TOYOTA MOTOR PHILS. WORKERS V.

NLRC 537 SCRA 171 (2007)

FACTS: Toyota Motor Philippines Corporation Workers Association (Union) and its
dismissed officers and members seek to set aside the decision declaring illegal the
strikes staged by the Union and upholding the dismissal of the 227 Union officers and
members. On the other hand, Toyota prays for the recall of the award of severance
compensation to the 227 dismissed employees.
1. The Union is a legitimate labor organization duly registered with the DOLE and is
the sole and exclusive bargaining agent of all Toyota rank and file employees.
2. Med-Arbiter Order certified the Union as the sole and exclusive bargaining agent
of all the Toyota rank and file employees. Toyota challenged said Order via an
appeal to the DOLE Secretary.
3. The Union submitted its CBA proposals to Toyota, but the latter refused to
negotiate in view of its pending appeal. Consequently, the Union filed a notice of
strike based on Toyotas refusal to bargain.
4. 135 Union officers and members failed to render the required overtime work, and
instead marched to and staged a picket in front of the BLR office. The Union also
requested that its members be allowed to be absent on February 22, 2001 to
attend the hearing and instead work on their next scheduled rest day. This
request however was denied by Toyota.
5. Despite denial of the Unions request, more than 200 employees staged mass
actions to protest the partisan and anti-union stance of Toyota.
6. Due to the deliberate absence of a considerable number of employees Toyota
experienced acute lack of manpower in its manufacturing and production lines,
and was unable to meet its production goals resulting in huge losses.
7. Toyota terminated the employment of 227 employees for participation in
concerted actions in violation of its Code of Conduct and for misconduct under
Article 282 of the Labor Code.
ISSUE: WON the mass actions committed by the Union on different occasions are
illegal strikes.
HELD: The Court affirmed the decision of NLRC which held that the strike was illegal
but deleted the grant of severance compensation.
The protest actions undertaken by the Union officials and members on February 21 to
23, 2001 are not valid and proper exercises of their right to assemble and ask
government for redress of their complaints, but are illegal strikes in breach of the Labor
Code. The concerted actions were undertaken without satisfying the prerequisites for a
valid strike under Art. 263 of the Labor Code
With respect to the strikes committed from March 17 to April 12, 2001, those were
initially legal as the legal requirements were met. However, the Union barricaded the
gates of the Bicutan and Sta. Rosa plants and blocked the free ingress to and egress
from the company premises. These strikes were illegal because unlawful means were
employed. The acts of the Union officers and members are in palpable violation of Art.

264(e) which proscribes acts of violence, coercion, or intimidation, or which obstruct the
free ingress to and egress from the company premises.
The individual respondents who staged illegal concerted actions on May 23 and 28,
2001 in contravention of the Order of the DOLE Secretary that no acts should be
undertaken by them to aggravate the already deteriorated situation. While it may be
conceded that there was no work disruption in the two Toyota plants, the Union and its
members picketed and performed concerted actions in front of the Company premises.
This is a patent violation of the assumption of jurisdiction and certification Order of the
DOLE Secretary, which ordered the parties to cease and desist from committing any
act that might lead to the worsening of an already deteriorated situation.
It is high time that employer and employee cease to view each other as adversaries and
instead recognize that theirs is a symbiotic relationship, wherein they must rely on each
other to ensure the success of the business. When they consider only their own selfinterests, and when they act only with their own benefit in mind, both parties suffer from
short-sightedness, failing to realize that they both have a stake in the business. The
employer wants the business to succeed, considering the investment that has been
made. The employee in turn, also wants the business to succeed, as continued
employment means a living, and the chance to better ones lot in life. It is clear then
that they both have the same goal, even if the benefit that results may be greater for
one party than the other. If this becomes a source of conflict, there are various, more
amicable means of settling disputes and of balancing interests that do not add fuel to
the fire, and instead open avenues for understanding and cooperation between the
employer and the employee. Even though strikes and lockouts have been recognized
as effective bargaining tools, it is an antiquated notion that they are truly beneficial, as
they only provide short-term solutions by forcing concessions from one party; but
staging such strikes would damage the working relationship between employers and
employees, thus endangering the business that they both want to succeed. The more
progressive and truly effective means of dispute resolution lies in mediation,
conciliation, and arbitration, which do not increase tension but instead provide relief
from them. In the end, an atmosphere of trust and understanding has much more to
offer a business relationship than the traditional enmity that has long divided the
employer and the employee.

GONZALEZ V. NLRC 313 SCRA169 (1999)

FACTS: Petitioner Gonzales has been a schoolteacher in the Elementary Department
of private respondent Ateneo since 1974.
1. Ateneo Grade School Headmaster, sent a letter informing petitioner of the
complaints of two (2) parents for alleged use of corporal punishment on her
students.
2. It was only two (2) years after the complaints were made that she discovered,
through her students and their parents, that ATENEO was soliciting complainants
to lodge written complaints against her. She wrote a letter to Fr. Oscar Millar,
S.J., demanding that she be formally informed of the complaint and be duly
investigated.
3. An investigative committee organized by Fr. Oscar Millar, S.J., to look into the
alleged use of corporal punishment by petitioner in disciplining her students. She
was duly furnished with the rules of procedure, informed of the schedule of the
hearings, and given copies of the affidavits executed by the students who
testified against her.
4. Petitioner refused to take part in the investigation unless the rules of procedure
laid down by the Committee be revised, contending that the same were violative
of her right to due process. Petitioner specifically objected to the provision which
stated: . . . 3) Counsel for Ms. Lorlene Gonzales shall not directly participate in
the investigation but will merely advise Ms. Gonzales ...
5. Ateneo refused to change the rules of procedure. The Committee commenced
with its investigation without petitioners participation. Private respondent served
a Notice of Termination on petitioner pursuant to the findings and
recommendation of the Committee.
6. Petitioner filed a complaint before the Labor Arbiter for illegal dismissal. Labor
Arbiter found her dismissal illegal for lack of factual basis, although petitioner was
afforded procedural due process respondent institution "failed to establish
substantial evidence as to the guilt of the complainant of the offense charged."
NLRC reversed the decision of the Labor Arbiter and declareed petitioners
dismissal valid and legal
ISSUE: WON the NLRC committed grave abuse of discretion in sustaining as valid and
legal the dismissal of petitioner by private respondent ATENEO.
HELD: The conclusion of the NLRC is unwarranted. Employment is not merely a
contractual relationship; it has assumed the nature of property right. It may spell the
difference whether or not a family will have food on their table, roof over their heads and
education for their children. It is for this reason that the State has taken up measures to
protect employees from unjustified dismissals. It is also because of this that the right to
security of tenure is not only a statutory right but, more so, a constitutional right.
The NLRC, in our view, appears to have skirted several important issues raised by
petitioner foremost of which is the absence of due process. Ample opportunity must be
afforded the employee to defend herself either personally and/or with assistance of a
representative; to know the nature of her offense; and, to cross examine and confront

face to face the witnesses against her. The adamant refusal of the Committee to accede
to this demand resulted in her failure to confront and cross-examine her accusers. This
is not "harping at technicalities" as wrongfully pointed out by the NLRC but a serious
violation of petitioner's statutory and constitutional right to due process that ultimately
vitiated the investigation.
ATENEO failed to prove by substantial evidence that petitioner had inflicted corporal
punishment on her students. Substantial evidence is more than mere scintilla. It means
such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion." The evidence of private respondent did not measure up to this standard. It
relied solely on the witnesses' affidavits with questionable veracity.

CAPITOL MEDICAL CENTER V. MERIS 470 SCRA 125 (2005)

FACTS: Capital Medical Center hired Dr. Meris as in charge of its ISU (Industrial
Service Unit). He has been medical services as the Chief of ISU since 1974 until the
closure of the ISU on April 30, 1992.
1. Dr. Clemente, President and Chairman of the Board sent a notice to Dr. Meris
advising him of the managements decision to abolish the ISU and the
consequent termination of his services as Chief due to the almost extinct
demand for direct medical service by the private and semi-government
corporations in providing health care for their employees; and that such extinct
demand was brought about by the existing trend of industrial companies
allocating their health care requirements to Health Maintenance Organizations
(HMOs) or thru a tripartite arrangement with medical insurance carriers and
designated hospitals.
2. Dr. Meris doubted the reason behind the managements decision to close the
ISU and believe that the ISU was not abolished instead it continued its
operations with Dr. Clemente. The notice of closure was a mere ploy to for his
ouster because of his refusal to retire despite Dr. Clementes prodding to do so.
He then filed a case against Capital Medical and Dr. Clemente for illegal
dismissal and reinstatement with claims for backwages, moral and exemplary
damage plus attorneys fees.
3. Labor Arbiter held that the abolition of ISU was a valid and lawful exercise of
management prerogative and there was convincing evidence that shows ISU
was operating at a loss.
4. On appeal, NLRC held that in the exercise of Capitols Management prerogative,
it had the right to close even if it was not suffering business loss in view of Article
283 of LC and jurisprudence.
5. Dr. Meris elevated the case to the CA which reverse the decision of NLRC and
held that the Capitols evidence failed to meet the standard of sufficient and
adequate proof of loss necessary to justify the abolition, thus this petition.
ISSUE: WON not the CA erred in not upholding the petitioners management
prerogative to abolish the ISU.
HELD: Work is a necessity that has economic significance deserving legal protection.
The social justice and protection to labor provisions in the Constitution dictate so.
Employers are also accorded rights and privileges to assure their self-determination and
independence and reasonable return of capital. This mass of privileges comprises the
so-called management prerogatives. Although they may be broad and unlimited in
scope, the State has the right to determine whether an employers privilege is exercised
in a manner that complies with the legal requirements and does not offend the protected
rights of labor. One of the rights accorded an employer is the right to close an
establishment or undertaking.
The right to close the operation of an establishment or undertaking is explicitly
recognized under the Labor Code as one of the authorized causes in terminating

employment of workers, the only limitation being that the closure must not be for the
purpose of circumventing the provisions on termination of employment embodied in the
Labor Code.
It would indeed be stretching the intent and spirit of the law if a court were to unjustly
interfere in managements prerogative to close or cease its business operations just
because said business operation or undertaking is not suffering from any loss. As long
as the companys exercise of the same is in good faith to advance its interest and
not for the purpose of defeating or circumventing the rights of employees under
the law or a valid agreement, such exercise will be upheld. Clearly then, the right to
close an establishment or undertaking may be justified on grounds other than business
losses but it cannot be an unbridled prerogative to suit the whims of the employer. The
ultimate test of the validity of closure or cessation of establishment or undertaking is that
it must be bona fide in character. And the burden of proving such falls upon the
employer
In the case at bar, Capitol failed to sufficiently prove its good faith in closing the ISU.
Capitol failed, however, to present sufficient and convincing evidence to support such
claim of extinct demand. In fact, the employees of Capitol submitted a petition dated
April 21, 1992 addressed to Dr. Clemente opposing the abolition of the ISU. The
closure of ISU then surfaces to be contrary to the provisions of the Labor Code on
termination of employment. The termination of the services of Dr. Meris not having been
premised on a just or authorized cause, he is entitled to either reinstatement or
separation pay if reinstatement is no longer viable, and to backwages.
Reinstatement, however, is not feasible in case of a strained employer-employee
relationship or when the work or position formerly held by the dismissed employee no
longer exists, as in the instant case. Dr. Meris is thus entitled to payment of separation
pay at the rate of one (1) month salary for every year of his employment, with a fraction
of at least six (6) months being considered as one(1) year, and full backwages from the
time of his dismissal from April 30, 1992 until the expiration of his term as Chief of ISU
or his mandatory retirement, whichever comes first.

BRO. LABOR UNITY V. ZAMORA 147 SCRA 49 (1987)

FACTS: The petitioners are workers who have been employed at the San Miguel Parola
Glass Factory since 1961. They worked as "cargadores" or "pahinante" at the SMC
Plant loading, unloading, piling or palleting empty bottles and woosen shells to and from
company trucks and warehouses. At times, they accompanied the company trucks on
their delivery routes.
1. The petitioners first reported for work to Superintendent-in-Charge Camahort.
They were issued gate passes signed by Camahort and were provided by San
Miguel with the tools, equipment and paraphernalia used in the loading,
unloading, piling and hauling operation.
2. Job orders emanated from Camahort. Work at times, exceeded the eight (8) hour
day and necessitated work on Sundays and holidays. For this, they were neither
paid overtime nor compensation for work on Sundays and holidays.
3. The petitioners worked exclusive at the SMC plant, never having been assigned
to other companies or departments of SMC plant, even when the volume of work
was at its minimum.
4. Sometime in January, 1969, the petitioner workers numbering 140 organized
and affiliated themselves with the petitioner union and engaged in union
activities. Believing themselves entitled to overtime and holiday pay, the
petitioners pressed management, airing other grievances such as being paid
below the minimum wage law, inhuman treatment, being forced to borrow at
usurious rates of interest and to buy raffle tickets, coerced by withholding their
salaries, and salary deductions made without their consent. However, their gripes
and grievances were not heeded by the respondents.
5. The complainant union through its officers presented a letter to the respondent
company containing proposals and/or labor demands together with a request for
recognition and collective bargaining. San Miguel refused to bargain with the
petitioner union alleging that the workers are not their employees.
6. On February 20, 1969, all the petitioners were dismissed from their jobs and,
thereafter, denied entrance to respondent company's glass factory despite their
regularly reporting for work. A complaint for illegal dismissal and unfair labor
practice was filed by the petitioners. Thus this petition.
ISSUE: WON an employer-employee relationship exists between petitioners-members
of the "Brotherhood Labor Unit Movement of the Philippines" (BLUM) and respondent
San Miguel Corporation
HELD: Evidence shows there existence of an employer-employee relationship between
petitioner workers and respondent San Miguel Corporation.
In determining the existence of an employer-employee relationship, the elements that
are generally considered are the following: (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 with respect to the means and methods by which the

work is to be accomplished. It. is the called "control test" that is the most important
element.
The respondent asserts that the petitioners are employees of the Guaranteed Labor
Contractor, an independent labor contracting firm.
The existence of an independent contractor relationship is generally established by the
following criteria: "whether or not the contractor is carrying on an independent business;
the nature and extent of the work; the skill required; the term and duration of the
relationship; the right to assign the performance of a specified piece of work; the control
and supervision of the work to another; the employer's power with respect to the hiring,
firing and payment of the contractor's workers; the control of the premises; the duty to
supply the premises tools, appliances, materials and labor; and the mode, manner and
terms of payment" None of the above criteria exists in the case at bar.
Each of the petitioners have worked continuously and exclusively for an average of 7
years for SMC plant. Considering the length of time that the petitioners have worked
with the respondent company, there is justification to conclude that they were engaged
to perform activities necessary or desirable in the usual business or trade of the
respondent, and the petitioners are, therefore regular employee.
The Guaranteed and Reliable Labor contractors have neither substantial capital nor
investment to qualify as an independent contractor under the law. The premises, tools,
equipment and paraphernalia used by the petitioners in their jobs are admittedly all
supplied by respondent company. The alleged contractor's office, which consists of a
space at respondent company's warehouse, table, chair, typewriter and cabinet, are
provided for by respondent SMC. It is only the manpower or labor force which the
alleged contractors supply, suggesting the existence of a "labor only" contracting
scheme prohibited by law.
THE PAYMENT OF WAGES. The amount paid by respondent company to the alleged
independent contractor considers no business expenses or capital outlay of the latter.
Nor is the profit or gain of the alleged contractor in the conduct of its business provided
for as an amount over and above the workers' wages. Instead, the alleged contractor
receives a percentage from the total earnings of all the workers plus an additional
amount corresponding to a percentage of the earnings of each individual worker.
EMPLOYERS POWER OF CONTROL. Documentary evidence presented by the
petitioners establish respondent SMC's right to impose disciplinary measures for
violations or infractions of its rules and regulations as well as its right to recommend
transfers and dismissals of the piece workers. The inter-office memoranda submitted in
evidence prove the company's control over the petitioners.

GRANDTEQ INDUSTRIAL STEEL PRODUCTS V. EDNA MARGALLO, G.R. NO.

181393 (2009)
FACTS: Grandteq is a domestic corporation engaged in the business of selling welding
electrodes, alloy steels, aluminum and copper alloys. Gonzales is the President/Owner
of Grandteq. Grandteq employed Margallo as Sales Engineer beginning 3 August 1999.
1. Margallo availed herself of the car loan program offered to her by Grandteq as a
reward for being "Salesman of the Year." She paid the down payment on a brand
new Toyota Corolla. She paid the half of the amortization of the car and the other
half was paid by Grandteq.
2. Grandteq sent a letter requiring petitioner to provide her written explanation for
allegedly committing: Moonlighting, Sabotage and Breach of trust and confidence
for working with JVM Industrial Supply and Allied Services while being employed
with Grandteq. Responding to the foregoing letter, Margallo contends that she
was only instructed by her superior to deliver the said items.
3. Margallo averred that De Leon asked her to resign, promising that if she did, she
will still be paid her commissions and other benefits as well as be reimbursed her
car loan payment. Relying on De Leons promise, Margallo resigned. Margallo
alleged that she was never paid her money claims. After Margallos resignation,
Grandteq sold her car to Annaliza Estrella, another employee.
4. Margallo filed a complaint before the Labor Arbiter for recovery of sales
commission, cash incentive and car loan payment. Grandteq and Gonzales
insisted that Margallo had no right to the refund of her car loan payments under
the car loan agreement she executed with Grandteq, which expressly provided
that in the event that Margallo resigned or was terminated for cause during the
effectivity of said agreement, her car loan payments would be forfeited in favor of
Grandteq, and Grandteq would regain possession of the car.
5. Labor Arbiter dismissed all her claims. NLRC reversed the previos decision by
grating Margallo her claims for sales commission, reimbursement of her car loan
payments and attorneys fees. Grandteq elevated the case to the CA. Like the
NLRC, Court of Appeals found that Margallo had a right to be reimbursed her car
loan payments, and the terms of the car loan agreement between Margallo and
Grandteq should not be applied for being highly prejudicial to the employees
interest.
ISSUE: WON the CA erred in declaring the car loan agreement between Grandteq and
Margallo, particularly the provision therein on the forfeiture of car loan payments in favor
of Grandteq should Margallo resign from the company, as null and void.
HELD: The provision in the car loan agreement between Grandteq and Margallo which
provides the forfeiture of the car loan payments in favor of Grandteq should Margallo
resign from the company is null and void.
Contracts are respected as the law between the contracting parties. The contracting
parties may establish such stipulations, clauses, terms and conditions as they may

deem convenient, provided they are not contrary to law, morals, good customs, public
order or public policy.
Said provisions plainly are contrary to the fundamental principles of justice and fairness.
It must be remembered that Margallo herself paid for the down payment and her share
in the monthly amortization of the car. The principle that no person may unjustly enrich
oneself at the expense of another is the "basic principles to be observed for the rightful
relationship between human beings and for the stability of the social order. There is
unjust enrichment when a person unjustly retains a benefit at the loss of another, or
when a person retains the money or property of another against the fundamental
principles of justice, equity and good conscience.
The principle against unjust enrichment obliges Grandteq and Gonzales to refund to
Margallo the car loan payments she had made, since she has not actually acquired the
car. To relieve Grandteq and Gonzales of their obligation to reimburse Margallo would,
indeed, be to sanction unjust enrichment in favor of the first two and cause unjust
poverty to the latter.
The Court rigorously disapproves contracts that demonstrate a clear attempt to exploit
the employee and deprive him of the protection sanctioned by both the Constitution and
the Labor Code. The Constitution and the Labor Code mandate the protection of labor.
Hence, as a matter of judicial policy, this Court has, in a number of instances, leaned
backwards to protect labor and the working class against the machinations and
incursions of their more financially entrenched employers.
Although not strictly a labor contract, the car loan agreement herein involves a benefit
extended by the employers, Grandteq and Gonzales, to their employee, Margallo. It
should benefit, and not unduly burden, Margallo. The Court cannot, in any way, uphold
a car loan agreement that threatens the employee with the forfeiture of all the car loan
payments he/she had previously made, plus loss of the possession of the car, should
the employee wish to resign; otherwise, said agreement can then be used by the
employer as an instrument to either hold said employee hostage to the job or punish
him/her for resigning.

SAN MIGUEL V. ABALLA, 462 SCRA 392 (2005)

FACTS: Petitioner San Miguel Corporation (SMC) and Sunflower Multi-Purpose
Cooperative (Sunflower), entered into a one-year Contract of Services commencing on
January 1, 1993, to be renewed on a month to month basis until terminated by either
party. The pertinent provisions of the contract are:
a. The cooperative agrees and undertakes to perform and/or provide for the
company, on a non-exclusive basis for a period of one year the following
services for the Bacolod Shrimp Processing Plant: Messengerial/Janitorial,
Shrimp Harvesting/Receiving, Sanitation/Washing/Cold Storage
b. There is no employer-employee relationship between the company and
the cooperative, or the cooperative and any of its members, or the
company and any members of the cooperative.
1. Pursuant to the contract, Sunflower engaged private respondents to, as they did,
render services at SMCs Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod
City. The contract was deemed renewed by the parties every month after its and
private respondents continued to perform their tasks until September 11, 1995.
2. Private respondents filed a complaint before the NLRC, praying to be declared as
regular employees of SMC, with claims for recovery of all benefits and privileges
enjoyed by SMC rank and file employees. Private respondents subsequently filed
an Amended Complaint to include illegal dismissal as additional cause of action
following SMCs closure of its Bacolod Shrimp Processing Plant which resulted in
the termination of their services.
3. SMC filed a Motion to implead Sunflower as Third Party Defendant which,
granted by Labor. In the meantime, SMC filed before the Regional Office at Iloilo
City of the DOLE a Notice of Closure of its aquaculture operations effective on
even date citing serious business losses.
4. Labor Arbiter and NLRC dismissed private respondents complaint for lack of
merit, finding that third party respondent Sunflower was an independent
contractor.
5. The CA reversed the NLRC decision and accordingly found for private
respondents. The CA held that there being a finding of labor-only contracting,
liability must be shouldered either by SMC or [Sunflower] or shared by both. SMC
however should be held solely liable for [Sunflower] became non-existent with
the closure of the aquaculture business of SMC.
6. SMC insists that private respondents are the employees of Sunflower, an
independent contractor. On the other hand, private respondents assert that
Sunflower is a labor-only contractor.
ISSUE: WON Sunflower Multi-Purpose Cooperative is considered an Independent
Contractor or a Labor-only Contractor.
HELD: The test to determine the existence of independent contractorship is whether
one claiming to be an independent contractor has contracted to do the work
according to his own methods and without being subject to the control of the
employer, except only as to the results of the work.

In legitimate labor contracting, the law creates an employer-employee relationship for a

limited purpose, i.e., to ensure that the employees are paid their wages. The principal
employer becomes jointly and severally liable with the job contractor, only for the
payment of the employees wages whenever the contractor fails to pay the same. Other
than that, the principal employer is not responsible for any claim made by the
employees.
In labor-only contracting, the statute creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The contractor is
considered merely an agent of the principal employer and the latter is responsible to the
employees of the labor-only contractor as if such employees had been directly
employed by the principal employer.
The Contract of Services between SMC and Sunflower shows that the parties clearly
disavowed the existence of an employer-employee relationship between SMC and
private respondents. The language of a contract is not, however, determinative of the
parties relationship; rather it is the totality of the facts and surrounding circumstances of
the case. A party cannot dictate, by the mere expedient of a unilateral declaration in a
contract, the character of its business, i.e., whether as labor-only contractor or job
contractor, it being crucial that its character be measured in terms of and determined by
the criteria set by statute.
Sunflower does not have substantial capitalization or investment in the form of tools,
equipment, machineries, work premises and other materials to qualify it as an
independent contractor. The lot, building, machineries and all other working tools
utilized by private respondents in carrying out their tasks were owned and provided by
SMC.
And from the job description provided by SMC itself, the work assigned to private
respondents was directly related to the aquaculture operations of SMC. The nature of
the work performed by private respondents in shrimp harvesting, receiving and packing
formed an integral part of the shrimp processing operations of SMC. As for janitorial
and messengerial services, that they are considered directly related to the principal
Sunflower did not carry on an independent business or undertake the performance of its
service contract according to its own manner and method, free from the control and
supervision of its principal, SMC, its apparent role having been merely to recruit persons
to work for SMC.
Control of the premises in which private respondents worked was by SMC. These tend
to disprove the independence of the contractor. Sunflower did not cater to clients other
than SMC, and with the closure of SMCs Bacolod Shrimp Processing Plant, Sunflower
likewise ceased to exist.

FARLEY FULACHE ET AL VS. ABS-CBN G.R. NO 183810 ( 2010)

FACTS: Petitioners worked as driver/cameramen, drivers, cameramen/editors of
respondent ABS-CBN, filed separate complaints for regularization, unfair labor practice
and several money claims against:
a. They were excluded from the coverage of the CBA as ABS-CBN
considered them temporary and not regular employees in violation of the
Labor Coe
b. Having rendered more than 1 year of service in the company, they should
be recognized as regular employees
1. ABS-CBN, on the other hand, contended that:
a. The production of programs per se is not necessary or desirable in its
business because it could generate profits by selling airtime to blocktimers or through advertising
b. It contracts on a case-to-case basis the services of persons who possess
the necessary talent, skills, training, etc to meet the requirements of its
programs and productions. These contracted persons are called talents
and are considered independent contractors who offer their services to
broadcasting companies
c. Instead of salaries, talents are paid a pre-arranged consideration called
talent fee taken from the budget of a particular program and subject to
10% withholding tax. Talents do not undergo probation. Their services are
engaged for a specific program, production or segment thereof. Their
contracts are terminated once the program, production or segment is
completed
2. LA held that petitioners were regular employees of ABS-CBN and are entitled to
the benefits and privileges of regular employees
3. While the appeal of the regularization case was pending, ABS-CBN dismissed
petitioners for their refusal to sign the contract of employment with service
contractor Able Services. As such, petitioners filed a complaint for illegal
dismissal
4. LA held that petitioners were dismissed due to redundancy which is an
authorized cause under the law
5. NLRC held that petitioners were regular employees and held their dismissal
illegal. There was an employer-employee relationship between petitioners and
ABS-CBN based on the following:
a. Petitioners were engaged to perform activities usually necessary or
desirable in ABS-CBN trade or business
b. The company exercised control over the petitioners in the performance of
their work
c. Petitioners were not paid by the result of their work but on a monthly basis
and were required to do their work in accordance with the companys
schedule
ISSUE: WON petitioners are regular employees

HELD: Respondent alleged that the petitioners were not employees (whose services
therefore could be terminated through dismissal under the Labor Code); they were
independent contractors whose services could be terminated at will, subject only to the
terms of their contracts. To justify the termination of service, the company cited
redundancy as its authorized cause but offered no justificatory supporting evidence. It
merely claimed that it was contracting out the petitioners activities in the exercise of its
management prerogative.
By claiming redundancy as authorized cause for dismissal, it impliedly admitted that the
petitioners were regular employees whose services, by law, can only be terminated for
the just and authorized causes defined under the Labor Code. It similarly forgot that an
exercise of management prerogative can be valid only if it is undertaken in good faith
and with no intent to defeat or circumvent the rights of its employees under the laws or
under valid agreements.

DEVELOPMENT BANK OF THE PHILS V. NLRC 233 SCRA 250 (1994)

FACTS: Private respondents were hired as security guards by Confidential Investigaton
and Security Corp (CISCOR). In the course of their employment, the private
respondents were assigned to secure the premises of CISCORs client, DBP which, in
turn, assigned them to secure the Riverside Mills Corp, one of its properties or assets
1. Private respondents eventually resigned from CISCOR. Thereafter, they claimed
from CISCOR the return of their cash bond and payment of their 13th month pay
and service incentive leave pay
2. For failure of CISCOR to grant their claims, private respondents filed against
CISCOR a complaint for recovery of their cash bond, payment of 13 th month pay
and their service incentive leave pay
3. CISCOR alleged that private respondents failed to secure the required clearance,
their cash bond deposit, proportionate 13th month pay and service incentive leave
pay were withheld to answer for liabilities incurred while private respondents
were guarding Riverside Mills Corp
4. CISCOR filed a motion to implead petitioner bank and averred that in view of its
contract with the petitioner whereby, for a certain service fee, CISCOR undertook
to guard petitioners premises. Under the Labor Code, both CISCOR and
petitioner are jointly and severally liable to pay the salaries and other statutory
benefits due the private respondents
5. Petitioner posits that it is not the employer of private respondents and should
thus not be held liable for the latters claims. In addition, it avers that it was not
properly impleaded as it was CISCOR and Medina who filed the motion to
implead petitioner, and not the private respondents, as complainants therein.
Petitioner even goes further by countering that, assuming arguendo, it was the
indirect employer of private respondents, Article 106 of the Labor Code 4 cannot
be applied to the present case as there was no failure on the part of CISCOR
and Medina, as direct employer, to pay the claims of private respondents, but
only a failure on the part of the latter to present the proper clearance to pave the
way for the payment of the claims.
ISSUE: WON petitioner is jointly and severally liable for the payment of the private
respondents salary
HELD: Nothing in Art 106 indicates that insolvency or unwillingness to pay by the
contractor or direct employer is a prerequisite for the joint and several liability of the
principal or indirect employer. In fact, the rule is that in job contracting, the principal is
jointly and severally liable with the contractor. The statutory basis for this joint and
several liability is set forth in Arts 107 and 109 in relation to Art 106 Labor Code. There
is no doubt that private respondents are entitled to the cash benefits due them. The
petitioner is also, no doubt, liable to pay such benefits because the law mandates the
joint and several liability of the principal and the contractor for the protection of labor.
In Eagle Security Agency Inc v. NLRC, the SC held that joint and several liability of the
contractor and the principal is mandated by the Labor Code to assure compliance of the

provisions therein including the statutory minimum wage (Art 99, Labor Code). The
contractor is made liable by virtue of his status as direct employer. The principal, on the
other hand, is made the indirect employer of the contractors employees for purposes of
paying the employees their wages should the contractor be unable to pay them. This
joint and several liability facilitates, if not guarantees, payment of the workers
performance of any work, task, job or project, thus giving the workers ample protection
as mandated by the 1987 Constitution.

CARINO V. COMMISSION ON HUMAN RIGHTS 204 SCRA 283 (1991)

FACTS: On September 17, 1990, some 800 school teachers, among them members of
the Manila Public School Teachers Association (MPSTA) engaged in a series of mass
concerted actions to dramatize and highlight their plight resulting from the alleged failure
of the public authorities to act upon grievances that had been brought to the latters
attention.
1. Through their representatives, the teachers participating in the mass actions
were served with an order of DECS to return to work in 24 hours or face
dismissal and a memorandum directing the DECS officials concerned to initiate
dismissal proceedings against those who did not comply and to hire their
replacements. Despite this, the mass actions continued into the week
2. Among those who took part in the concerted mass actions were the 8 private
respondents who had agreed to support the non-political demands of MPSTA
3. For failure to heed the return to work order, they were administratively charged
on the basis of the principals report and given 5 days to answer the charges.
They were also preventively suspended for 90 days
4. Private respondents submitted sworn statements to CHR to complain that while
they were participating in peaceful mass actions, they suddenly learned of their
replacements as teachers, allegedly without notice and consequently for reasons
completely unknown to them
5. Through the OSG, DECS secretary sought and was granted leave to file a
motion to dismiss the case alleging that the complaint does not state any cause
of action and that the CHR has no jurisdiction over the case
ISSUE: WON CHR, like a court of justice or even a quasi-judicial agency, has the
jurisdiction or adjudicatory powers, over or the power to try and decide or hear and
determine the case at bar
HELD: The SC held that the CHR has no such power. The most that may be
conceded to the Commission in the way of adjudicative power is that it may investigate,
i.e., receive evidence and make findings of fact as regards claimed human rights
violations involving civil and political rights. But fact finding is not adjudication, and
cannot be likened to the judicial function of a court of justice, or even a quasi-judicial
agency or official. The function of receiving evidence and ascertaining there from the
facts of a controversy is not a judicial function, properly speaking. To be considered
such, the faculty of receiving evidence and making factual conclusions in a controversy
must be accompanied by the authority of applying the law to those factual conclusions
to the end that the controversy may be decided or determined authoritatively, finally and
definitively, subject to such appeals or modes of review as may be provided by law.
Having merely the power "to investigate," CHR cannot and should not "try and resolve
on the merits" (adjudicate) the matters involved in Striking Teachers More particularly,
the Commission has no power to "resolve on the merits" the question of (a) whether or
not the mass concerted actions engaged in by the teachers constitute and are
prohibited or otherwise restricted by law; (b) whether or not the act of carrying on and

taking part in those actions, and the failure of the teachers to discontinue those actions,
and return to their classes despite the order to this effect by the Secretary of Education,
constitute infractions of relevant rules and regulations warranting administrative
disciplinary sanctions, or are justified by the grievances complained of by them; and (c)
what where the particular acts done by each individual teacher and what sanctions, if
any, may properly be imposed for said acts or omissions.
These are matters undoubtedly and clearly within the original jurisdiction of the
Secretary of Education, being within the scope of the disciplinary powers granted to him
under the Civil Service Law, and also, within the appellate jurisdiction of the Civil
Service Commission.

SAN MIGUEL CORP V. LAYOC 537 SCRA 77 (2007)

FACTS: Respondents were among the supervisory security guards of the Beer Division
of San Miguel Corp. From the commencement of their employment, the respondents
were required to punch their time cards for purposes of determining the time they would
come in and out of the companys work place. They were also availing the benefits for
overtime, holiday and night premium duty through time card punching
1. However, in the early 1990s, SMC embarked on a decentralization program
aimed at enabling the separate divisions of SMC to pursue a more efficient and
effective management of their respective operations
2. As a result, the Beer Division implemented a no time card policy whereby
Supervisory I and II comprised of the supervising security guards of the Beer
Division no longer required to punch their time cards. Without prior consultation
with the private respondents, the time cards were ordered confiscated and the
latter were no longer allowed to render overtime work
3. In lieu of the overtime pay and premium pay, the personnel of the Beer Division
affected by the no time card policy were given a 10% across the board increase
on their basic pay while the supervisors who were assigned in the night shift
were given night shift allowance ranging from P2,000 to P2,500
4. Respondents, then, filed a complaint for unfair labor practice, violation of Art 100
Labor Code, and violation of the equal protection clause and due process of law
in relation to par 6-8 Art 32 NCC
5. Respondents alleged that SMC maliciously and fraudulently refused payment of
their overtime, holiday and night premium pay because of the new policy.
Moreover, petitioners had no written authority to stop respondents from punching
their time cards because the alleged memorandum authorizing such stoppage
did not include supervisory security guards
6. Petitioners maintained that respondents were supervisory security guards who
were exempt from the provisions of the Labor Code on hours of work, weekly rest
periods and rest days. Petitioners further asserted that the no time card policy
was a valid exercise of management prerogative and that all supervisors in the
Beer Division were covered the said policy, which classification was distinct and
separate from the other divisions within SMC
7. LA held in favor respondents and noted that petitioner SMC failed to show good
faith in the exercise of their management prerogative in altering company
practice because petitioners changed the terms and conditions of employment
from hours of work rendered to result only with respect to respondents and not
with other supervisors in other departments. NLRC affirmed the same
ISSUE: WON the circumstances in the present case constitute and exception to the
rule that supervisory employees are not entitled to overtime pay
HELD: Both petitioners and respondents agree that respondents are supervising
security guards and, thus, managerial employees. The dispute lies on whether
respondents are entitled to render overtime work and receive overtime pay despite the
institution of the "no time card policy" because (1) SMC previously allowed them to

render overtime work and paid them accordingly, and (2) supervising security guards in
other SMC divisions are allowed to render overtime work and receive the corresponding
overtime pay.
Art 82 Labor Code states that the provisions of the Labor Code on working conditions
and rest periods shall not apply to managerial employees. The other provisions in the
Title include normal hours of work (Art 83), hours worked (Arte 84), meal periods (Art
85), night shift differential (Art 86), overtime work (Art 87), under time not offset by
overtime (Art 88), emergency overtime work (Art 89), and computation of additional
compensation (Art 90). It is thus clear that, generally, managerial employees such as
respondents are not entitled to overtime pay for services rendered in excess of eight
hours a day. Respondents failed to show that the circumstances of the present case
constitute an exception to this general rule.
Respondents assert that Art 100 Labor Code prohibits the elimination or diminution of
benefits. However, contrary to the nature of benefits, petitioners did not freely give the
payment for overtime work to respondents. Petitioners paid respondents overtime pay
as compensation for services rendered in addition to the regular work hours.
Respondents rendered overtime work only when their services were needed after their
regular working hours and only upon the instructions of their superiors. Respondents
even differ as to the amount of overtime pay received on account of the difference in the
additional hours of services rendered.
The "no time card policy" affecting all of the supervisory employees of the Beer Division
is a valid exercise of management prerogative. The "no time card policy" undoubtedly
caused pecuniary loss to respondents. However, petitioners granted to respondents and
other supervisory employees a 10% across-the-board increase in pay and night shift
allowance, in addition to their yearly merit increase in basic salary, to cushion the
impact of the loss. So long as a company's management prerogatives are exercised in
good faith for the advancement of the employer's interest and not for the purpose of
defeating or circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold them.

OLLENDORF V. ABRAHAMSON 38 PHIL 585 (1918)

FACTS: Plaintiff Ollendorf is engaged in the business of manufacturing ladies
embroidered underwear for export in the Philippines. He imports the material from
which is underwear is made and adopts decorative designs which are embroidered
upon it by Filipino needle workers from patterns selected and supplied by him. Most of
the embroiderers employed by plaintiff are under contract to work for plaintiff
exclusively.
1. In 1915, plaintiff and defendant Abrahamson entered into a contract of
employment. One of the provisions in the same stipulated that the defendant may
not enter or engage himself directly or indirectly, nor permit any other person
under his control to enter or engage in similar or competitive business to that of
Ollendorf within the Philippines for 5 years from the execution of the contract
2. While in Ollendorfs establishment, Abrahamson had the opportunity to acquaint
himself with the plaintiffs method of business and business connection. But in
1916, defendant Abrahamson left Olldendorfs company due to ill health and
went back to the US
3. Thereafter, Abrahamson returned to Manila as the manager of the Philippine
Underwear Company. This corporation does not maintain a factory in the
Philippines but sends material and embroidery designs from New York to its local
representative in the Philippines who employs Filipino needle workers to
embroider the designs and garments in their homes.
4. The only difference between the plaintiffs business and defendants company is
the method of doing the finishing workthe manufacture of the embroidered
material into finished garments. Defendant admits that both firms produce the
same class of goods and that they are exported into the same market. It also
appears that defendant has employed in his firm some of the same workers
employed by Ollendorf.
5. Plaintiff filed a complaint praying for preliminary injunction to enjoin the defendant
from engaging in a similar or competitive business to that of the plaintiff. The trial
court held in favor of the plaintiff
ISSUE: WON defendant Abrahamson violated the non-complete clause of the contract
he entered into with plaintiff Ollfendorf
HELD: The business in which defendant is engaged is not only very similar to that of
plaintiff, but that it is conducted in open competition with that business within the
meaning of the contract in question. Defendant himself expressly admitted, on crossexamination, that the firm by which he is now employed puts out the same class of
foods as that which plaintiff is engaged in producing. When two concerns operate in the
same field, produce the same class of goods and dispose them in the same market,
their businesses are of necessity competitive. Defendant having engaged in the
Philippine Islands in a business directly competitive with that of plaintiff, within five years
from the date of his contract of employment by plaintiff, under the terms of which he
expressly agreed that he would refrain from doing that very thing. As such, his conduct
constitutes a breach of that agreement.

PHARMACIA AND UPJOHN INC (NOW PFIZER PHILS) V. ALBAYDA G.R. NO

172724 (2010)
FACTS: Respondent Albayda worked for petitioner Pharmacia as a district sales
manager assigned in the Western Visayas area
1. Respondent received in 1999, a memorandum announcing his reassignment to
the Northern Mindanao sales area. Albayda wrote a letter requesting to remain in
his current assignment as he feared his transfer could me a means to
constructively dismiss him and also he did not want to dislocate his family who
was already based in Bacolod City. His request was denied by the company
2. Albayda requested several times to remain in his current assignment but despite
his request the company denied it. According to Pharmacia, since he had been
performing well in his current assignment, he could apply his sales expertise in
the Northern Mindanao area which was performing dismally. The company
stressed that the transfer was purely a business decision
3. Thereafter, Montilla, VP of Sales and Marketing, met with respondent to discuss
his situation. He was informed that his request to continue his assignment in the
Visayas area was denied since there are currently no vacant positions in the
area. He was given an option to either be assigned in Manila or in Cagayan de
Oro. The company even gave the respondent some time to consider his options
4. Respondent was subsequently served a final notice to work in Manila otherwise
he would be terminated on the basis of being absent without official leave
(AWOL). Despite due notice, respondent refused to report to his new
assignment. As a result, Pharmacia issued a memorandum informing him of their
decision to terminate his services
5. Albayda, then, filed a complaint for constructive dismissal. LA dismissed the case
for lack of merit. NLRC affirmed the same
6. Upon appeal, CA reversed the NLRC decision and remanded to case to NLRC
for proper determination of the petitioners claims
ISSUE: WON respondents transfer to a different sales area constitutes a valid exercise
of management prerogative
HELD: Yes.
Jurisprudence recognizes the exercise of management prerogative to transfer or assign
employees from one office or area of operation to another, provided there is no
demotion in rank or diminution of salary, benefits, and other privileges, and the action is
not motivated by discrimination, made in bad faith, or effected as a form of punishment
or demotion without sufficient cause.
To determine the validity of the transfer of employees, the employer must show that the
transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it
involve a demotion in rank or a diminution of his salaries, privileges and other benefits.
Should the employer fail to overcome this burden of proof, the employee's transfer shall
be tantamount to constructive dismissal.

In the case at bar, Pharmacias transfer of respondent was a valid exercise of a

legitimate management prerogative to maximize business opportunities, growth and
development of personnel and that the expertise of respondent was needed to build the
companys business in Cagayan de Oro City which dismally performed in 1999. The
reassignment of respondent was not a demotion as he will also be assigned as a
District Sales Manager in Mindanao or in Metro Manila and that the notice of his transfer
did not indicate that his emoluments will be reduced.
Furthermore, there is no evidence to prove that the restructuring move of respondent
company was done with ill motives or with malice and bad faith purposely to
constructively terminate respondents employment. Such misinterpretation or misguided
supposition by Albayda is belied by the fact that respondents officers had in several
communications officially sent to complainant, expressly recognized complainants
expertise and capabilities as a top sales man and manager for which reason the
respondent company needs his services and skills to energize the low-performing areas
in order to maximize business opportunities and to afford complainant an opportunity for
further growth and development. Respondent persistently refused instead of taking this
opportunity as a challenge after all, the nature of employment of a sales man or sales
manager is that it is mobile or ambulant being always seeking for possible areas to
market goods and services. He totally forgot the terms and conditions in his
employment contract which stipulated that he may be assigned to any work or
workplace for such period as may be determined by the company and whenever the
operations require such assignment.

DE LEON V. NLRC 176 SCRA 615 (1989)

FACTS: Petitioner De Leon was employed by private respondent La Tondena at the
Maintenance section of its Engineering department in Manila. His work consisted mainly
of painting company building and equipment, and other odd jobs relating to
maintenance. He was paid on a daily basis through petty cash vouchers
1. After service of more than 1 year, petitioner requested from respondent company
that he be included in the payroll of regular workers, instead of being paid
through petty cash vouchers. Private respondents respondents to this request
was to dismiss petitioner from his employment
2. Petitioner then filed a complaint for illegal dismissal, reinstatement and payment
of back wages
3. Private respondent claimed that petitioner was not a regular employee but only a
casual worker hired allegedly only to paint a certain building in the company
premises and that his work as a painter was terminated upon completion of the
painting job
4. LA held in favor of petitioner citing that De Leon was not a merely casual
employee but a regular employee and that his dismissal was prompted by his
request to be included in the list of regular employees and to be paid through the
payroll and is as such, an attempt to circumvent the legal obligations of the
employer towards a regular employee
5. NLRC reversed LA decision and held that De Leon was a casual employee and
there was no illegal dismissal. NLRC based its decision on the finding that
respondent hired petitioner on a causal basis and it was made known to him at
the beginning that he would be so engaged on such and that painting work is not
part of the main business of the company
ISSUE: WON petitioner is a regular or casual employee
HELD: Regular employee
Art 281 Labor Code is clear that an employment is deemed regular when the activities
performed by the employee are usually necessary or desirable in the usual business or
trade of the employer. Not considered regular are the so-called "project employment"
the completion or termination of which is more or less determinable at the time of
employment, such as those employed in connection with a particular construction
project and seasonal employment which by its nature is only desirable for a limited
period of time. However, any employee who has rendered at least one year of service,
whether continuous or intermittent, is deemed regular with respect to the activity he
performed and while such activity actually exists.
The primary standard, therefore, of determining a regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the
usual business or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. The connection
can be determined by considering the nature of the work performed and its relation to

the scheme of the particular business or trade in its entirety. Also, if the employee has
been performing the job for at least one year, even if the performance is not continuous
or merely intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability of that activity
to the business. Hence, the employment is also considered regular, but only with
respect to such activity and while such activity exists.
In the case at bar, the respondent company, which is engaged in the business of
manufacture and distillery of wines and liquors, claims that petitioner was contracted on
a casual basis specifically to paint a certain company building and that its completion
rendered petitioner's employment terminated. This may have been true at the
beginning, and had it been shown that petitioner's activity was exclusively limited to
painting that certain building, respondent company's theory of casual employment would
have been worthy of consideration.
However, during petitioner's period of employment, the records reveal that the tasks
assigned to him included not only painting of company buildings, equipment and tools
but also cleaning and oiling machines, even operating a drilling machine, and other odd
jobs assigned to him when he had no painting job.
The law demands that the nature and entirety of the activities performed by the
employee be considered. In the case of petitioner, the painting and maintenance work
given him manifest a treatment consistent with a maintenance man and not just a
painter, for if his job was truly only to paint a building there would have been no basis
for giving him other work assignments In between painting activities.
Moreover, it is untenable to argue that the painting and maintenance work of petitioner
are not necessary in respondent's business of manufacturing liquors and wines, just as
it cannot be said that only those who are directly involved in the process of producing
wines and liquors may be considered as necessary employees. Otherwise, there would
have been no need for the regular Maintenance Section of respondent company's
Engineering Department, manned by regular employees like Emiliano Tanque Jr.,
whom petitioner often worked with.

DELA CRUZ V. MAERSK FILIPINAS CREWING 551 SCRA 284 (2008)

FACTS: Respondent Elite Shipping A.S. hired petitioner Dela Cruz as third engineer for
its vessel through its local agency, Maersk Filipinas Crewing Inc. The contract for
employment was for a period of 9 months, starting April 1999 with a basic salary of
US$1,004 plus other benefits. Petitioner was subsequently deployed to UAE
1. In June 1999, the chief engineer of the vessel expressed his dissatisfaction over
petitioners performance. He was then informed of his discharge through a notice
2. Petitioner thereafter filed a complaint for illegal dismissal with money claims
equivalent to the unexpired portion of his contract
3. LA ruled that petitioner was dismissed without just cause and due process as the
logbook entry (which respondents claimed to be the 1 st notice to petitioner) was
vague. It failed to expound on or state the details of petitioners shortcomings or
infractions. As such, petitioner was deprived of a real opportunity to explain his
side. NLRC affirmed the same
4. Petitioner also alleged that he was already a regular employee when his services
were terminated. Respondents, on the other hand, insisted that Dela Cruz was
then still on probationary status which entitled them to dismiss him in accordance
with the terms of the CBA
ISSUE: WON petitioner is a regular employee
HELD: Contractual employee
As held in Brent School v. Zamora, seafarers are not covered by the term regular
employment defined in Art 280 Labor Code. Instead, they are considered contractual
employees whose rights and obligations are governed primarily POEA Standard
Employment Contract for Filipino Seamen, the Rules and Regulations governing
Overseas Employment, and more importantly, by RA 8042 (Migrant Workers and
Overseas Filipinos Act) Even the POEA Standard Employment Contract itself mandates
that in no case shall a contract of employment concerning seamen exceed 12 months.
It is an accepted maritime industry practice that the employment of seafarers is for a
fixed period only. The Court acknowledges this to be for the mutual interest of both the
seafarer and the employer. Seafarers cannot stay for a long and indefinite period of time
at sea as limited access to shore activity during their employment has been shown to
adversely affect them. Furthermore, the diversity in nationality, culture and language
among the crew necessitates the limitation of the period of employment.
While petitioner was a registered member of the Associated Marine Officers and
Seamen's Union of the Philippines which had a CBA with respondent Elite Shipping
A.S. providing for a probationary period of employment, the CBA cannot override the
provisions of the POEA Standard Employment Contract. The law is read into, and forms
part of, contracts. And provisions in a contract are valid only if they are not contrary to
law, morals, good customs, public order or public policy.

In using the terms "probationary" and "permanent" vis-a-vis seafarers, what was
really meant was "eligible for re-hire
ILLEGAL DISMISSAL
Procedural due process requires that a seaman must be given a written notice of the
charges against him and afforded a formal investigation where he can defend himself
personally or through a representative before he can be dismissed and disembarked
from the vessel. The employer is bound to furnish him two notices: (1) the written
charge and (2) the written notice of dismissal (in case that is the penalty imposed). This
is in accordance with the POEA Revised Standard Employment Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels
(POEA Revised Standard Employment Terms and Conditions).
Contrary to respondents' claim, the logbook entries did not substantially comply with the
first notice, or the written notice of charge(s). It did not state the particular acts or
omissions for which petitioner was charged. The statement therein that petitioner had
"not been able to live up to the company's SMS job description for 3 rd Engineer" and
that he had "been informed that if he [does] not improve his job/working performance
within [a] short time he will have to be signed off according to CBA Article 1 (7)" was
couched in terms too general for legal comfort.

LACUESTA V. ATENEO DE MANILA 477 SCRA 217 (2005)

FACTS: Respondent ADMU hired, on a contractual basis, petitioner Lacuesta as a part
time lecturer in its English Department for the 2nd semester of school year 1988-1989.
She was subsequently rehired, still on a contractual basis, for the 1 st and 2nd semesters
of 1989-1990. During these 3 years, she was on probation status.
1. In January 1993, the dean informed Lacuesta that her contract would no longer
be renewed because she did not integrate well with the English Department.
2. ADMU president informed Lacuesta that she was not being terminated but her
contract would simply expire. He further explained that as university president he
can only make a permanent appointment upon recommendation of the dean and
confirmation of the committee on Faculty Rank and Permanent Appointment
3. Consequently, petitioner was offered to work as book editor in the University
Press under terms comparable to that of a faculty member from April 1993 to
October 1994 when she decided not to have her contract renewed due to a
severe back problem.
4. In December 1996, petitioner filed a complaint for illegal dismissal with prayer for
reinstatement and back wages
5. LA held in favor of petitioner and ordered her reinstatement
6. Upon appeal, NLRC reversed the decisions and ruled that petitioner was not
illegally dismissed and that her quitclaim was valid
7. Petitioner contends that Art 280 and 281 Labor Code and not the Manual of
Regulations for Private Schools is the applicable law to determine whether or not
an employee in an educational institution has acquired regular or permanent
status
8. ADMU contends that the Manual of Regulations for Private Schools is controlling.
In the Manual, full-time teachers who have rendered three consecutive years of
satisfactory service shall be considered permanent. Respondents also claim that
the petitioner was not terminated but her employment contract expired at the end
of the probationary period. Further, institutions of higher learning, such as
respondent ADMU, enjoy the freedom to choose who may teach according to its
standards. Respondents also argue that the quitclaim, discharge and release by
petitioner are binding and should bar her complaint for illegal dismissal.
ISSUE: WON the Labor Code or Manual of Regulations for Private Schools is
controlling in determining the status of petitioner as probationary or regular employee
HELD: Manual for Private Schools
The Manual of Regulations for Private Schools, and not the Labor Code, determines
whether or not a faculty member in an educational institution has attained regular or
permanent status. Under Policy Instructions No. 11 issued by the Department of Labor
and Employment, the probationary employment of professors, instructors and teachers
shall be subject to the standards established by the Department of Education and
Culture. Said standards are embodied in paragraph 75 (now Section 93) of the Manual
of Regulations for Private Schools.

Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time
teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent. Moreover, for those teaching in the tertiary level, the
probationary period shall not be more than six consecutive regular semesters of
satisfactory service. The requisites to acquire permanent employment, or security of
tenure, are (1) the teacher is a full-time teacher; (2) the teacher must have rendered
three consecutive years of service; and (3) such service must have been satisfactory.
As previously held, a part-time teacher cannot acquire permanent status. Only when
one has served as a full-time teacher can he acquire permanent or regular status. The
petitioner was a part-time lecturer before she was appointed as a full-time instructor on
probation. As a part-time lecturer, her employment as such had ended when her
contract expired. Thus, the three semesters she served as part-time lecturer could not
be credited to her in computing the number of years she has served to qualify her for
permanent status.
In the case at bar, completing the probation period does not automatically qualify her to
become a permanent employee of the university. Petitioner could only qualify to
become a permanent employee upon fulfilling the reasonable standards for permanent
employment as faculty member. Consistent with academic freedom and constitutional
autonomy, an institution of higher learning has the prerogative to provide standards for
its teachers and determine whether these standards have been met. At the end of the
probation period, the decision to re-hire an employee on probation, belongs to the
university as the employer alone.
Upon expiration of their contract of employment, academic personnel on probation
cannot automatically claim security of tenure and compel their employers to renew their
employment contracts. In the instant case, petitioner, did not attain permanent status
and was not illegally dismissed. As found by the NLRC, her contract merely expired.

PANGILINAN ET AL V. GENERAL MILLING CORP G.R. NO 149329 (2004)

FACTS: Respondent General Milling Corp (GMC) is a domestic corporation engaged in
the production and sale of livestock and poultry. It also distributes dressed chicken to
various restaurants and establishments nationwide. As such, it employs hundreds of
employees, some on regular basis and others on casual basis, as emergency workers:
1. Petitioners were hired on different dates as emergency workers under separate
temporary/casual contracts of employment for five months. Most of them
worked as dressers and packagers. Upon the expiration of their contracts, their
services were terminated
2. Petitioners then filed a complaint for illegal dismissal and nonpayment of holiday
pay, 13th month pay, night-differential pay and service incentive leave pay
3. Petitioners alleged that their work as chicken dressers was necessary and
desirable in the usual business of the respondent. They stressed that based on
the nature of their work, they were regular employees of the respondent. Hence,
they could not be dismissed unless for just cause and after due notice
4. LA held in favor of petitioners and declared them as regular employees.
5. NLRC reversed the decision, holding that the petitioners who were temporary or
contractual employees of the respondent, were legally terminated upon the
expiration of their respective contracts. Although their work was necessary and
desirable in the usual business of GMC, they cannot be considered as regular
employees since they agreed to a fixed term. CA affirmed the same
ISSUE: WON petitioners were regular employees of the respondent GMC when their
employment was terminated
HELD: Fixed period employees
A regular employee is one who is engaged to perform activities which are necessary
and desirable in the usual business or trade of the employer as against those which are
undertaken for a specific project or are seasonal. There are two separate instances
whereby it can be determined that an employment is regular: (1) if the particular activity
performed by the employee is necessary or desirable in the usual business or trade of
the employer; and, (2) if the employee has been performing the job for at least a year.
Art 280 Labor Code does not proscribe or prohibit an employment contract with a fixed
period. We furthered that it does not necessarily follow that where the duties of the
employee consist of activities usually necessary or desirable in the usual business of
the employer, the parties are forbidden from agreeing on a period of time for the
performance of such activities. There is thus nothing essentially contradictory between a
definite period of employment and the nature of the employee's duties.
As held in Brent School v. Zamora, stipulations in employment contracts providing for
term employment or fixed period employment are valid when the period were agreed
upon knowingly and voluntarily by the parties without force, duress or improper
pressure, being brought to bear upon the employee and absent any other

circumstances vitiating his consent, or where it satisfactorily appears that the employer
and employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter.
The records reveal that the stipulations in the employment contracts were knowingly
and voluntarily agreed to by the petitioners without force, duress or improper pressure,
or any circumstances that vitiated their consent. Similarly, nothing therein shows that
these contracts were used as a subterfuge by the respondent GMC to evade the
provisions of Arts 279 and 280 Labor Code.
The petitioners were hired as "emergency workers" and assigned as chicken dressers,
packers and helpers at the Cainta Processing Plant. While the petitioners' employment
as chicken dressers is necessary and desirable in the usual business of the respondent,
they were employed on a mere temporary basis, since their employment was limited to
a fixed period. As such, they cannot be said to be regular employees, but are merely
"contractual employees." Consequently, there was no illegal dismissal when the
petitioners' services were terminated by reason of the expiration of their contracts.

CASERES V. UNIVERSAL ROBINA SUGAR MILLING CORP 534 SCRA 356 (2007)
FACTS: Respondent Universal Robina Sugar Mililng Corp (Robina) is a corporation
engaged in the cane sugar milling business. Petitioners worked for Robina from 1989,
and at the start of their employment, they were made to sign a contract of employment
for specific project or undertaking. Petitioners contracts were renewed from time to time
until May 1999 when they were informed that their contracts will not be renewed
1. Petitioners filed a complaint for illegal dismissal, regularization, nonpayment of
service incentive leave pay, and 13th month pay
2. LA dismissed the complaint for not being substantiated with clear and convincing
evidence. NLRC affirmed the same
ISSUE: WON the petitioners are seasonal/project/term employees not regular
employees of respondent
HELD: Seasonal employees
Art 280 Labor Code provides for three kinds of employees: (a) regular employees or
those who have been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; (b) project employees or those
whose employment has been fixed for a specific project or undertaking, the completion
or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season; and (c) casual employees or those who
are neither regular nor project employees.
The principal test for determining whether an employee is a project employee or a
regular employee is whether 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. A project employee is one whose employment has
been fixed for a specific project or undertaking, the completion or termination of which
has been determined at the time of the engagement of the employee or where the work
or service to be performed is seasonal in nature and the employment is for the duration
of the season. A true project employee should be assigned to a project which begins
and ends at determined or determinable times, and be informed thereof at the time of
hiring.
As found by LA and NLRC:
a. Complainants never bothered to deny that they voluntarily, knowingly and willfully
executed the contracts of employment.
b. The very nature of the terms and conditions of complainants' hiring reveals that
they were required to perform phases of special projects for a definite period
after, their services are available to other farm owners. This is so because the
planting of sugar does not entail a whole year operation, and utility works are
comparatively small during the off-milling season.

The fact that petitioners were constantly re-hired does not ipso facto establish that they
became regular employees. Their respective contracts with respondent show that there
were intervals in their employment. These support the conclusion that they were indeed
project employees, and since their work depended on the availability of such contracts
or projects, necessarily the employment of respondents work force was not permanent
but co-terminus with the projects to which they were assigned and from whose payrolls
they were paid. As ruled in Palomares v. NLRC, it would be extremely burdensome for
their employer to retain them as permanent employees and pay them wages even if
there were no projects to work on.
Moreover, even if petitioners were repeatedly and successively re-hired, still it did not
qualify them as regular employees, as length of service is not the controlling
determinant of the employment tenure of a project employee, but whether the
employment has been fixed for a specific project or undertaking, its completion has
been determined at the time of the engagement of the employee. Furthermore, Art 280
states that an employee who has rendered service for at least one (1) year shall be
considered a regular employee, pertains to casual employees and not to project
employees.

HACIENDA FATIMA V. NATIONAL FEDERATION OF SUGARCANE WORKERS 396

SCRA 518 (2003)
FACTS: Workers of Hacienda Fatima organized themselves into a union. However, the
organization was not favored by the petitioners. Thus, when the union was certified as
the collective bargaining representative in the certification elections, petitioners refused
to sit down with the union for the purpose of entering into a collective bargaining
agreement. In protest, complainants staged a strike which was settled upon the signing
of a MOA.
1. Another dispute arose between the parties, it was alleged that respondent union
failed to load 15 wagons, so petitioners reneged on its commitment to sit down
and bargain collectively
2. Petitioners prevented the organizers from entering the premises and starting
September 1991, did not assign any work forcing the union to stage a strike. But
due to the conciliation efforts by the DOLE, another MOA was signed by the
complainants. Among other things, the Agreement aims to resolve the status of
the subject 36 hacienda workers, to determine whether or not the concerned
Union members are hacienda workers or employees
3. The parties subsequently met and a list of employees was submitted. Four
people are deemed not considered employees, one employee shall be verified in
the 1990 payroll and 12 employees are to be reinstated immediately upon
availability of work. However, despite of the Agreement, petitioners again
reneged on its commitment
4. The complaint of the union was lodged to NLRC and CA. The appellate courts
both found that the accusation that the workers refused to work and was choosy
in the kind of work they have to perform are groundless. Further, CA affirmed
that while the work of respondents was seasonal in nature, they were considered
to be merely on leave during the off-season and were therefore still employed by
petitioners. Moreover, the workers enjoyed security of tenure. Any infringement
upon this right was deemed by the CA to be tantamount to illegal dismissal. The
CA likewise concurred with the NLRC's finding that petitioners were guilty of
unfair labor practice.
ISSUE: WON respondents are seasonal or regular employees
HELD: Regular employees
For respondents to be excluded from those classified as regular employees, it is not
enough that they perform work or services that are seasonal in nature. They must have
also been employed only for the duration of one season. The evidence proves the
existence of the first, but not of the second, condition. Evidently, petitioners employed
respondents for more than one season. Therefore, the general rule of regular
employment is applicable.
The test of whether or not an employee is a regular employee has been laid down in De
Leon v. NLRC, in which this Court held: "The primary standard, therefore, of

determining regular employment is the reasonable connection between the particular

activity performed by the employee in relation to the usual trade or business of the
employer.
The test is whether the former is usually necessary or desirable in the usual trade or
business of the employer. The connection can be determined by considering the nature
of the work performed and its relation to the scheme of the particular business or trade
in its entirety. Also if the employee has been performing the job for at least a year, even
if the performance is not continuous and merely intermittent, the law deems repeated
and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such activity exists.
The fact that respondents do not work continuously for one whole year but only for the
duration of the season does not detract from considering them in regular employment
since in a litany of cases this Court has already settled that seasonal workers who are
called to work from time to time and are temporarily laid off during off-season are not
separated from service in said period, but merely considered on leave until reemployed.
Mercado v. NLRC is not applicable to the case at bar. In the earlier case, the workers
were required to perform phases of agricultural work for a definite period of time, after
which their services would be available to any other farm owner. They were not hired
regularly and repeatedly for the same phase/s of agricultural work, but on and off for
any single phase thereof. On the other hand, herein respondents, having performed the
same tasks for petitioners every season for several years, are considered the latter's
regular employees for their respective tasks. Petitioners' eventual refusal to use their
services even if they were ready, able and willing to perform their usual duties
whenever these were available and hiring of other workers to perform the tasks
originally assigned to respondents amounted to illegal dismissal of the latter.