therefore,
absent any qualifying terms, so long as the decision of the LA involves a monetary
award, as in this case, that ruling can only be appealed after the employer posts a
bond.
Clearly, this construction is but proper considering the avowed purpose of appeal
bonds demanded by the law from employers in labor cases. If we are to construe
otherwise, then an aggrieved party may simply seek the quashal of a writ of
execution, instead of going through the normal modes of appeal, to altogether
avoid paying for an appeal bond. This ruse will then circumvent the requirement
of both labor rules and jurisprudence16to post an appeal bond before contesting
the LA's grant of monetary award. Hence, the first point is not only incorrect, but
also dangerous.
According to the NLRC and the CA, the bonding company's mere declaration in
the Certification of Security Deposit that the bond is fully secured is not
tantamount to a faithful compliance with the rule, because there must first be an
accompanying assignment of the employer's bank deposit. On the other hand, the
dissent sees this declaration as an act that satisfies Section 6, Rule VI of the 2011
NLRC Rules of Procedure. For this reason, he opines that the NLRC should have
entertained the appeal of petitioner. Notwithstanding this issue, the NLRC has
given a well-founded reason for refusing to entertain petitioner's appeal,
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namely, no appeal may be taken from an order of execution of a final and
executory judgment. An appeal is not a matter of right but is a mere statutory
privilege. In this case, petitioner elevated to the NLRC an already final and
executory decision of the LA. To recall, after petitioner learned of its former
counsel's negligence in filing a Position Paper before the LA, it nonetheless failed
to file a motion reconsideration to question the ruling of the LA that it illegally
dismissed Games. At that point, the Decision was already final and executory, so
the LA dutifully issued a Writ of Execution. Petitioner sought the quashal of the
writ of execution and the reopening of its case only at that stage; and only after it
was rebuffed by the LA did petitioner appeal before the NLRC. Based on the
timeline, therefore, the LA's adverse Decision had become final and executory
even prior to petitioner's appeal before the NLRC contesting the denial of the
Motion to Quash the Writ of Execution. Consequently, the NLRC dismissed the
appeal based on its clear prohibition under Section 5, Rule V of the 2011 NLRC
Rules of Procedure.
The NLRC's reasoning that no appeal may be taken from an order of execution of
a final and executory judgment is also rooted in case law. Jurisprudence dictates
that a final and executory decision of the LA can no longer be reversed or
modified. After all, just as a losing party has the right to file an appeal within the
prescribed period, so does the winning party have the correlative right to enjoy
the finality of the resolution of the case. On this basis, the CA did not grievously
err when it concluded that the ruling of the NLRC denying petitioner's appeal was
not baseless, arbitrary, whimsical or despotic.
SOCIAL SECURITY SYSTEM, v. DEBBIE UBAÑA
[G.R. No. 200114, August 24, 2015]
FACTS
In her complaint for damages against the Social Security System (SSS), the DBP
Service Corporation, and the SSS Retirees Association, respondent Ubana alleged
that in July 1995 she applied for employment with the SSS. Despite passing all the
examinations and submitting the requirements, she was referred to the DBP
Service Corporation, passed the pre-employment examination and was referred to
SSS Naga for training and immediate deployment to SSS Daet.
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She was made to sign a six-month Service Contract in May 1996; and when she
reported to the SSS Daet Branch, she was assigned to various sections and
divisions as Processor and Data Encoder. Her salary was only P229.00 daily
compared to a regular SSS Processor who receives P846.45 daily. While her service
contract with the DBP Service Corporation was never renewed, she continued to
be employed by the SSS; she was continually assured of being absorbed into the
SSS; in fact, she was qualified for the position as she passed the required training.
Because of the oppressive and prejudicial treatment of the SSS, she was forced to
resign in August 2002 as she could not stand anymore the exploitation, the agony
of dissatisfaction, anxiety, demoralization, and injustice. Respondent Ubana
therefore alleges that the defendants conspired to exploit her and violate civil
service rules and regulations and Civil Code provisions on Human relations,
specifically Articles 19, 20 and 21. Thus, she prayed for actual damages by way of
unrealized income, moral and exemplary damages, and attorney’s fees.
The defendants filed a motion to dismiss for lack of jurisdiction, averring that the
complaint was predicated on the claims that arose out of employer-employee
relations, thus cognizable by the NLRC. At first, the RTC granted the motion to
dismiss, but on motion for reconsideration by the respondent, the RTC reversed
itself and denied the motion to dismiss. It held that a perusal of the complaint
filed by Debbie substantially alleges that the case is for Damages. Having denied
the existence of employer-employee relationship between it and Debbie, and the
case is for damages, the regular trial courts, not the CSC has jurisdiction over the
case. SSS moved to reconsider, but the RTC denied, hence it filed a petition for
certiorari with the CA which likewise dismissed the case.
ISSUE: Whether the RTC has jurisdiction over the complaint filed by Debbie.
The Court denies the Petition.
In Home Development Mutual Fund v. Commission on Audit, it was held that while
they performed the work of regular government employees, DBP Service
Corporation personnel are not government personnel, but employees of DBP
Service Corporation acting as an independent contractor. Applying the foregoing
pronouncement to the present case, it can be said that during respondent’s stint
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with petitioner, she never became an SSS employee, as she remained an employee
of DBP Service Corporation and SSS Retirees Association – the two being
independent contractors with legitimate service contracts with SSS.
Indeed, “[i]n legitimate job contracting, no employer-employee relation exists

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

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

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

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

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

between respondent and petitioner, the latter being responsible to the former only
for the proper payment of wages, respondent is thus justified in filing a case
against petitioner, based on Articles 19 and 20 of the Civil Code, to recover the
proper salary due her as SSS Processor. At first glance, it is indeed unfair and
unjust that as, Processor who has worked with petitioner for six long years, she
was paid only P5,038.00 monthly, or P229.00 daily, while a regular SSS employee
with the same designation and who performs identical functions is paid a monthly
salary of P18,622.00, or P846.45 daily wage. Petitioner may not hide under its
service contracts to deprive respondent of what is justly due her. As a vital
government entity charged with ensuring social security, it should lead in setting
the example by treating everyone with justice and fairness. If it cannot guarantee
the security of those who work for it, it is doubtful that it can even discharge its
directive to promote the social security of its members in line with the
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fundamental mandate to promote social justice and to insure the well-being and
economic security of the Filipino people.
In this jurisdiction, the “long honored legal truism of ‘equal pay for equal work'”
has been “impregnably institutionalized;” “persons who work with substantially
equal qualifications, skill, effort and responsibility, under similar conditions,
should be paid similar salaries.” “That public policy abhors inequality and
discrimination is beyond contention. Our Constitution and laws reflect the policy
against these evils. The Constitution in the Article on Social Justice and Human
Rights exhorts Congress to ‘give highest priority to the enactment of measures that
protect and enhance the right of all people to human dignity, reduce social,
economic, and political inequalities.’ The very broad Article 19 of the Civil Code
requires every person, ‘in the exercise of his rights and in the performance of his
duties, [to] act with justice, give everyone his due, and observe honesty and good
faith”.
ILAW BUKLOD NG MANGGAGAWA NESTLE PHILIPPINES CHAPTER vs.

NESTLE PHILS.
[GR No. 198675, Sept 23, 2015]
Facts
The petitioner union staged a strike against Nestle Philippines Inc. company's Ice
Cream and Chilled Products Division on the following grounds: alleged violation
of the collective bargaining agreement (CBA), dismissal of union officers and
members, discrimination and other unfair labor practice (ULP) acts. However,
after a series of conciliation meetings and discussions between the parties, they
agreed to resolve their differences and came up with a compromise which was
embodied in a Memorandum of Agreement (MOA).
After a lapse of more than eleven (11) years from the time of execution of the
subject MOA, petitioners filed with the NLRC a Motion for Writ of Execution
contending that they have not been paid the amounts they are entitled to in
accordance with the MOA. Respondent filed its Opposition to the Motion for Writ
of Execution contending that petitioners' remedy is already barred by prescription
because, under the 2005 Revised Rules of the NLRC, a decision or order may be
executed on motion within five (5) years from the date it becomes final and
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executory and that the same decision or order may only be enforced by
independent action within a period often (10) years from the date of its finality.
Petitioners' basic contention is that respondent cannot invoke the defense of

prescription because it is guilty of deliberately causing delay in paying petitioners'
claims and that petitioners, on the other hand, are entitled to protection under the
law because they had been vigilant in exercising their right as provided for under
the subject MOA.
ISSUE: Whether the Petitioners' demand to be paid has prescribed
No, it has not. The compromise agreement between petitioner and respondent
was executed on August 4, 1998 and was subsequently approved via the NLRC
Decision dated October 12, 1998.
However, considering petitioners' allegation that the terms and conditions of the
agreement have not been complied with by respondent, petitioners should have
moved for the issuance of a writ of execution.
It is settled that when a compromise agreement is given judicial approval, it

becomes more than a contract binding upon the parties. Having been sanctioned
by the court, it is entered as a determination of a controversy and has the force and
effect of a judgment. It is immediately executory and not appealable, except for
vices of consent or forgery. The non-fulfillment of its terms and conditions justifies
the issuance of a writ of execution; in such an instance, execution becomes a
ministerial duty of the court. A decision on a compromise agreement is final and
executor and has the force of law and is conclusive between the parties. It becomes
a judgment that is subject to execution in accordance with the Rules.
Section 8, Rule XI, 2005 Revised Rules of Procedure of the NLRC provides that a
judgment may be executed on motion within five years from the date of its entry
or from the date it becomes final and executory. After the lapse of such time, and
before it is barred by the statute of limitations, a judgment may be enforced by
action. If the prevailing party fails to have the decision enforced by a mere motion
after the lapse of five years from the date of its entry (or from the date it becomes
final and executory), the said judgment is reduced to a mere right of action in favor
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of the person whom it favors and must be enforced, as are all ordinary actions, by
the institution of a complaint in a regular form.
In the present case, the five-and ten-year periods provided by law and the rules
are more than enough to enable petitioners to enforce their right under the subject
MOA. In this case, the judgment of the NLRC, having been based on a compromise
embodied in a written contract, was immediately executory upon its issuance on
October 12, 1998. Thus, it could have been executed by motion within five (5)
years. It was not. Nonetheless, it could have been enforced by an independent
action within the next five (5) years, or within ten (10) years from the time the
NLRC Decision was promulgated. It was not.
Therefore, petitioners' right to have the NLRC judgment executed by mere motion
as well as their right of action to enforce the same judgment had prescribed by the
time they filed their Motion for Writ of Execution on January 25, 2010.
QUANTUM FOODS, INC. vs. ESLOYO
[GR. No. 213696, December 9, 2015]
FACTS
Petitioner, Quantum Foods, Inc. (QFI) is a domestic corporation engaged in the

distribution and selling of food products nationwide. It hired respondent, Esloyo
as Major Accounts Representative, and Magsila as Key Accounts Representative.
Esloyo and Magsila were each required to post a cash bond in the amount of
P10,000.00 and P7,000.00, respectively. However, later on, both were terminated,
Esloyo for alleged misbehavior and violations of various company rules and
regulations, such as sexual harassment, misappropriation of company funds/
property, falsification/padding of reports and serious misconduct, and Magsila
was retrenched because QFI decided to reorganize its sales force nationwide
following a drastic drop in net income.
Esloyo asserted that his dismissal was illegal, claiming that: (a) the charges were
all fabricated; (b) no formal investigation was conducted; and (c) he was not given
the opportunity to confront his accusers. Magsila, on the other hand, averred that
there was no valid retrenchment as the losses claimed by QFI were
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unsubstantiated and that he was merely replaced. The Labor Arbiter found
respondents to have been illegally dismissed.
QFI filed its Notice of Appeal and Memorandum of Appeal before the NLRC,
accompanied by: (a) a Motion to Reduce Bond averring that it was encountering
difficulty raising the amount of the bond and finding an insurance company that
can cover said amount during the short period of time allotted for an appeal; and
(b) a cash bond in the amount of P400,000.00 (partial bond).
Respondents filed a motion to dismiss the appeal for QFI's failure: (a) to attach a
Verification and Certification of Non-Forum Shopping as required by the New
Rules and Procedure of the NLRC; and (b) to post a bond in an amount equivalent
to the monetary judgment as mandated by law.
The NLRC denied respondents' motion to dismiss and gave due course to QFI's
appeal, holding that: (a) the lack of verification was a formal defect that could be
cured by requiring an oath; (b) the belated filing of the certificate of non-forum
shopping may be allowed under exceptional circumstances as technical rules of
procedure should be used to promote, not frustrate justice; and (c) there was
substantial compliance with the bond requirement, and merit in QFI's appeal that
would justify a liberal application of the requirement on the timely filing of the
appeal bond.
The CA reversed and set aside the NLRC's ruling and reinstated the LA's Decision.
It ruled that QFI's failure to post the required bond in an amount equivalent to the
monetary judgment impeded the perfection of its appeal and rendered the LA's
Decision final and executory. Thus, the NLRC was bereft of jurisdiction and
abused its discretion in entertaining the appeal. It also held that the posting of the
partial bond together with the Motion to Reduce Bond did not stop the running of
the period to perfect the appeal, considering that: (a) the grounds relied upon by
QFI are not meritorious; and (b) the partial bond posted was not reasonable in
relation to the monetary judgment
ISSUE: Whether the CA erred in ascribing grave abuse of discretion on the part of
the NLRC in giving due course to QFI's appeal holding that: (a) the lack of
verification was a formal defect that could be cured by requiring an oath; (b) the
belated filing of the certificate of non-forum shopping may be allowed under
exceptional circumstances as technical rules of procedure should be used to
promote, not frustrate justice; and (c) there was substantial compliance with the
Page | 256
bond requirement, and merit in QFI's appeal that would justify a liberal
application of the requirement on the timely filing of the appeal bond.
An appeal by the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly accredited by the
Commission in the amount equivalent to the monetary award in the judgment
appealed from.
There was, indeed, grave abuse of discretion on the part of the NLRC in giving
due course to QFI's appeals: Art. 229 of the Labor Code provides that decisions,
awards, or orders of the Labor Arbiter are final and executory unless appealed to
the Commission by any or both parties within ten (10) calendar days from receipt
of such decisions, awards, or orders. Such appeal may be entertained only on any
of the provided grounds.
Posting of a cash or surety bond is indispensable to the perfection of an appeal in

cases involving monetary awards from the decision of the LA,in several cases, the
Court has relaxed this stringent requirement whenever justified. Thus, the Rules -
specifically Section 6, Rule VI - thereof, allow the reduction of the appeal bond
upon a showing of: (a) the existence of a meritorious ground for reduction, and (b)
the posting of a bond in a reasonable amount in relation to the monetary award:
Sec. 6. Bond. - In case the decision of the Labor Arbiter or the Regional Director involves
a monetary award, an appeal by the employer may be perfected only upon the posting of a
bond, which shall either be in the form of cash deposit or surety bond equivalent in amount
to the monetary award, exclusive of damages and attorney's fees.
Case law has held that for purposes of justifying the reduction of the appeal bond,
the merit referred to may pertain to (a) an appellant's lack of financial capability
to pay the full amount of the bond, or (b) the merits of the main appeal such as
when there is a valid claim that there was no illegal dismissal to justify the award,
the absence of an employer-employee relationship, prescription of claims, and
other similarly valid issues that are raised in the appeal.
In this case, the NLRC held that a liberal application of the requirement on the
timely filing of the appeal bond is justified, finding that (a) the posting of a
P400,000.00 cash bond within the reglementary period to appeal and the
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subsequent posting of a surety bond constitute substantial compliance of the bond
requirement; and (b) there is merit in QFI's appeal. The posting of the said partial
bond coupled with the subsequent posting of a surety bond in an amount
equivalent to the monetary judgment also signified QFI's good faith and
willingness to recognize the outcome of its appeal.
DELA ROSA LINER INC ET VS. BORELA, et.al
GR No. 207286, July 29, 2016
FACTS
On September 23, 2011, respondents Calixto Borela, bus driver, and Estelo
Amarille, conductor, filed separate complaints against petitioners Dela Rosa Liner,
Inc., a public transport company, Rosauro Dela Rosa, Sr., and Nora Dela Rosa, for
underpayment/non-payment of salaries, holiday pay, overtime pay, service
incentive leave pay, 13th month pay, sick leave and vacation leave, night shift
differential, illegal deductions, and violation of Wage Order Nos. 13, 14, 15 and 16.
In a motion dated October 26, 2011, the petitioners asked the labor arbiter to
dismiss the case for forum shopping. They alleged that on September 28, 2011, the
CA 13th Division disposed of a similar case between the parties after they entered
into a compromise agreement which covered all claims and causes of action they
had against each other in relation to the respondents' employment. The
respondents opposed the motion, contending that the causes of action in the
present case are different from the causes of action settled in the case the
petitioners cited.
Labor Arbiter (LA) Danna A. Castillon, in an order dated November 24, 2011,
upheld the petitioners' position and dismissed the complaint on grounds of forum
shopping. Respondents appealed the LA's ruling, and the NLRC 1st Division
granted the appeal.The NLRC held that the respondents could not have
committed forum shopping as there was no identity of causes of action between
the two cases.
The first complaint, the NLRC pointed out, charged the petitioners with illegal
dismissal and unfair labor practice; while the second complaint was based on the
petitioners' alleged nonpayment/underpayment of their salaries and monetary
benefits, and violation of several wage orders. The petitioners moved for
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reconsideration, but the NLRC denied their motion, prompting them to file with
the CA a petition for certiorari.
CA 15th Division denied the petition; it found no grave abuse of discretion in the
NLRC ruling that the respondents did not commit forum shopping when they
filed their second complaint. The NLRC likewise held that neither was the case
barred by res judicata arising from the CA judgment in the first case.
The appeals court explained that the first case involved the issues of whether
respondents had been illegally dismissed and whether petitioners should be liable
for unfair labor practice. The labor arbiter dismissed the first complaint for lack of
merit in his decision of November 6, 2008. On the respondents' appeal against the
LA ruling in this first case, the NLRC 6th Division reversed the dismissal of the
complaint. It awarded respondents back wages (P442, 550.00) for Borela and
P215,775.00 for Amarille), damages (P10,000.00 each in moral and exemplary
damages for Borela), and moral and exemplary damages (P25,000.00 each for
Amarille), plus 10% attorney's fees for each of them.
On the petitioners' motion for reconsideration of the NLRC issued a new ruling
that followed the LA's ruling, with modification. It awarded the respondents
financial assistance of P10,000.00 each, in consideration of their long years of
service to the company.
The respondents sought relief from the CA through a petition for certiorari (CA-
G.R. SP No. 118038). Thereafter, the parties settled the case (involving the first
complaint) amicably through the compromise agreement adverted to earlier.
Under the terms of this agreement, "(t)he parties has (sic) agreed to terminate the
case now pending before the Court of Appeals and that both parties further agree
that no further action based on the same grounds be brought against each other,
and this Agreement applies to all claims and damages or losses either party may
have against each other whether those damages or losses are known or unknown,
foreseen or unforeseen."
Based on this agreement, Borela and Amarille received from respondents

P350,000.00 and P150,000.00, respectively, and executed a quitclaim. In this
manner, the parties resolved the first case.
To go back to the present case CA-G.R. SP No. 128188, which arose from the second
complaint the respondents subsequently filed), the CA 15th Division upheld the
NLRC's (1st Division) decision and ruled out the presence of forum shopping and
Page | 259
res judicata as bars to the respondents' subsequent money claims against the
petitioners. The petitioners moved for reconsideration, but the CA denied the
motion.
ISSUE: The petitioners now ask the Court to nullify the CA judgment in CA-G.R.
SP No. 128188 (arising from the second complaint), contending that the appellate
court erred in upholding the NLRC ruling that there was no forum shopping nor
res judicata that would bar the second complaint. The respondents pray for the
denial of the petition for having been filed out of time and for lack of merit. They
argue that the petition should not prosper as it was belatedly filed.
Respondents contend that their second complaint involved two causes of action:
(1) their claim for sick leave, vacation leave, and 13th-month pay under the
collective bargaining agreement of the company; and (2) the petitioners'
noncompliance with wage orders since the year 2000 until the present.
The petition is dismissed for lack of merit.
The petition for review on certiorari is timely filed pursuant to Rule 45, Section 2
of the Rules of Court. The last day for filing of the petition, as respondents claim,
fell on June 12, 2013, Independence Day, a legal holiday. The filing of the petition
therefore on June 13, 2013, a working day, fully complied with the rules.
The CA 15th Division committed no reversible error when it affirmed the NLRC
ruling that the second complaint is not barred by the rule on forum shopping nor
by the principle of res judicata. In other words, no grave abuse of discretion could
be attributed to the NLRC when it reinstated the second complaint.
Contrary to the petitioners' submission, respondents' second complaint (CA-G.R.

SP No. 128188), a money claim, is not a "similar case" to the first complaint (CA-
G.R. SP No. 118038). Thus, the filing of the second complaint did not constitute
forum shopping and the judgment in the first case is not a res judicata ruling that
bars the second complaint.
The elements of forum shopping are: (1) identity of parties; (2) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (3)
identity of the two preceding particulars such that any judgment rendered in the
Page | 260
other action will, regardless of which party is successful, amount to res judicata in
the action under consideration.
We concur with the CA that forum shopping and res judicata are not applicable in
the present case. There is no identity of rights asserted and reliefs prayed for, and
the judgment rendered in the previous action will not amount to res judicata in
the action now under consideration. There is also no identity of causes of action in
the first complaint and in the second complaint.
The NLRC's and CA's conclusion that there is no identity of causes of action
between the respondents' two complaints against the petitioners is sufficient. The
first complaint involved illegal dismissal/suspension, unfair labor practice with
prayer for damages and attorney's fees; while the second complaint (the subject of
the present appeal) involves claims for labor standards benefits — the petitioners'
alleged violation of Wage Orders Nos. 13, 14, 15 and 16; nonpayment of
respondents' sick and vacation leave pays, 13th-month pay, service incentive leave
benefit, overtime pay, and night shift differential.
The same facts or evidence would not support both action, that is, the facts or the
evidence that would determine whether respondents were illegally dismissed,
illegally suspended, or had been the subject of an unfair labor practice act by the
petitioners are not the same facts or evidence that would support the charge of
non-compliance with labor standards benefits and several wage orders. Thus,
there is no basis for petitioners' claim that "the same action had been settled . . . .”
and the petitioners' argument that "The Compromise Agreement covered all
claims and causes of action that the parties may have against each other in relation
to the private respondents' employment."
While the parties agreed that no further action shall be brought by the parties
against each other, they pointedly stated that they referred to actions on the same
grounds. The phrase same grounds can only refer to the grounds raised in the first
complaint and not to any other grounds. The compromise agreement's application
"to all claims and damages or losses either party may have against each other
whether those damages or losses are known or unknown, foreseen or unforeseen,”
is also too sweeping and effectively excludes any claims by the respondents
against the petitioners, including those that by law and jurisprudence cannot be
waived without appropriate consideration such as nonpayment or underpayment
of overtime pay and wages.
Page | 261
In labor law, respondents' claim for 13th-month pay, overtime pay, and statutory
wages (under Wages Orders 13, 14, 15 and 16), among others, cannot simply be
generally waived as they are granted for workers' protection and welfare; it takes
more than a general waiver to give up workers' rights to these legal entitlements.
Lastly, the petitioners' insinuation, that the respondents are not and should not be
entitled to anything more, because they had already "received a considerable
amount for the settlement" (P350,000.00 for Borela and P150,000.00 for Amarille),
should be placed and understood in its proper context. The illegal dismissal case
where the compromise agreement took place, the NLRC 6th Division (acting on
the appeal from the LA's ruling) awarded Borela P442,550.00 in backwages;
P20,000.00 in moral and exemplary damages, plus 10% attorney's fees; and to
Amarille P215,775.00 in back wages and P50,000.00 in moral and exemplary
damages, plus 10% attorney's fees.
Although the NLRC reconsidered these awards and eventually granted financial
assistance of P10,000.00 each to Borela and Amarille, it is reasonable to regard the
amounts they received as a fair compromise in the settlement of the first complaint
in relation with the initial NLRC award, indicated above, before its
reconsideration. The parties, especially the respondents, could not have
considered the P10,000.00 financial assistance or their labor standards claims,
particularly the alleged violation of the wage orders, as a factor in their effort to
settle the case amicably. The compromise agreement, it should be emphasized,
was executed on September 8, 2011, while the labor standards complaint was filed
only on September 23, 2011.
FONTANA DEVELOPMENT CORP. et. al. vs. SASCHA VUKASINOVIC
GR No. 222424, September 21, 2016
FACTS
In July 2009, respondent Sascha Vukasinovic was hired by petitioner Fontana

Development Corporation (FDC) as its Director for Business Development for one
year. His employment was renewed for another year at the end of his first contract.
On May 2010, respondent allegedly received a text message from one Jenny
Malllari informing him that some officers of FDC were receiving commissions
from company transactions.
Page | 262
Thereafter, respondent met with Mallari and offered her money in exchange for
evidence that will support her allegations. She handed over a photocopy of a check
as proof, but the check had an alteration, so respondent asked her to execute an
affidavit and provide more proof.
Mallari eventually gave respondent two invoices issued by one of the suppliers of
petitioner FDC as proof, and again respondent discovered discrepancies.
Respondent, then recommended to FDC’s General Manager to conduct further
investigations on the alleged corruptions.
During the inquiry, Mallari denied the said allegations stated by her and revealed
that she merely fabricated the story so that she can ask money from respondent.
Following the turn of events, petitioner received a complaint that respondent paid
Mallari a substantial amount of money to concoct a story depicting the officer as a
corrupt employee.
Respondent received a Show Cause/Preventive Suspension Order from FDC.

Respondent did not deny the allegations against him, and instead, admitted that
he gave money to Mallari because “it is a common practice in FDC to give money
to informants for vital information.”
FDC approved the recommendation of the Panel and terminated respondent.

Respondent, however, refused to acknowledge its receipt, and instead filed a
complaint for illegal dismissal, illegal suspension, regularization, non-payment of
salaries, service incentive leave, 13th month pay, actual, moral and exemplary
damages, attorney’s fees and demands for his reinstatement with full back wages
against petitioner FDC and its officers.
The Labor Arbiter dismissed the complaint for lack of factual or legal basis and
ruled that respondent cannot be regularized as he is an employee with a legal and
valid fixed-term employment and that his dismissal was for a just cause.
Respondent appealed to the NLRC which affirmed the decision of the Labor
Arbiter.
Respondent then filed a petition for certiorari with the CA which agreed with the
CA that respondent’s employment has not ripened into regular employment and
that he was validly dismissed. However, it was modified when CA awarded the
unpaid salaries to respondent.
Page | 263
Petitioners filed a petition for review contending that the CA erred in not
dismissing outright respondent’s petition and claimed that given the final
decision, the CA should have refused to take cognizance of the case.
ISSUE: Whether the CA gravely erred in not dismissing the petition for deliberate
forum shopping.
Yes. The respondent is guilty of forum shopping.
There is forum shopping when a party repetitively avails of several judicial

remedies in different court, simultaneously or successively, all substantially
founded on the same transactions and the same essential facts and circumstances,
and all raising substantially the same issues either pending in or already resolved
adversely by some other court. Forum shopping is an act of malpractice that is
prohibited and condemned because it trifles with the courts and buses their
processes.
The test for determining the existence of forum shopping is whether a final
judgment in one case amounts to res judicata in another or whether the following
elements of litis pendentia are present: (a) identity of parties, or at least such
parties as representing the same interests in both actions; (b) identity of rights
asserted and reliefs prayed for, the relief being founded on the same facts; and (c)
the identity of the two preceding particulars, such that any judgment rendered in
the other action will, regardless of which party is successful, amount to res judicata
in the action under consideration. Said requisites are also constitutive of the
requisites for auter action pendant or lis pendens.
In the instant case, there is no doubt that all the elements of litis pedentia have
already been established, as this was already settled with finality. It is well-settled
that once there is a finding of forum shopping, the penalty is summary dismissal
not only of the petition pending before this Court, but also of the other case that is
pending in a lower court.
The purpose of the rule is to avoid multiplicity of suits and to prevent a party from
instituting two or more actions or proceedings involving the same parties for the
same cause of action on the supposition the one or the other court would make a
favorable disposition.
Page | 264
Furthermore, Rule 7, section 5 of the Rules of Court mandates that a willful and
deliberate forum shopping shall be a ground for summary dismissal of a case with
prejudice.
Page | 265

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VOLUME 1 - LABOR STANDARDS

SECOND YEAR LAW

FIRST SEMESTER, A.Y. 2019 – 2020

A Case Digest Compilation

Atty. Jefferson M. Marquez

School of Law and Governance

University of San Carlos

Cebu City, Philippines

ISABEL LUCHIE C. GUIMARY

1. Sonza vs. ABS-CBN, G.R. No. 138051, June 10, 2004

III. HIRING OF EMPLOYEE

1. PT&T vs. NLRC, 272 SCRA 596 [1997]

IV. WAGES & WAGE RATIONALIZATION ACT

VI. WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING

VII. PAYMENT OF WAGES

VIII. CONDITIONS OF EMPLOYMENT

IX. MINIMUM LABOR STANDARD BENEFITS

X. Other Special Benefits

I. THE APPLICABLE LAWS ......................................................................................... 9

II. BASIC PRINCIPLES ................................................................................................. 9

III. HIRING OF EMPLOYEE ...................................................................................... 71

IV-A. VIOLATION OF WAGE ORDER ................................................................... 81

V. WAGE ENFORCEMENT AND RECOVERY ................................................... 111

VI. WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING

VII. PAYMENT OF WAGES ..................................................................................... 144

VIII. CONDITIONS OF EMPLOYMENT .............................................................. 149

IX. MINIMUM LABOR STANDARD BENEFITS................................................ 164

X. OTHER SPECIAL BENEFITS .............................................................................. 198

XI. JURISDICTION OF LABOR ARBITER ........................................................... 226

XII. 2011 NLRC RULES OF PROCEDURE ............................................................. 226

I. THE APPLICABLE LAWS

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

On April 1, 1996, Sonza wrote a letter to ABS-CBN addressed to President

ISSUE: Whether SONZA is an employee of ABS-CBN or an independent

SUPREME COURT RULING

The existence of an employer-employee relationship could be established if

a) The selection and engagement of the employee;

The last element (control test) is the most important element.

Independent contractors often present themselves to possess unique skills,

ANGELITO L. LAZARO, Proprietor of Royal Star Marketing, petitioner, vs.

[G. R. No. 138254 July 30, 2004]

Among the respondents was herein petitioner Angelito L. Lazaro

As such, Laudato could not be deemed an employee of Royal Star while

ISSUE: Whether respondent is an employee, which entitles her to be under the

SUPREME COURT RULING

The Supreme Court held that Laudato is an employee of Royal Star

The relevant factor remains whether the "employer" controls or has

PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs. RICARDO

[G.R. No. 157214 June 7, 2005]

Philippine Global Communications Inc. is a corporation engaged in the

SUPREME COURT RULING

Moreover, there is no element of control. PHILCOMM had no control over

ABS-CBN BROADCASTING CORPORATION, petitioner, vs. MARLYN

[G.R. No. 164156 September 26, 2006]

Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan

Respondents countered that they were engaged by respondent ABS-CBN as

ISSUE: Whether respondents are regular employees.

Supreme Court ruled that the respondents are regular employees.

What determines whether a certain employment is regular or otherwise is the

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

ANGELINA FRANCISCO, Petitioner, vs. NATIONAL LABOR RELATIONS

[G.R. No. 170087 August 31, 2006]

ISSUE: Whether an employer-employee relationship exists.