Calalang vs.

Williams
G.R. No. 47800 2 December 1940
FIRST DIVISION, LAUREL (J): 4 CONCUR
Facts:
A resolution by the National Traffice Commission that animal drawn vehicles be prohibited from passing along Rosario Street extending from Plaza
Calderon de la Barca to Dasmariñas Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from
the railroad crossing at Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., for a period of one year from the date of the opening of the
Colgante Bridge to traffic was approved and adopted by the Secretary of Public Works and Communications upon indorsement by the Director of
Public Works pursuant to Commonwealth Act 548 with modifications that Rosario Street and Rizal Avenue be closed to traffic of animal-drawn
vehicles, between the points and during the hours as indicated.
The Mayor of Manila and the Acting Chief of Police of Manila have enforced and caused to be enforced the rules and regulations thus adopted.
Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before the Supreme Court the petition for a writ of
prohibition against A. D. Williams, as Chairman of the National Traffic Commission; Vicente Fragante, as Director of Public Works; Sergio Bayan, as
Acting Secretary of Public Works and Communications; Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of
Police of Manila.
Issue:
Whether the rules and regulations promulgated by the Director of Public Works infringe upon the constitutional precept regarding the promotion of
social justice to insure the well-being and economic security of all the people.
Held:
The promotion of social justice is to be achieved not through a mistaken sympathy towards any given group.
Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. Social justice means the
promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent
elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community,
constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the existence
of all governments on the time-honored principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse units of a society and of
the protection that should be equally and evenly extended to all groups as a combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the health, comfort, and quiet of all persons, and of bringing about "the greatest good
to the greatest number."
Decision:
IN VIEW OF THE FOREGOING, the Writ of Prohibition Prayed for is hereby denied, with costs against the petitioner. So ordered.

INSULAR BANK OF ASIA and AMERICAN EMPLOYEES UNION v. Hon. AMADO INCIONG
G.R. No. L- 52415 October 23, 1984
Ponente: MAKASIAR, J!1
FACTS: On June 20, 1975, the Union filed a complaint against the bank for the payment of holiday pay before the then Department of Labor, NLRC,
Regional Office IV in Manila. Conciliation having failed, and upon the request of both parties, the case was certified for arbitration on July 7, 1975.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a decision granting petitioner’s complaint for payment of holiday pay.  Respondent
bank did not appeal from the said decision. Instead, it complied with the order of the Labor Arbiter by paying their holiday pay up to and including
January 1976.
P.D. 850 was promulgated amending the provisions of the Labor Code on the right to holiday pay. Accordingly by authority of Article 5 of the Labor
Code, the Department of Labor (now Ministry of Labor) promulgated the rules and regulations for the implementation of holidays with pay.
The section reads: “Status of employees paid by the month. — Employees who are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month
whether worked or not.” Policy Instruction 9 was issued by the then Secretary of Labor on April 23,1976, interpreting the said rule. The bank, by
reason of the ruling laid down by the rule implementing Article 94 of the Labor Code and by Policy Instruction 9, stopped the payment of holiday pay
to an its employees.
On August 30,1976, the Union filed a motion for a writ of execution to enforce the arbiter’s decision dated August 1975, which the bank opposed. On
October 18,1976, the Labor Arbiter, instead of issuing a writ of execution, issued an order enjoining the bank to continue paying its employees their
regular holiday pay. On November 17, 1976, the bank appealed from the order of the Labor Arbiter to the NLRC. On 20 June 1978, the NLRC
promulgated its resolution dismissing the bank’s appeal, and ordering the issuance of the proper writ of execution.  On February 21,1979, the bank
filed with the Office of the Minister of Labor a motion for reconsideration/appeal with urgent prayer to stay execution. On August 13,1979 the NLRC
issued an order directing the Chief of Research and Information of the Commission to compute the holiday pay of the IBAA employees from April
1976 to the present in accordance with the Labor Arbiter dated August 25,1975.
On November 10, 1979, the Office of the Minister of Labor, through Deputy Minister Amado Inciong, issued an order setting aside the resolution of
the NLRC dated June 20, 1978, and dismissing the case for lack of merit.
Issue: Whether or not the Ministry of Labor is correct in determining that monthly paid employees are excluded from the benefits of holiday pay?
Held: From Article 92 of the Labor Code, as amended by Presidential Decree 850, and Article 82 of the same Code, it is clear that monthly paid
employees are not excluded from the benefits of holiday pay. However, the implementing rules on holiday pay promulgated by the then Secretary of
Labor excludes monthly paid employees from the said benefits by inserting, under Rule IV, Book Ill of the implementing rules, Section 2, which
provides that: “employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the
statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not.” Even if contemporaneous
construction placed upon a statute by executive officers whose duty is to enforce it is given great weight by the courts, still if such construction is so
erroneous, the same must be declared as null and void.  So long, as the regulations relate solely to carrying into effect the provisions of the law, they
are valid. Where an administrative order betrays inconsistency or repugnancy to the provisions of the Act, the mandate of the Act must prevail and
must be followed. A rule is binding on the Courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory
authority granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom. Further, administrative
interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means.
The Supreme Court granted the petition, set aside the order of the Deputy Minister of Labor, and reinstated the decision of the Labor Arbiter Ricarte
T. Soriano.

SAN MIGUEL CORPORATION vs NATIONAL LABOR RELATIONS COMMISSION and RUSTICO VEGA G.R. No. 80774, May 31, 1988
FACTS:
San Miguel Corporation  sponsored an Innovation Program and under which, the management undertook to grant cash awards to all SMC employee
s  except  higher-ranked personnel  who submit to the Corporation ideas and suggestions found to be beneficial to the Corporation. Rustico Vega the
n submitted a proposal but was not accepted. Vega filed a complaint against the company with the Regional Arbitration Branch No. VII, contending t
hat he should be paid 60,000 since his idea was implemented.  The petitioner in his answer stated that they turned down the proposal for lack of orig
inality. The labor Arbiter dismissed the complaint on the ground that the money claim is not a necessary incident of his employment. Upon appeal of 
Vega to the NLRC, it ordered the petitioner to pay the 60,0000. Petitioner then seek to annul the judgment on the ground that the Labor Arbiter and 
NLRC have no jurisdiction over the case.
ISSUE:
Whether or not  the fact that the money claim of an employee arose out of or in connection with employment relation with his company, is enough to 
bring such money claim within the original and exclusive jurisdiction of Labor Arbiter.
HELD:
No, just because the claim arises from employer-employee relationship, it does not follow that it is automatically within the jurisdiction of the Labor Ar
biter.
The company’s undertaking, though unilateral in origin, could nonetheless ripen into an enforceable contractual (facio ut des)  obligation on the part 
of petitioner Corporation under certain circumstances. Thus, whether or not an enforceable contract, albeit implied arid innominate, had arisen betwe
en petitioner Corporation and private respondent Vega in the circumstances of this case, and if so, whether or not it had been breached, are preemin
ently legal questions, questions not to be resolved by referring to labor legislation and having nothing to do with wages or other terms and conditions 
of employment, but rather having recourse to our law on contracts.
If the 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 th
e general civil law, the jurisdiction over the dispute belongs to the regular courts of justice and not to the Labor Arbiter and the NLRC. In such situatio
ns, resolution of the dispute requires expertise, not in labor management relations nor in wage structures and other terms and conditions of employm
ent, but rather in the application of the general civil law.

MAKATI HABERDASHERY, INC., vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. Nos. 83380-81 November 15, 1989

FACTS:
Individual complainants have been working for petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and
"plantsadoras". They are paid on a piece-rate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their
piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday. Private respondents are
required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday and during peak periods even on Sundays and holidays.
The Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a complaint for (a) underpayment of the basic wage;
(b) underpayment of living allowance; (c) non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of service incentive pay;
(f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5.  
Labor Arbiter rendered judgment in favor of complainants. The NLRC affirmed the arbiter’s decision.
Petitioner urged that the NLRC erred in concluding that an employer-emplyee relationship existed between petitioner and the workers.
ISSUE: Whether employees paid on piece-rate basis are entitled to service incentive pay.
RULING:
The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from the operations of petitioner, when a
customer enters into a contract with the haberdashery or its proprietor, the latter directs an employee who may be a tailor, pattern maker, sewer or
"plantsadora" to take the customer's measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision is actively
manifested in all these aspects — the manner and quality of cutting, sewing and ironing.
Petitioner has reserved the right to control its employees not only as to the result but also the means and methods by which the same are to be
accomplished. That private respondents are regular employees is further proven by the fact that they have to report for work regularly from 9:30 a.m.
to 6:00 or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they report for work before 9:30 a.m. and which is forfeited when they
arrive at or after 9:30 a.m.
The workers did not exercise independence in their own methods, but on the contrary were subject to the control of petitioners from the beginning of
their tasks to their completion. Unlike independent contractors who generally rely on their own resources, the equipment, tools, accessories, and
paraphernalia used by private respondents are supplied and owned by petitioners. Private respondents are totally dependent on petitioners in all
these aspects.
The piece-rate workers in the case at bar are employees which fall under exceptions set forth in the implementing rules and therefore not entitled to
service incentive leave and holiday pay.

PETROPHIL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION, ANSELMO B. ENCARNACION AND GERSHER ENGINEERING
WORKS,respondents.
G.R. No. L-64048 August 29, 1986
Facts:
Anselmo B. Encarnacion, had been working as a casual employee of various job contractors in Petrophil's premises. Respondent Gersher
Engineering Works entered into a service contract with Petrophil and thereafter placed respondent Encarnacion in its payroll. Respondent Gersher
received a letter from Petrophil Corporation complaining about the unsatisfactory performance of respondent Encarnacion. As a result, respondent
Gersher decided to re-assign Encarnacion to Caltex Phil. Inc. with whom said respondent Gersher had also a contract. Respondent Encarnacion
refused to be reassigned to Caltex unless he was made to occupy the same position of warehouseman as in Petrophil Corporation and since the
position available at Caltex was that of equipment maintainer, respondent Encarnacion refused to be transferred. Instead he filed a complaint for
illegal dismissal against respondent Gersher and in the alternative, against petitioner Petrophil Corporation.
The Labor Arbiter rendered judgment holding that respondent Encarnacion was the employee of respondent Gersher Engineering Works and not of
petitioner Petrophil Corporation; that respondent Encarnacion was not illegally dismissed; but that he is entitled to receive from respondent Gersher
the 13th month pay of P340.00 covering the year from March 15, 1976 to March 26, 1977 and the emergency monthly living allowance of P100.00
for the same period. The claim for holiday and vacation leave pay was dismissed for insufficiency of evidence. The judgment further ordered
respondent Gersher to accept respondent Encarnacion back to work to be assigned as helper in any of its contractual jobs (except Petrophil
Corporation) with the same salary and without loss of seniority and other benefits appurtenant to his position.
On appeal, the NLRC rendered judgment modifying the decision of the Labor Arbiter and holding that Encarnacion was the employee of Petrophil
Corporation and not of respondent Gersher and that he had been illegally dismissed.
Issues:
1. Which was the employer of respondent Anselmo B. Encarnacion-petitioner Petrophil Corporation or respondent Gersher Engineering Works?
2. Was Anselmo B. Encarnacion illegally dismissed?
Held:
1. On the first issue raised, the Supreme Court agreed with the findings of the Labor Arbiter that respondent Encarnacion was the employee of
respondent Gersher and not petitioner Petrophil Corporation. This fact was admitted by no less than Gersher in its position paper which it filed with
the Labor Relations Division. The payrolls of respondent Gersher also show that respondent Encarnacion was its employee.
2. Anent the issues of his alleged illegal dismissal and his entitlement to benefits from his employer, We likewise agree with the decision of the Labor
Arbiter that respondent Encarnacion was not dismissed but was only demoted and transferred to Caltex Phil. Inc. because of his failure to observe
proper diligence in his work, and also because of his indolence, habitual tardiness and absences. But following his demotion and transfer,
Encarnacion refused to report for work anymore. Reinstatement of respondent Encarnacion and payment of his money claims should be made by
respondent Gersher Engineering Works, his employer.

San Miguel Brewery Sales Force Union(PTGWO) vs. Hon. Blas Ople G.R. No. L-53515, February 8, 1989
FACTS:
For 3 years, a collective bargaining agreement was being implemented by San Miguel Corporation Sales Force Union (PTGWO), and San Miguel
Corporation. Section 1, of Article IV of which provided “Employees within the appropriate bargaining unit shall be entitled to a basic monthly
compensation plus commission based on their respective sales.”
Then, the company introduced a marketing scheme known as “Complementary Distribution System” (CDS) whereby its beer products were offered
for sale directly to wholesalers through San Miguel’s Sales Offices.
The union alleged that the new marketing scheme violates Sec 1, Art IV f the CBA because the introduction of the CDS would reduce the take home
pay of the salesmen.
ISSUE:
Whether or not the new marketing scheme should be upheld considering that the act was unilaterally made by the employer.
RULING:
Yes, because it is a valid exercise of managerial prerogative. 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.
San Miguel Corporation’s offer to compensate the members of its sales force who will be adversely affected by the implementation of the CDS by
paying them a so-called “back adjustment commission” to make up for the commissions they might lose as a result of the CDS proves the company’s
good faith and lack of intention to bust their union.

CITREK EMPLOYEES LABOY UNION-FFW VS. CITREK ELECTRONICS INC. G.R. NO. 190515, 15 NOVEMBER 2010
Facts:
Cirtek Electronics, Inc. (respondent), an electronics and semi-conductor firm situated inside the Laguna Technopark, had an existing CBA with Cirtek
Employees Labor Union-Federation of Free Workers (petitioner) for the period January 1, 2001 up to December 31, 2005. Prior to the 3rd year of the
CBA, the parties renegotiated its economic provisions but failed to reach a settlement, particularly on the issue of wage increases. Petitioner
thereupon declared a bargaining deadlock and filed a Notice of Strike with the NCMB-Regional Office on April 26, 2004. Respondent, upon the other
hand, filed a Notice of Lockout on June 16, 2004.
While the conciliation proceedings were ongoing, respondent placed seven union officers including the President, a Vice President, the Secretary
and the Chairman of the Board of Directors under preventive suspension for allegedly spearheading a boycott of overtime work. The officers were
eventually dismissed from employment, prompting petitioner to file another Notice of Strike which was, after conciliation meetings, converted to a
voluntary arbitration case. The dismissal of the officers was later found to be legal, hence, petitioner appealed.
In the meantime, as amicable settlement of the CBA was deadlocked, petitioner went on strike on June 20, 2005. By Order dated June 23, 2005, the
Secretary of Labor assumed jurisdiction over the controversy and issued a Return to Work Order which was complied with.
Before the SOLE could rule on the controversy, respondent created a Labor Management Council (LMC) through which it concluded with the
remaining officers of petitioner a Memorandum of Agreement providing for daily wage increases of P6.00 per day effective January 1, 2004 and
P9.00 per day effective January 1, 2005. Petitioner submitted the MOA via Motion and Manifestation to the Secretary of Labor, alleging that the
remaining officers signed the MOA under respondent’s assurance that should the Secretary order a higher award of wage increase, respondent
would comply.
By Orderdated March 16, 2006, the Secretary of Labor resolved the CBA deadlock by awarding a wage increase of from P6.00 to P10.00 per day
effective January 1, 2004 and from P9.00 to P15.00 per day effective January 1, 2005, and adopting all other benefits as embodied in the MOA.
Respondent moved for a reconsideration of the Decision. Reconsideration of the Decision was denied by Resolution of August 12, 2008, hence,
respondent filed a petition for certiorari before the Court of Appeals.
The CA favored respondent.
Issues:
Whether or not the SOLE is authorized to give an award higher than that agreed upon in the MOA;
Whether or not the MOA was entered into and ratified by the remaining officers of petitioner under the condition, which was not incorporated in the
MOA, that respondent would honor the SOLE’s award in the event that it is higher.
Ruling:
The Court resolves both issues in the affirmative. It is well-settled that the SOLE, in the exercise of his power to assume jurisdiction under Art. 263
(g)of the Labor Code, may resolve all issues involved in the controversy including the award of wage increases and benefits. While an arbitral award
cannot per se be categorized as an agreement voluntarily entered into by the parties because it requires the intervention and imposing power of the
State thru the Secretary of Labor when he assumes jurisdiction, the arbitral award can be considered an approximation of a collective bargaining
agreement which would otherwise have been entered into by the parties, hence, it has the force and effect of a valid contract obligation.
That the arbitral award was higher than that which was purportedly agreed upon in the MOA is of no moment. For the SOLE, in resolving the CBA
deadlock, is not limited to considering the MOA as basis in computing the wage increases. He could, as he did, consider the financial documents
submitted by respondent as well as the parties’ bargaining history and respondent’s financial outlook and improvements as stated in its website.
While a contract constitutes the law between the parties, this is so in the present case with respect to the CBA, not to the MOA in which even the
union’s signatories had expressed reservations thereto. But even assuming arguendo that the MOA is treated as a new CBA, since it is imbued with
public interest, it must be construed liberally and yield to the common good.
While the terms and conditions of a CBA constitute the law between the parties, it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a labor contract within the contemplation of Article 1700 of the Civil Code of the Philippines
which governs the relations between labor and capital, is not merely contractual in nature but impressed with public interest, thus, it must yield to the
common good. As such, it must be construed liberally rather than narrowly and technically, and the courts must place a practical and realistic
construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve.
The petition is GRANTED. The Decisions of the Court of Appeals are REVERSED and SET ASIDE and the Order dated March 16, 2006 and
Resolution dated August 12, 2008 of the Secretary of Labor are REINSTATED.
NOTE: A motion for reconsideration was filed by respondent. A resolution to that effect was issued on June 06, 2011 (G.R. No. 190515, 06 June
2011). The SC denied said motion.

PEOPLE VS. BULI-E, 404 SCRA 105, G.R. NO. 123146 JUNE 17, 2003
Facts:
The complainants, upon learning that she was recruiting workers for overseas employment, went to the house of appellant Alona Buli-e in Baguio
City. Buli-e then confirmed that she was, in fact recruiting contract workers for Taiwan and that although she did not have a license of her own to
recruit, her boss, the spouses Jose and Josefa Alolino, who was a licensed recruiter, was in the process of getting her one which would soon be
issued.
Upon this representation, the complainants gave placement fees and other requirements to Buli-e. Buli-e even accompanied the complainants for
their medical check-up in Manila. During their medical check-ups, complainants were able to talk to the spouses Alolino who assured them that they
were licensed to recruit overseas contract workers and that they can deploy workers within two to three months.
After months of waiting and despite compliance with all the requirements, complainants were not deployed abroad as promised prompting them to
check with the POEA office in Baguio City if the appellants were licensed to recruit overseas contract workers. Upon learning that Buli-e and   the
spouses Alolino had no license to recruit in any part of the Cordillera Administrative Region, the complainant filed their complaint with the POEA-
CAR and the Prosecutor’s Office.
The RTC found Buli-e and the spouses Alolino guilty of large scale illegal recruitment and estafa. The Court of Appeals affirmed the same.
Issues:
Whether there was conspiracy between Buli-e and spouses Alolino in the commission of the crimes of large scale illegal recruitment and estafa.
Held:
Yes. A conspiracy may be inferred even though no actual meeting between or among them to coordinate ways and means is proved. Settled is the
rule that if it is proved that two or more persons, aimed, by their acts, at the accomplishment of the same unlawful object, each doing a part so that
their acts, although apparently independent, were in fact connected and cooperative, indicating a closeness of personal association and a
concurrence of sentiment, a conspiracy may be inferred even though no actual meeting between or among them to coordinate ways and means is
proved.

PEOPLE v. PANIS G.R. Nos. L-58674-77 July 11, 1990 Illegal Recruitment
FACTS:
Four informations were filed alleging that Serapio Abug, “without first securing a license from the Ministry of Labor as a holder of authority to operate
a fee-charging employment agency, did then and there wilfully, unlawfully and criminally operate a private fee charging employment agency by
charging fees and expenses (from) and promising employment in Saudi Arabia” to four separate individuals named therein, in violation of Article 16
in relation to Article 39 of the Labor Code. 
Abug filed a motion to quash on the ground that the informations did not charge an offense because he was accused of illegally recruiting only one
person in each of the four informations. Under the proviso in Article 13(b), he claimed, there would be illegal recruitment only “whenever two or more
persons are in any manner promised or offered any employment for a fee. ”
The Motion was subsequently granted. Hence, this certiorari.
ISSUE:
Whether the number of persons dealt with is an essential ingredient of the act of recruitment and placement of workers.
RULING:
As we see it, the proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto but merely to create a
presumption. The presumption is that the individual or entity is engaged in recruitment and placement whenever he or it is dealing with two or more
persons to whom, in consideration of a fee, an offer or promise of employment is made in the course of the “canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring (of) workers. ”
The number of persons dealt with is not an essential ingredient of the act of recruitment and placement of workers. Any of the acts mentioned in the
basic rule in Article 13(b) win constitute recruitment and placement even if only one prospective worker is involved.
The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to two or more
prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words
“shall be deemed” create that presumption.
In the instant case, the word “shall be deemed” should by the same token be given the force of a disputable presumption or of prima facie  evidence
of engaging in recruitment and placement.
At any rate, the interpretation here adopted should give more force to the campaign against illegal recruitment and placement, which has victimized
many Filipino workers seeking a better life in a foreign land, and investing hard- earned savings or even borrowed funds in pursuit of their dream,
only to be awakened to the reality of a cynical deception at the hands of theirown countrymen.
The four informations against the private respondent was reinstated.

ROSA C. RODOLFO, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.

G.R. No. 146964 August 10, 2006
Facts:
Rosa Rodolfo approached the private complainants and invited them to apply for overseas employment in Dubai. Rosa being their neighbor, the
private complainants agreed and went to the Rosa’s office bearing the name, Bayside Manpower Export Specialist. In that office, the applicants who
are now the complainants in this case gave certain amounts to Rosa for processing and other fees. She then told private complainants that they
were scheduled to leave for Dubai on September 8, 1984. However, the applicants were not able to depart on the said date as their employer
allegedly did not arrive. Their departure was rescheduled, but the result was the same. Suspecting that they were being hoodwinked, the
complainants demanded Rosa to return their money. Rosa was not able to return the entire complainant’s money. Tired of excuses, they filed the
present case for illegal recruitment against Rosa.
An officer of the POEA proved that Rosa had no authority to recruit workers for overseas employment. For her defense, Rosa denied ever
approaching the complainants to recruit them for employment in Dubai. On the contrary, it was the private complainants who asked her help in
securing jobs abroad. As a good neighbor and friend, she brought the private complainants to the Bayside Manpower Export Specialist agency
because she knew the owner of the said agency. While Rosa admitted that she received money from the private complainants, she was quick to
point out that she received the same only in trust for delivery to the agency. She denied being part of the agency either as an owner or employee
thereof.
Further, Rosa assailed that the court failed to consider that the provisional receipts she issued indicated that the amounts she collected from the
private complainants were turned over to the agency. She cited People v. Seoron wherein this Court held that the issuance or signing of receipts for
placement fees does not make a case for illegal recruitment.
Issue:
Whether or not Rosa Rodolfo is guilty of illegal recruitment.
Held:
Yes. The elements of the offense of illegal recruitment, which must concur, are: (1) that the offender has no valid license or authority required by law
to lawfully engage in recruitment and placement of workers; and (2) that the offender undertakes any activity within the meaning of recruitment and
placement under Article 13(b), or any prohibited practices enumerated under Article 34 of the Labor Code. If another element is present, that is, the
accused commits the act against three or more persons, individually or as a group, it becomes an illegal recruitment in a large scale.
Article 13 (b) of the Labor Code defines recruitment and placement as [a]ny act of canvassing, enlisting, contracting, transporting, utilizing, hiring or
procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not.
That the first element is present in the case at bar, there is no doubt. Article 38 (a) clearly shows that illegal recruitment is an offense that is
essentially committed by a non-licensee or non-holder of authority. A non-licensee means any person, corporation or entity to which the labor
secretary has not issued a valid license or authority to engage in recruitment and placement; or whose license or authority has been suspended,
revoked or cancelled by the POEA or the labor secretary. A license authorizes a person or an entity to operate a private employment agency, while
authority is given to those engaged in recruitment and placement activities.
The second element is doubtless also present. The act of referral, which is included in recruitment, is the act of passing along or forwarding of an
applicant for employment after an initial interview of a selected applicant for employment to a selected employer, placement officer or bureau. Rosa’s
admission that she brought private complainants to the agency whose owner she knows and her acceptance of fees including those for processing
betrays her guilt. That petitioner issued provisional receipts indicating that the amounts she received from the private complainants were turned over
to the agency does not free her from liability. For the act of recruitment may be for profit or not. It is sufficient that the accused promises or offers for
a fee employment to warrant conviction for illegal recruitment. As the appellate court stated: x x x Sec. 13(b) of P.D. 442 [The Labor Code] does not
require that the recruiter receives and keeps the placement money for himself or herself. For as long as a person who has no license to engage in
recruitment of workers for overseas employment offers for a fee an employment to two or more persons, then he or she is guilty of illegal recruitment.
Why petitioner accepted the payment of fees from the private complainants when, in light of her claim that she merely brought them to the agency,
she could have advised them to directly pay the same to the agency, she proferred no explanation. On petitioners reliance on Seoron case, true, this
Court held that issuance of receipts for placement fees does not make a case for illegal recruitment. But it went on to state that it is rather the
undertaking of recruitment activities without the necessary license or authority that makes a case for illegal recruitment.

C.F. SHARP CREW MANAGEMENT, INC. vs. HON. UNDERSECRETARY JOSE M. ESPANOL
G.R. No. 155903 (September 14, 2007)
FACTS: The petitioner C.F. Sharp Crew Management, Inc. (C.F. Sharp) appeals by certiorari the April 30, 2002 Decision1 of the Court of Appeals
(CA) in CA-G.R. SP No. 53747 and the November 5, 2002 Resolution2 denying its reconsideration.
Louis Cruise Lines (LCL), a foreign corporation duly organized and existing under the laws of Cyprus, entered into a Crewing Agreement3 with
Papadopolous Shipping, Ltd. (PAPASHIP). PAPASHIP in turn appointed private respondent
Rizal International Shipping Services (Rizal) as manning agency in the Philippines, recruiting Filipino seamen for LCL’s vessel.
LCL terminated the Crewing Agreement with PAPASHIP to take effect on December 31, 1996. It then appointed C.F. Sharp as crewing agent in the
Philippines. C.F. Sharp requested for accreditation as the new manning agency of LCL with the (POEA), but Rizal objected on the ground that its
accreditation still existed and would only expire on December 31, 1996.
Pending approval of the accreditation, two (2) principals of LCL arrived in the Philippines and conducted a series of interviews for seafarers at C.F.
Sharp’s office. Rizal reported LCL’s recruitment activities to the POEA on December 9, 1996, and requested an ocular inspection of C.F. Sharp’s
premises.
On December 17, 1996, POEA representatives conducted an inspection and found the two (2) principals C.F. Sharp interviewing and recruiting. The
Inspection Report signed by Corazon Aquino of the POEA and countersigned by Mr. Reynaldo Banawis of C.F. Sharp was thereafter submitted to
the POEA.
On January 2, 1997, Rizal filed a complaint6 for illegal recruitment, cancellation or revocation of license, and blacklisting against LCL and C.F. Sharp
with the POEA
For its part, C.F. Sharp admitted that the two principals conducted interviews at C.F. Sharp’s office, but denied that they were for recruitment and
selection purposes but for LCL’s ex-crew members who had various complaints against Rizal. It belittled the inspection report of the POEA
inspection team claiming that it simply stated that interviews and recruitment were undertaken, without reference to who were conducting the
interview and for what vessels.
The POEA Administrator was not persuaded and found C.F. Sharp liable for illegal recruitment and ordered suspended for a period of six (6) months
or in lieu thereof, it is ordered to pay a fine of P50,000.00 for violation of Art. 29 of the Labor Code, as amended in relation to Sec. 6(b), Rule II, Book
II of the Rules and Regulations Governing Overseas Employment in accordance with the schedule of penalties. Further, the respondent CF Sharp is
as it is hereby ordered suspended for another period of [eighteen] (18) months or to pay the fine of P180,000.00 for committing 9 counts of violation
of Article 29 of the Labor Code as amended in relation to Sec. 2(k), Rule I, Book VI of the Rules and Regulations governing Overseas Employment.
C.F. Sharp elevated the Administrator’s ruling to the Department of Labor and Employment (DOLE), but the AFFIRMED the decision.
A supersedeas bond was posted by the CF Sharp for payment of the fines as imposed above should the CF Sharp opt to pay the fine instead of
undergoing suspension of its license. However, the suspension shall remain in force until such fine is paid, or in the event that the petitioner-
appellant further appeals this Order.
C.F. Sharp’s motion for reconsideration having been denied on February 5, 1999 by the then Undersecretary, Jose M. Espanol, Jr.,
It elevated the case to this Court on petition for certiorari, DOLE Resolution, this Court referred the petition to the CA.
The CA denied C.F. Sharp’s petition for certiorari, holding that C.F. Sharp was already estopped from assailing the Secretary of Labor’s ruling
because it had manifested its option to have the cash bond posted answer for the alternative fines imposed upon it. By paying the adjudged fines,
C.F. Sharp effectively executed the judgment, the CA also agreed with the POEA Administrator and the Secretary of Labor that LCL, along with C.F.
Sharp, undertook recruitment activities without authority.. Finally, it affirmed both labor officials finding that C.F. Sharp violated Article 29 of the Labor
Code and Section 2(k), Rule I, Book VI of the POEA Rules when it appointed Henry Desiderio as agent, without prior approval from the POEA. Thus,
the appellate court declared that the Secretary of Labor acted well within his discretion in holding C.F. Sharp liable for illegal recruitment.
C.F. Sharp filed a motion for reconsideration, but the CA denied it on November 25, 2002.
ISSUE: Whether or not C.F. Sharp is liable for illegal recruitment.
HELD:
C.F. Sharp denies committing illegal recruitment activities in December 1996. It posits that the interviews undertaken by the LCL principals do not
amount to illegal recruitment under Section 6 of Republic Act No. 8042 or the Migrants Workers Act. Further, it contends that the interviews
conducted were not for selection and recruitment purposes, but were in connection with the seamen’s past employment with Rizal, specifically, their
complaints for non-remittance of SSS premiums, withholding of wages, illegal exactions from medical examinations and delayed allotments. It claims
that it was only upon approval of its application for accreditation that the employment contracts were entered into and actual deployment of the
seamen was made. C.F. Sharp, thus, concludes that it cannot be held liable for illegal recruitment.
Article 13(b) of the Labor Code defines recruitment and placement as:
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad whether for profit or not: Provided, That any person or entity which in any manner, offers or promises
for a fee employment to two or more persons shall be deemed engaged in recruitment and placement.
On the basis of this definition and contrary to what C.F. Sharp wants to portray - the conduct of preparatory interviews is a recruitment activity.
This Office cannot conceive of a good reason why LCL should be interested at the time in unearthing alleged violations committed by Rizal Shipping
whose representative status as manning agency was to be terminated in just a few weeks thereafter, spending valuable time and money in the
process. They stood to gain nothing from such taxing exercise involving several hundreds of ex-crew members, which could be handled by
government agencies like the POEA, NLRC, SSS. The observation of the POEA Administrator that the complaints of the crewmen were filed only
after Rizal Shipping filed its complaints with the POEA merely to bolster the defense of CF Sharp, is telling and was just an afterthought.

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. ROSARIO "ROSE" OCHOA, Accused-Appellant. G.R. No. 173792, FIRST DIVISION, August
31, 2011, LEONARDO-DE CASTRO, J
FACTS:
Rosario Ochoa was charged with illegal recruitment in large scale, for having recruited the private complainants for various jobs in either Taiwan or
Saudi Arabia without the having secured the necessary license from the DOLE and for a consideration in the total amount of P124,000.00 as
placement fee. She was also charged with three counts of estafa. The prosecution presented as witnesses Cory Aquino (Cory) of the POEA and
private complainants. Cory authenticated a Certification that Ochoa, in her personal capacity, is neither licensed nor authorized by the POEA to
recruit workers for overseas employment. Ochoa stated under oath that she was employed by AXIL International Services and Consultant (AXIL) as
recruiter.
AXIL had a temporary license to recruit Filipino workers for overseas employment. She admitted recruiting private complainants and receiving from
them the placement and medical fees but claimed that she remitted the money to the manager of AXIL. The RTC found Ochoa guilty beyond
reasonable doubt of the crimes of illegal recruitment in large scale and three counts of estafa, which was affirmed by the CA.
ISSUE:
Should Ochoa be held personally and criminally liable for Illegal Recruitment? (YES)
RULING:
Ochoa could still be convicted of illegal recruitment even if we disregard the POEA certification, for regardless of whether or not Ochoa was a
licensee or holder of authority, she could still have committed illegal recruitment. Section 6 of Republic Act No. 8042 clearly provides that any
person, whether a nonlicensee, non-holder, licensee or holder of authority may be held liable for illegal recruitment for certain acts as enumerated in
paragraphs (a) to (m) thereof. Among such acts, under Section 6(m) of Republic Act No. 8042, is the "[f]ailure to reimburse expenses incurred by the
worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take
place without the worker’s fault." Ochoa committed illegal recruitment as described in the said provision by receiving placement and medical fees
from private complainants, evidenced by the receipts issued by her, and failing to reimburse the private complainants the amounts they had paid
when they were not able to leave for Taiwan and Saudi Arabia, through no fault of their own.
The POEA verification presented by Ochoa during trial pertains only to the status of AXIL as a placement agency with a "limited temporary authority"
which had already expired. The receipts presented by some of the private complainants were issued and signed by Ochoa herself, and did not
contain any indication that Ochoa issued and signed the same on behalf of AXIL. Also, Ochoa was not able to present any proof that private
complainants’ money were actually turned over to or received by AXIL. Under the last paragraph of Section 6 of Republic Act No. 8042, illegal
recruitment shall be considered an offense involving economic sabotage if committed in a large scale, that is, committed against three or more
persons individually or as a group. Here, there are eight private complainants who convincingly testified on Ochoa’s acts of illegal recruitment.

CASE DIGEST: PEOPLE OF THE PHILIPPINES, Petitioner, v. RODOLFO GALLO y GADOT, Accused-Appellant. People v. Gallo (G.R. No.
187730; June 29, 2010).
FACTS: Accused-appellant Gallo and accused Pacardo and Manta together with Mardeolyn and 9 others, were charged with syndicated illegal
recruitment and 18 counts of estafa committed against eighteen complainants, including Dela Caza, Guantero and Sare. The present appeal
concerns solely accused-appellants conviction for syndicated illegal recruitment in Criminal Case No. 02-206293 and for estafa in Criminal Case No.
02-206297. According to the prosecution, Dela Caza was introduced by Panuncio to accused-appellant Gallo, Pacardo, Manta, Mardeolyn, Lulu
Mendanes, Yeo Sin Ung and another Korean national at the office of MPM Agency located in Malate, Manila. Accused-appellant Gallo then
introduced himself as a relative of Mardeolyn and informed Dela Caza that the agency was able to send many workers abroad. Together with
Pacardo and Manta, he also told Dela Caza about the placement fee of PhP150,000 with a down payment of PhP45,000 and the balance to be paid
through salary deduction. With accused-appellants assurance that many workers have been sent abroad, as well as the presence of the 2 Korean
nationals and upon being shown the visas procured for the deployed workers, Dela Caza was convinced to part with his money and paid the agency.
After 2 weeks, the said agency moved and changed their name. After 2 more months of waiting in vain to be deployed, Dela Caza and the other
applicants decided to take action. The first attempt was unsuccessful because the agency again moved to another place. However, with the help of
the Office of Ambassador Seres and the Western Police District, they were able to locate the new address at Carriedo, Manila. The agency
explained that it had to move in order to separate those who are applying as entertainers from those applying as factory workers. Accused-appellant
Gallo, together with Pacardo and Manta, were then arrested. For his defense, accused-appellant denied having any part in the recruitment of Dela
Caza. In fact, he testified that he also applied with MPM Agency for deployment to Korea as a factory worker. RTC and CA convicted the appellants.
ISSUE: Is the accused-appellant guilty of illegal recruitment committed by a syndicate?
HELD: To commit syndicated illegal recruitment, three elements must be established: (1) the offender undertakes either any activity within the
meaning of recruitment and placement defined under Article 13(b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code;
(2) he has no valid license or authority required by law to enable one to lawfully engage in recruitment and placement of workers; and (3) the illegal
recruitment is committed by a group of three (3) or more persons conspiring or confederating with one another.
When illegal recruitment is committed by a syndicate or in large scale, i.e., if it is committed against three (3) or more persons individually or as a
group, it is considered an offense involving economic sabotage. Under Art. 13(b) of the Labor Code, recruitment and placement refers to any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or
advertising for employment, locally or abroad, whether for profit or not.
SC believes that the prosecution was able to establish the elements of the offense sufficiently. The evidence readily reveals that MPM Agency
was never licensed by the POEA to recruit workers for overseas employment. In the instant case, accused-appellant committed the acts enumerated
in Sec. 6 of R.A. 8042. Testimonial evidence presented by the prosecution clearly shows that, in consideration of a promise of foreign employment,
accused-appellant received the amount of Php 45,000.00 from Dela Caza. When accused-appellant made misrepresentations concerning the
agency's purported power and authority to recruit for overseas employment, and in the process, collected money in the guise of placement fees, the
former clearly committed acts constitutive of illegal recruitment.
The elements of estafa in general are: (1) that the accused defrauded another (a) by abuse of confidence, or (b) by means of deceit; and (2) that
damage or prejudice capable of pecuniary estimation is caused to the offended party or third person. Deceit is the false representation of a matter of
fact, whether by words or conduct, by false or misleading allegations, or by concealment of that which should have been disclosed; and which
deceives or is intended to deceive another so that he shall act upon it, to his legal injury. All these elements are present in the instant case: the
accused-appellant, together with the other accused at large, deceived the complainants into believing that the agency had the power and capability
to send them abroad for employment; that there were available jobs for them in Korea as factory workers; that by reason or on the strength of such
assurance, the complainants parted with their money in payment of the placement fees; that after receiving the money, accused-appellant and his
co-accused went into hiding by changing their office locations without informing complainants; and that complainants were never deployed abroad.
As all these representations of the accused-appellant proved false, paragraph 2(a), Article 315 of the RPC is thus applicable.

GR No. 105204

G.R. 167590, G.R. 182978-79,[16] and G.R. 184298-99[17]

(Constitutionality of Section 10, last sentence of 2nd paragraph)

G.R. 182978-79 and G.R. 184298-99 are consolidated cases. Respondent spouses Simplicio and Mila Cuaresma (the Cuaresmas) filed a claim for
death and insurance benefits and damages against petitioners Becmen Service Exporter and Promotion, Inc. (Becmen) and White Falcon Services,
Inc. (White Falcon) for the death of their daughter Jasmin Cuaresma while working as staff nurse in Riyadh, Saudi Arabia.
The Labor Arbiter (LA) dismissed the claim on the ground that the Cuaresmas had already received insurance benefits arising from their daughter's
death from the Overseas Workers Welfare Administration (OWWA). The LA also gave due credence to the findings of the Saudi Arabian authorities
that Jasmin committed suicide.
On appeal, however, the National Labor Relations Commission (NLRC) found Becmen and White Falcon jointly and severally liable for Jasmin's
death and ordered them to pay the Cuaresmas the amount of US$113,000.00 as actual damages. The NLRC relied on the Cabanatuan City Health
Office's autopsy finding that Jasmin died of criminal violence and rape.
Becmen and White Falcon appealed the NLRC Decision to the Court of Appeals (CA).[18] On June 28, 2006 the CA held Becmen and White Falcon
jointly and severally liable with their Saudi Arabian employer for actual damages, with Becmen having a right of reimbursement from White Falcon.
Becmen and White Falcon appealed the CA Decision to this Court.
On April 7, 2009 the Court found Jasmin's death not work-related or work-connected since her rape and death did not occur while she was on duty at
the hospital or doing acts incidental to her employment. The Court deleted the award of actual damages but ruled that Becmen's corporate directors
and officers are solidarily liable with their company for its failure to investigate the true nature of her death. Becmen and White Falcon abandoned
their legal, moral, and social duty to assist the Cuaresmas in obtaining justice for their daughter. Consequently, the Court held the foreign employer
Rajab and Silsilah, White Falcon, Becmen, and the latter's corporate directors and officers jointly and severally liable to the Cuaresmas for: 1)
P2,500,000.00 as moral damages; 2) P2,500,000.00 as exemplary damages; 3) attorney's fees of 10% of the total monetary award; and 4) cost of
suit.
On July 16, 2009 the corporate directors and officers of Becmen, namely, Eufrocina Gumabay, Elvira Taguiam, Lourdes Bonifacio and Eddie De
Guzman (Gumabay, et al.) filed a motion for leave to Intervene. They questioned the constitutionality of the last sentence of the second paragraph of
Section 10, R.A. 8042 which holds the corporate directors, officers and partners jointly and solidarily liable with their company for money claims filed
by OFWs against their employers and the recruitment firms. On September 9, 2009 the Court allowed the intervention and admitted Gumabay, et
al.'s motion for reconsideration.
In G.R. 167590 (the PASEI case), the Quezon City RTC held as unconstitutional the last sentence of the 2nd paragraph of Section 10 of R.A. 8042.
It pointed out that, absent sufficient proof that the corporate officers and directors of the erring company had knowledge of and allowed the illegal
recruitment, making them automatically liable would violate their right to due process of law.
ISSUE:
1. Whether Sections 29 and 30 of R.A 8042 which commands to deregulate the recruitment, placement, and sending or deploying of
overseas workers abroad is unconstitutional. (No)
2. Whether Sections 6, 7, and 9 of R.A. 8042 are unconstitutional. (No)
3. Whether Section 10 and last sentence of 2nd paragraph are unconstitutional. (No)
RULING:
1. The Court DISMISSED the petitions for having become moot and academic. Provisions stated in Sec. 29 and 30 of R.A 8042 have already
been repealed due to passage of R.A 9422.

2. The "illegal recruitment" as defined in Section 6 is clear and unambiguous and, contrary to the RTC's finding, actually makes a distinction
between licensed and non-licensed recruiters. By its terms, persons who engage in "canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers" without the appropriate government license or authority are guilty of illegal recruitment whether or not
they commit the wrongful acts enumerated in that section. On the other hand, recruiters who engage in the canvassing, enlisting, etc. of
OFWs, although with the appropriate government license or authority, are guilty of illegal recruitment only if they commit any of the
wrongful acts enumerated in Section 6.
Apparently, the Manila RTC did not agree that the law can impose such grave penalties upon what it believed were specific acts that were
not as condemnable as the others in the lists. But, in fixing uniform penalties for each of the enumerated acts under Section 6, Congress
was within its prerogative to determine what individual acts are equally reprehensible, consistent with the State policy of according full
protection to labor, and deserving of the same penalties. It is not within the power of the Court to question the wisdom of this kind of
choice. Notably, this legislative policy has been further stressed in July 2010 with the enactment of R.A. 10022[12] which increased even
more the duration of the penalties of imprisonment and the amounts of fine for the commission of the acts listed under Section 7.
 Obviously, in fixing such tough penalties, the law considered the unsettling fact that OFWs must work outside the country's borders and
beyond its immediate protection. The law must, therefore, make an effort to somehow protect them from conscienceless individuals within
its jurisdiction who, fueled by greed, are willing to ship them out without clear assurance that their contracted principals would treat such
OFWs fairly and humanely.

With regard to Section 9 of RA 8042, the Court held that there is nothing arbitrary or unconstitutional in Congress fixing an alternative
venue for violations of Section 6 of R.A. 8042 that differs from the venue established by the Rules on Criminal Procedure. Indeed, Section
15(a), Rule 110 of the latter Rules allows exceptions provided by laws. It is an exception to the rule on venue of criminal actions is,
consistent with that law's declared policy of providing a criminal justice system that protects and serves the best interests of the victims of
illegal recruitment.

3. The Court has already held, pending adjudication of this case, that the liability of corporate directors and officers is not automatic. To make
them jointly and solidarily liable with their company, there must be a finding that they were remiss in directing the affairs of that company,
such as sponsoring or tolerating the conduct of illegal activities.[19] In the case of Becmen and White Falcon,[20] while there is evidence
that these companies were at fault in not investigating the cause of Jasmin's death, there is no mention of any evidence in the case against
them that intervenors Gumabay, et al., Becmen's corporate officers and directors, were personally involved in their company's particular
actions or omissions in Jasmin's case.
As a final note, R.A. 8042 is a police power measure intended to regulate the recruitment and deployment of OFWs. It aims to curb, if not
eliminate, the injustices and abuses suffered by numerous OFWs seeking to work abroad. The rule is settled that every statute has in its
favor the presumption of constitutionality. The Court cannot inquire into the wisdom or expediency of the laws enacted by the Legislative
Department. Hence, in the absence of a clear and unmistakable case that the statute is unconstitutional, the Court must uphold its validity.

Serrano vs. Gallant Maritime Services G.R. No. 167614 March 24, 2009 Non-impairment of Contract Clause, OFW Employment Contract
DECEMBER 4, 2017
FACTS:
For Antonio Serrano, a Filipino seafarer, the last clause in the 5th paragraph of Section 10, Republic Act (R.A.) No. 8042, does not magnify the
contributions of OFWs to national development, but exacerbates the hardships borne by them by unduly limiting their entitlement in case of illegal
dismissal to their lump-sum salary either for the unexpired portion of their employment contract “or for three months for every year of the unexpired
term, whichever is less” (subject clause). Petitioner claims that the last clause violates the OFWs’ constitutional rights in that it impairs the terms of
their contract, deprives them of equal protection and denies them due process.
ISSUE:
Does the 5th paragraph of Section 10, RA 8042 violate the non-impairment of contract clause of the Constitution?
RULING:
NO. The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation, and cannot affect acts or
contracts already perfected; however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof. Thus, the
non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing
acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto.
As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner and
respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the
parties. Rather, when the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of R.A.
No. 8042.

PEOPLE VS DIAZ
GR No. 112175
26 July 1996
FACTS:
Three women (Navarro, Fabricante, and Ramirez) were enrolled at the Henichi Techno Exchange Cultural Foundation in Davao City, studying
Niponggo, when they were informed by their teacher, Mrs. Aplicador, that she knew of a Mr. Paulo Lim who also knew of one Engineer Erwin Diaz
who was recruiting applicants for Brunei.
Accompanied by Mrs. Aplicador, the three women went to Mr. Lim who told them that his children had already applied with Engr. Diaz. The four
women were then accompanied by Mr. Lim to the CIS Detention Center where Engr. Diaz was already being detained. After Navarro and Ramirez
had already given 20k as placement fee, Fabricante went to the office of the POEA and found out the Engr. Diaz was not licensed. Fabricante
informed the two women about her discovery and they all withdrew their applications. Engr. Diaz refunded their payments.
The trial court held Engr. Diaz guilty of illegal recruitment in large scale.
ISSUE:
WON Diaz was engaged in illegal recruitment.
HELD:
YES. Diaz was neither a licensee nor a holder of authority to qualify him to lawfully engage in recruitment and placement activity. Appellant told the
three women that he was recruiting contract workers for abroad, particularly Brunei, and promised them job opportunities if they can produce various
amounts of money for expenses and processing of documents. He manifestly gave the impression to the three women that he had the ability to send
workers abroad. Misrepresenting himself as a recruiter of workers for Brunei, he promised them work for a fee and convinced them to give their
money for the purpose of getting an employment overseas.

G.R. No. 122226 March 25, 1998

UNITED PEPSI-COLA SUPERVISORY UNION (UPSU), petitioner,
vs.
HON. BIENVENIDO E. LAGUESMA and PEPSI-COLA PRODUCTS, PHILIPPINES, INC. respondents.

FACTS: Petitioner is a union of supervisory employees. It appears that on March 20, 1995 the union filed a petition for certification election on behalf
of the route managers at Pepsi-Cola Products Philippines, Inc. However, its petition was denied by the med-arbiter and, on appeal, by the Secretary
of Labor and Employment, on the ground that the route managers are managerial employees and, therefore, ineligible for union membership under
the first sentence of Art. 245 of the Labor Code, which provides:
Ineligibility of managerial employees to join any labor organization; right of supervisory employees. — Managerial employees are not eligible to join,
assist or form any labor organization. Supervisory employees shall not be eligible for membership in a labor organization of the rank-and-file
employees but may join, assist or form separate labor organizations of their own.
Petitioner brought this suit challenging the validity of the order, dismissed.
Hence, this petition. Pressing for resolution its contention that the first sentence of Art. 245 of the Labor Code, so far as it declares managerial
employees to be ineligible to form, assist or join unions, contravenes Art. III, §8 of the Constitution which provides:
The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not
contrary to law shall not be abridged.
ISSUES:
(1) whether the route managers at Pepsi-Cola Products Philippines, Inc. are managerial employees and
(2) whether Art. 245, insofar as it prohibits managerial employees from forming, joining or assisting labor unions, violates Art. III, §8 of the
Constitution.
HELD: YES and NO
As a class, managers constitute three levels of a pyramid: (1) Top management; (2) Middle Management; and (3) First-line Management [also called
supervisors].
FIRST-LINE MANAGERS — The lowest level in an organization at which individuals are responsible for the work of others is called first-line or first-
level management. First-line managers direct operating employees only; they do not supervise other managers. Examples of first-line managers are
the “foreman” or production supervisor in a manufacturing plant, the technical supervisor in a research department, and the clerical supervisor in a
large office. First-level managers are often called supervisors.
MIDDLE MANAGERS — The term middle management can refer to more than one level in an organization. Middle managers direct the activities of
other managers and sometimes also those of operating employees. Middle managers’ principal responsibilities are to direct the activities that
implement their organizations’ policies and to balance the demands of their superiors with the capacities of their subordinates. A plant manager in an
electronics firm is an example of a middle manager.
TOP MANAGERS — Composed of a comparatively small group of executives, top management is responsible for the overall management of the
organization. It establishes operating policies and guides the organization’s interactions with its environment. Typical titles of top managers are “chief
executive officer,” “president,” and “senior vice-president.” Actual titles vary from one organization to another and are not always a reliable guide to
membership in the highest management classification.
A distinction exists between those who have the authority to devise, implement and control strategic and operational policies (top and middle
managers) and those whose task is simply to ensure that such policies are carried out by the rank-and-file employees of an organization (first-level
managers/supervisors). What distinguishes them from the rank-and-file employees is that they act in the interest of the employer in supervising such
rank-and-file employees.
“Managerial employees” may therefore be said to fall into two distinct categories: the “managers” per se, who compose the former group described
above, and the “supervisors” who form the latter group.
#1: It appears that this question was the subject of two previous determinations by the Secretary of Labor and Employment, in accordance with
which this case was decided by the med-arbiter.
To qualify as managerial employee, there must be a clear showing of the exercise of managerial attributes under paragraph (m), Article 212 of the
Labor Code as amended. Designations or titles of positions are not controlling. As to the route managers and accounting manager, we are convinced
that they are managerial employees. Their job descriptions clearly reveal so (Worker’s Alliance Trade Union (WATU) v. Pepsi-Cola Products
Philippines, Inc., Nov. 13, 1991)
This finding was reiterated in Case No. OS-A-3-71-92. entitled In Re: Petition for Direct Certification and/or Certification Election-Route
Managers/Supervisory Employees of Pepsi-Cola Products Phils.Inc.
* doctrine of res judicata certainly applies to adversary administrative proceedings
Thus, we have in this case an expert’s view that the employees concerned are managerial employees within the purview of Art. 212.
At the very least, the principle of finality of administrative determination compels respect for the finding of the Secretary of Labor that route managers
are managerial employees as defined by law in the absence of anything to show that such determination is without substantial evidence to support it.
The Court now finds that the job evaluation made by the Secretary of Labor is indeed supported by substantial evidence. The nature of the job of
route managers is given in a four-page pamphlet, prepared by the company, called “Route Manager Position Description,” the pertinent parts of
which read:
A. BASIC PURPOSE
A Manager achieves objectives through others.
As a Route Manager, your purpose is to meet the sales plan; and you achieve this objective through the skillful MANAGEMENT OF YOUR JOB AND
THE MANAGEMENT OF YOUR PEOPLE.
These then are your functions as Pepsi-Cola Route Manager. Within these functions — managing your job and managing your people — you are
accountable to your District Manager for the execution and completion of various tasks and activities which will make it possible for you to achieve
your sales objectives.
Xxxx
Distinction is evident in the work of the route managers which sets them apart from supervisors in general. Unlike supervisors who basically merely
direct operating employees in line with set tasks assigned to them, route managers are responsible for the success of the company’s main line of
business through management of their respective sales teams. Such management necessarily involves the planning, direction, operation and
evaluation of their individual teams and areas which the work of supervisors does not entail.
The route managers cannot thus possibly be classified as mere supervisors because their work does not only involve, but goes far beyond, the
simple direction or supervision of operating employees to accomplish objectives set by those above them.
While route managers do not appear to have the power to hire and fire people (the evidence shows that they only “recommended” or “endorsed” the
taking of disciplinary action against certain employees), this is because thisis a function of the Human Resources or Personnel Department of the
company.
# 2: Constitutionality of Art. 245
Art.245 is the result of the amendment of the Labor Code in 1989 by R.A. No. 6715, otherwise known as the Herrera-Veloso Law. Unlike the
Industrial Peace Act or the provisions of the Labor Code which it superseded, R.A. No. 6715 provides separate definitions of the terms “managerial”
and “supervisory employees,” as follows:
Art. 212. Definitions. . . .
(m) “managerial employee” is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire transfer,
suspend, lay off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively
recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent
judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book.
The distinction between top and middle managers, who set management policy, and front-line supervisors, who are merely responsible for ensuring
that such policies are carried out by the rank and file, is articulated in the present definition. 30 When read in relation to this definition in Art. 212(m),
it will be seen that Art. 245 faithfully carries out the intent of the Constitutional Commission in framing Art. III, §8 of the fundamental law.
*Framer’s Intent: MR. LERUM. My amendment is on Section 7, page 2, line 19, which is to insert between the words “people” and “to” the following:
WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS. In other words, the section will now read as follows: “The right of the
people WHETHER EMPLOYED BY THE STATE OR PRIVATE ESTABLISHMENTS to form associations, unions, or societies for purposes not
contrary to law shall not be abridged.”
Nor is the guarantee of organizational right in Art. III, §8 infringed by a ban against managerial employees forming a union. The right guaranteed in
Art. III, §8 is subject to the condition that its exercise should be for purposes “not contrary to law.” In the case of Art. 245, there is a rational basis for
prohibiting managerial employees from forming or joining labor organizations.
PETITION is DISMISSED.

Sonza vs ABS-CBN (2004) G.R. 138051

Facts:
In May 1994, ABS-CBN signed an agreement with Mel & Jay Management and Development Corp for a radio and television program. ABS-CBN
agreed to pay for 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.
ABS-CBN would pay the talent fees on the 10th and 25th days of the month.
On April 1996, Sonza wrote a letter to ABS-CBN President Eugenio Lopez III about a recent event concerning his programs and career, and that the
said violation of the company has breached the agreement, thus, the notice of rescission of Agreement was sent.
At the end of the same month, Sonza filed a complaint against ABS-CBN before the DOLE for non-payment of salaries, separation pay, service
incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP) which was
opposed by ABS-CBN on the ground there was no employer-employee relationship existed between the parties.
Issue: WON Sonza was an employee or independent contractor?
Held: There was no employer-employee relationship that existed, but that of an independent contractor.
Case law has consistently held that the elements of an employer-employee relationship are:
(a) The selection and engagement of the employee - ABS-CBN engaged SONZA’s services to co-host its television and radio programs because
of SONZA’s peculiar skills, talent and celebrity status. The specific selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual
relationship.
(b) The payment of wages - ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. All the talent fees
and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBN’s employee, there would be
no need for the parties to stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay" which the law automatically incorporates
into every employer-employee contract.
(c) The power of dismissal - For violation of any provision of the Agreement, either party may terminate their relationship. During the life of the
Agreement, ABS-CBN agreed to pay SONZA’s talent fees as long as "AGENT and Jay Sonza shall faithfully and completely perform each
condition of this Agreement." Even if it suffered severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained
obligated to pay SONZA’s talent fees during the life of the Agreement.
(d) The employer’s power to control the employee on the means and methods by which the work is accomplished - The control test is the most
important test. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse holds true as well – the less control the hirer exercises, the more
likely the worker is considered an independent contractor.
First, ABS-CBN engaged SONZA’s services specifically to co-host the "Mel & Jay" programs. ABS-CBN did not assign any other work to SONZA. To
perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were
outside ABS-CBN’s control. SONZA did not have to render eight hours of work per day. The Agreement required SONZA to attend only rehearsals
and tapings of the shows, as well as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of SONZA’s script. However,
the Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear implication is that SONZA had a free hand on
what to say or discuss in his shows provided he did not attack ABS-CBN or its interests.
Second, The Agreement stipulates that SONZA shall abide with the rules and standards of performance "covering talents" of ABS-CBN. The
Agreement does not require SONZA to comply with the rules and standards of performance prescribed for employees of ABS-CBN. The code of
conduct imposed on SONZA under the Agreement refers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas
(KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics." The KBP code applies to broadcasters, not to employees of
radio and television stations. Broadcasters are not necessarily employees of radio and television stations. Clearly, the rules and standards of
performance referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN.
Lastly, being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an independent contractor can validly
provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. The hiring of
exclusive talents is a widespread and accepted practice in the entertainment industry. This practice is not designed to control the means and
methods of work of the talent, but simply to protect the investment of the broadcast station. The broadcast station normally spends substantial
amounts of money, time and effort "in building up its talents as well as the programs they appear in and thus expects that said talents remain
exclusive with the station for a commensurate period of time." Normally, a much higher fee is paid to talents who agree to work exclusively for a
particular radio or television station. In short, the huge talent fees partially compensates for exclusivity.

MAYON HOTEL & RESTAURANT, PACITA O. PO and/or JOSEFA PO LAM, petitioners,

vs.
ROLANDO ADANA, CHONA BUMALAY, ROGER BURCE, EDUARDO ALAMARES, AMADO ALAMARES, EDGARDO TORREFRANCA,
LOURDES CAMIGLA, TEODORO LAURENARIA, WENEFREDO LOVERES, LUIS GUADES, AMADO MACANDOG, PATERNO LLARENA,
GREGORIO NICERIO, JOSE ATRACTIVO, MIGUEL TORREFRANCA, and SANTOS BROÑOLA, respondents.
FACTS:
Petitioner Mayon Hotel & Restaurant is a single proprietor business registered in the name of petitioner Pacita O. Po,6 whose mother, petitioner
Josefa Po Lam, manages the establishment.7 The hotel and restaurant employed about sixteen (16) employees.
Due to the expiration and non-renewal of the lease contract for the rented space occupied by the said hotel and restaurant at Rizal Street, the hotel
operations of the business were suspended on March 31, 1997.9 The operation of the restaurant was continued in its new location at Elizondo
Street, Legazpi City, while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street, Legazpi City.10Only nine (9) of the
sixteen (16) employees continued working in the Mayon Restaurant at its new site.11 the 16 employees filed complaints for underpayment of wages
and other money claims against petitioners
Executive Labor Arbiter Gelacio L. Rivera, Jr. rendered a Joint Decision in favor of the employees. The Labor Arbiter awarded substantially all of
respondents’ money claims, and held that respondents Loveres, Macandog and Llarena were entitled to separation pay, while respondents Guades,
Nicerio and Alamares were entitled to their retirement pay. The Labor Arbiter also held that based on the evidence presented, Josefa Po Lam is the
owner/proprietor of Mayon Hotel & Restaurant and the proper respondent in these cases.
On appeal to the NLRC, the decision of the Labor Arbiter was reversed, and all the complaints were dismissed.
Respondents filed a motion for reconsideration with the NLRC and when this was denied, they filed a petition for certiorari with the CA. CA reversed
the NLRC decision and the employers filed MR which was denied, hence the case before the SC.
RULING:
1. Ownership by Josefa Po Lam
notwithstanding the certificate of registration in the name of Pacita Po, it is Josefa Po Lam who is the owner/proprietor of Mayon Hotel & Restaurant,
and the proper respondent in the complaints filed by the employees.
First. It is significant that only Josefa Po Lam appeared in the proceedings with the Labor Arbiter. Despite receipt of the Labor Arbiter’s notice and
summons, other notices and Orders, petitioner Pacita Po failed to appear in any of the proceedings with the Labor Arbiter in these cases, nor file her
position paper.26 It was only on appeal with the NLRC that Pacita Po signed the pleadings.27 The apathy shown by petitioner Pacita Po is contrary
to human experience as one would think that the owner of an establishment would naturally be concerned when all her employees file complaints
against her.
Second. Mayon Hotel and Restaurant is a [business name] of an enterprise. While [petitioner] Josefa Po Lam claims that it is her daughter, Pacita
Po, who owns the hotel and restaurant when the latter purchased the same from one Palanos in 1981, Josefa failed to submit the document of sale
from said Palanos to Pacita as allegedly the sale was only verbal although the license to operate said hotel and restaurant is in the name of Pacita
which, despite our Order to Josefa to present the same, she failed to comply.
Third. Respondents] testified that it was Josefa who exercises all the acts and manifestation of ownership of the hotel and restaurant like transferring
employees from the Greatwall Palace Restaurant which she and her husband Roy Po Lam previously owned; it is Josefa to whom the employees
submits (sic) reports, draws money for payment of payables and for marketing, attending (sic) to Labor Inspectors during ocular inspections. Except
for documents whereby Pacita Po appears as the owner of Mayon Hotel and Restaurant, nothing in the record shows any circumstance or
manifestation that Pacita Po is the owner of Mayon Hotel and Restaurant. The least that can be said is that it is absurd for a person to purchase a
hotel and restaurant in the very heart of the City of Legazpi verbally.
Article 221 of the Labor Code is clear: technical rules are not binding, and the application of technical rules of procedure may be relaxed in labor
cases to serve the demand of substantial justice. The rule of evidence prevailing in court of law or equity shall not be controlling in labor cases and it
is the spirit and intention of the Labor Code that the Labor Arbiter shall use every and all reasonable means to ascertain the facts in each case
speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process. Labor laws mandate the speedy
administration of justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process. As to the best
evidence rule raised by the employers (certificate of registration as the best proof of ownership)
To apply the concept of judicial admissions to respondents — who are but lowly employees – would be to exact compliance with technicalities of law
that is contrary to the demands of substantial justice.
Petitioners were also not denied due process, as they were given sufficient opportunity to be heard on the issue of ownership. The essence of due
process in administrative proceedings is simply an opportunity to explain one’s side or an opportunity to seek reconsideration of the action or ruling
complained of.34 And there is nothing in the records which would suggest that petitioners had absolute lack of opportunity to be heard. Obviously,
the choice not to present evidence was made by petitioners themselves.
2. Illegal Dismissal: claim for separation pay
First, petitioners admit that since April 1997, when hotel operations were suspended due to the termination of the lease of the old premises,
respondents Loveres, Macandog, Llarena, Nicerio and Guades have not been permitted to work. Second, even after six months of what should have
been just a temporary lay-off, the same respondents were still not recalled to work. As a matter of fact, the Labor Arbiter even found that as of the
time when he rendered his Joint Decision on July 2000 — or more than three (3) years after the supposed “temporary lay-off,” the employment of all
of the respondents with petitioners had ceased, notwithstanding that the new premises had been completed and the same operated as a hotel with
bar and restaurant. This is clearly dismissal — or the permanent severance or complete separation of the worker from the service on the initiative of
the employer regardless of the reasons therefor.
But they made no mention of any intent to recall these respondents to work upon completion of the new premises.
And even assuming that the closure was due to a reason beyond the control of the employer, it still has to accord its employees some relief in the
form of severance pay.
While we recognize the right of the employer to terminate the services of an employee for a just or authorized cause, the dismissal of employees
must be made within the parameters of law and pursuant to the tenets of fair play.66 And in termination disputes, the burden of proof is always on
the employer to prove that the dismissal was for a just or authorized cause.67 Where there is no showing of a clear, valid and legal cause for
termination of employment, the law considers the case a matter of illegal dismissal.

gr 79664

BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President, JOSELITO LARIÑO, VIVENCIO B. BARTE, SATURNINO
EGERA and SIMPLICIO AYA-AY, petitioners, - versus- NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA CORPORATION, and/or
WILFREDO C. RIVERA, respondents.
G.R. No. 151309, THIRD DIVISION, October 15, 2008, NACHURA, J.
FACTS:
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City. Petitioners Joselito
Lariño, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment helper and
factory workers, respectively, assigned to the Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive
bargaining representative of the rank-andfile employees.
Tryco and the petitioners signed separate Memorand[a] of Agreement (MOA), providing for a compressed workweek schedule to be implemented in
the company effective May 20, 1996. Tryco issued a Memorandumdated April 7, 1997 which directed petitioner Aya-ay to report to the company's
plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18, 1997.[6] Subsequently, through a Memorandum
dated May 9, 1997, Tryco also directed petitioners Egera, Lariño and Barte to report to the company's plant site in Bulacan.
ISSUE:
Whether the transfer orders amount to a constructive dismissal? (NO)
RULING:
Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of
Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of
employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot be denied. This prerogative extends to the management's right to regulate, according
to its own discretion and judgment, all aspects of employment, including the freedom to transfer and reassign employees according to the
requirements of its business. Management's prerogative of transferring and reassigning employees from one area of operation to another in order to
meet the requirements of the business is, therefore, generally not constitutive of constructive dismissal. Thus, the consequent transfer of Tryco's
personnel, assigned to the Production Department was well within the scope of its management prerogative.
In the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the petitioners.
Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents of Metro
Manila and they would incur additional expenses to travel daily from Manila to Bulacan. The Court has previously declared that mere incidental
inconvenience is not sufficient to warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely upon the personal
inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer.

Wack Wack Golf and Country club vs NLRC

GR No. 149793; April 15, 2005
Ponente: Callejo, Sr., J.
FACTS:
A fire destroyed a large portion of the main clubhouse of the Wack Wack Golf and Counrty Club (wack Wack)., including its kitchen. In view of the
reconstruction of the whole clubhouse complex, Wack Wack had to suspend the operations of the Food and Beverages Department which required
the suspension of 54 employees. The Wack Wack Employee’s Union found the suspension arbitrary and constitutive of union-busting, and went to
strike.
The parties soon entered into an agreement and formulated a “special separation benefir/remittance privilege” which contained, among other things,
the following provision:
“4. All qualified employees who may have been separated from the service under the above package shall be considered under a priority basis for
employment by concessionaires and/or contractors, and even by the Club upon full resumption of operations, upon the recommendation of the
UNION. The Club may even persuade an employee-applicant for availment under the package to remain on his/her job, or be assigned to another
position.”
Three employees, namely: Martina B. Cagasan, Carmencita F. Dominguez, and Crisanto Baluyot, Sr. availed of the aforementioned privilege.
Soon after, Wack Wack entered into a Management Contract with Business Staffing and Management, Inc. (BSMI) whereby the latter will provide
management services to Wack Wack. Cagasan, Dominguez, and Baluyot, Sr. were among those hired by BMSI.
Wack Wack also engaged with several contractors which were assigned in various operating functions of the club. Due to these various
management service contracts, BSMI undertook an organizational analysis and manpower evaluation. In the course of the assessment, it was
decided that the services of Cagasan, Domingues, and Baluyot, Sr. were no longer needed. They were then dismissed from service. Later, these
employees individually filed an illegal dismissal complaint against Wack Wack before the NLRC.
The Labor Arbiter dismissed the complaints of Cagasan and Domingues for lack of cause of action. As to Baluyot, Sr., the Arbiter found that his
dismissal was illegal. Upon appeal by Cagasan and Dominguez, the NLRC decided in their favor. It held that BMSI is only a labor-only contractor
and hence, had nothing to do with the grievance of the complainants. It ordered Wack Wack to reinstate Cagasan and Dominguez.
ISSUE:
WoN BSMI is a labor-only contractor.
HELD:
NO. An independent contractor is one who undertakes job contracting, i.e., a person who: (a) carries on an independent business and undertakes
the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the work except as to the results thereof; and (b) has substantial capital or
investment in the form of tools, equipments, machineries, work premises and other materials which are necessary in the conduct of the business.
There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations,
functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided
management services to various industrial and commercial business establishments. Its Articles of Incorporation proves its sufficient capitalization. In
December 1993, Labor Secretary Bienvenido Laguesma, in the case of In re Petition for Certification Election Among the Regular Rank-and-File
Employees Workers of Byron-Jackson (BJ) Services International Incorporated, Federation of Free Workers (FFW)-Byron Jackson Services
Employees Chapter, recognized BSMI as an independent contractor. As a legitimate job contractor, there can be no doubt as to the existence of an
employer-employee relationship between the contractor and the workers.

Jardin v. NLRC (G.R. No. 119268)

Facts:
Petitioners were drivers of private respondent’s taxicabs under the boundary system whose earnings were regularly deducted washing fee for the
taxi units. Petitioners decided to form a labor union to protect their rights and interests on the belief that the deductions made were illegal. Upon
learning, respondent refused to let petitioners drive their taxicabs when they reported for work. Aggrieved, petitioners filed a complaint for illegal
dismissal with the Labor Arbiter but the latter dismissed said complaint. On appeal, the NLRC tribunal declared that petitioners are employees of
private respondent. On reconsideration however, the decision was reversed by the NLRC tribunal and held that no employer-employee relationship
between the parties exists.
Issue:
Whether or not petitioner taxi drivers are employees of respondent company.
Ruling: YES.
In a number of cases decided by this Court, we ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on
the other under the boundary system is that of employer-employee and not of lessor-lessee. In the case of jeepney owners/operators and jeepney
drivers, the former exercise supervision and control over the latter. The management of the business is in the owner’s hands. The owner as holder of
the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated
as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called “boundary” they pay to
the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. We have applied by analogy the
doctrine to the relationships between bus owner/operator and bus conductor, auto-calesa owner/operator and driver, and recently between taxi
owners/operators and taxi drivers. Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform
activities which are usually necessary or desirable in the usual business or trade of their employer.

Manila Golf & Country Club, Inc., vs IAC and Fermin Llamar (1994) G.R. 64948
Facts:
Respondents were caddies and employees of Manila Golf & Country Club who originally filed a petition with the Social Security Commission (SSC)
for coverage and availment of benefits under the Social Security Act. They alleged that although the petitioners were employees of the Manila Golf
and Country Club, a domestic corporation, the latter had not registered them as such with the SSS.
In the case before the SSC, the respondent Club alleged that the petitioners, caddies by occupation, were allowed into the Club premises to render
services as such to the individual members and guests playing the Club's golf course and who themselves paid for such services; that as such
caddies, the petitioners were not subject to the direction and control of the Club as regards the manner in which they performed their work; and
hence, they were not the Club's employees.
Issue: WON there exist an employer-employee relationship between the cadies and the Golf Club?
Held: No existence of employer-employee relationship.
In the very nature of things, caddies must submit to some supervision of their conduct while enjoying the privilege of pursuing their occupation within
the premises and grounds of whatever club they do their work in. For all that is made to appear, they work for the club to which they attach
themselves on sufferance but, on the other hand, also without having to observe any working hours, free to leave anytime they please, to stay away
for as long they like. It is not pretended that if found remiss in the observance of said rules, any discipline may be meted them beyond barring them
from the premises which, it may be supposed, the Club may do in any case even absent any breach of the rules, and without violating any right to
work on their part. All these considerations clash frontally with the concept of employment.
The IAC would point to the fact that the Club suggests the rate of fees payable by the players to the caddies as still another indication of the latter's
status as employees. It seems to the Court, however, that the intendment of such fact is to the contrary, showing that the Club has not the measure
of control over the incidents of the caddies' work and compensation that an employer would possess. Court agree that the group rotation system so-
called, is less a measure of employer control than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is
called simply losing his turn to serve and being assigned instead the last number for the day.
Moreover, as pointed out by petitioner which was never refuted that: has no means of compelling the presence of a caddy. A caddy is not required to
exercise his occupation in the premises of petitioner. He may work with any other golf club or he may seek employment a caddy or otherwise with
any entity or individual without restriction by petitioner.

ALFREDO B. FELIX
vs.
DR. BRIGIDA BUENASEDA, in her capacity as Director, and ISABELO BAÑEZ, JR., in his capacity as Administrator, both of the National Center for
Mental Health, and the CIVIL SERVICE COMMISSION
G.R. No. 109704 January 17, 1995
By Richard Troy A. Colmenares
USA College of Law
Facts
Felix worked as Medical Specialist I for the government [National Center of Mental Health (NCMH)]. He started as a Resident Physician with an
annual salary. Later he got promoted to Senior Resident Physician [permanent], which he held for some time, and thereafter accepted the
appointment as Medical Specialist I [temporary] – which Felix held for three years without remonstrations. Pursuant to an Executive Order [EO No.
119] a general reorganization in the government ensued. In view of this, DoH effected a reorganization, and one of the guidelines [DoH DO No. 478]
made Felix unfit for the position [he was not yet accredited by the Psychiatry Specilaty Board]. His appointment was extended pending review of the
Medical Committee [of NCMH], which eventually recommended non-renewal of Felix’s appointment and informed him of the same. Nevertheless,
Felix was still allowed to continue his service even after he was informed of his termination. The Chief of Service [of NCMH] conducted an
emergency to discuss, inter alia, Felix’s performance. The overall consensus expressed non-renewal of Felix’s contract [due to poor performance,
frequent tardiness and inflexibility]. The matter was referred to CSC which ruled that appointment of Felix can be terminated at any time and that
renewal was within the discretion of the appointing authority [NCMH] by virtue of the incidental power of the power to appoint [the power to renew a
temporary appointment] and further. The removal of Felix has thus been affirmed by CSC. Felix’s appeal was dismissed and his subsequent motion
for reconsideration has been denied by CSC. Petitioner now questions the validity of such removal. Hence, this direct appeal.
Issue(s)
(1). Is the position held by Felix as Resident Physician a permanent one?
(2). Is an employee, after not challenging his appointment from a permanent to a temporary position within a reasonable period, deemed to have
accepted his appointment?
Held
(1). No.
Residency is never meant to be a permanent position. It is a step taken by a physician right after post -graduate internship (and after hurdling the
Medical Licensure Examinations) prior to his recognition as a specialist or sub-specialist in a given field.
To specialize on a medical field [be it Psychiatry or Cardiology], one has to go through a stringent process. This process is to guarantee the
specialist’s minimum standards and skills – which is an assurance to the community that a specialist is not set loose without the basic knowledge
and skills of his specialty as lives are ultimately at stake. The purpose is thus geared towards training the resident physician.
(2). Yes.
Felix’s acceptance as temporary Medical Specialist I for three years was subject to peer and superior evaluation, for which Felix fell short.
Regardless, Felix never questioned his temporary assignment [for three years] until DoH, as a result of his performance evaluation, ordered non-
renewal of his temporary position. In view of his silence to question his appointment from permanent to temporary, warrants the presumption that
Felix has either given up his claim or that he has already settled into the new position, which is the concept of laches, which therefore estops him
from questioning the same [three years later]. Stated otherwise, Felix has abandoned his right to claim to question his conversion from permanent
employee to temporary employee through laches, and henceforth, is deemed to have accepted his appointment from permanent to temporary
position.

R. TRANSPORT CORPORATION vs EJANDRA Case Digest

R. TRANSPORT CORPORATION, petitioner, vs. ROGELIO EJANDRA, respondent. 
G.R. No. 148508 May 20, 2004 
Ponente: CORONA, J.: 
FACTS: 
Private respondent Rogelio Ejandra worked as a bus driver of the petitioner corporation. On January 31, 1996, his license was confiscated for
obstruction of traffic. He immediately reported the incident to his manager, Mr. Oscar Pasquin, who gave him P500 to redeem his license. The
following day, he went to LTO, Guadalupe Branch, to claim it but he was told that it had not yet been turned over by the officer who apprehended
him. He was able to retrieve his license only after a week. 
On February 8, 1996, Ejandra was told that the company was still studying whether to allow him to drive again and also he was accused of causing
damage to the bus he used to drive. Denying the charge, private respondent blamed the person who drove the said bus during his absence,
considering that the damage was sustained during the week that he did not drive the bus. Mr. Pacquin nonetheless told him “Magpahinga ka muna
at tatawagin ka na lang namin kung kailangan ka na para magmaneho. Magbakasyon ka muna, bata.” When respondent asked how long he had to
rest, the manager did not give a definite time. 
Petitioner denied private respondent’s allegations and claimed that private respondent, a habitual absentee, abandoned his job. To contradict private
respondent’s allegation that his license had been confiscated, petitioner asserted that, had it been true, he should have presented an apprehension
report and informed petitioner of his problems with the LTO. But he did not. Petitioner further argued that private respondent was not an employee
because theirs was a contract of lease and not of employment, with petitioner being paid on commission basis. 
On February 23, 1997, the labor arbiter rendered his decision in favor of private respondent which was later affirmed by the NLRC. Petitioner filed in
the Court of Appeals a petition for certiorari which was instantly dismissed for lack of merit. 
ISSUE: 
1. WON the appellate court erred in not finding that private respondent abandoned his work, that petitioner was not the lessor of private respondent;
that, as such, the termination of the contract of lease of services did not require petitioner to respect private respondent’s rights to notice and
hearing; and, that private respondent’s affidavit was hearsay and self-serving. 
2. WON the petitioner is correct in saying that there is no employer-employee relationship and that the parties’ agreement was for a contract of lease
of services. 
3. WON the private respondent, an employee of petitioner, was dismissed for just cause? 
RULING: 
1. No. The court did not agree. The labor arbiter, the NLRC and the Court of Appeals were unanimous in finding that private respondent worked as a
driver of one of the buses of petitioner and was paid on a 10% commission basis. After he was apprehended for a traffic violation, his license was
confiscated. When he informed petitioner’s general manager of such fact, the latter gave him money to redeem his license. He went to the LTO office
everyday but it was only after a week that he was able to get back his license. When he reported back to work, petitioner’s manager told him to wait
until his services were needed again. Considering himself dismissed, private respondent filed a complaint for illegal dismissal against petitioner. We
have no reason to disturb all these factual findings because they are amply supported by substantial evidence. 
2. No. The court did not agree. The court ruled that an employer-employee exist between the petitioner and the private respondent. In its petition
filed before this Court, petitioner invoked our rulings on the right of an employer to dismiss an employee for just cause. Petitioner maintained that
private respondent was justifiably dismissed due to abandonment of work. By adopting said rulings, petitioner impliedly admitted that it was in fact
the employer of private respondent. According to the control test, the power to dismiss an employee is one of the indications of an employer-
employee relationship. Petitioner’s claim that private respondent was legally dismissed for abandonment was in fact a negative pregnant: an
acknowledgement that there was no mutual termination of the alleged contract of lease and that private respondent was its employee. The fact that
petitioner paid private respondent on commission basis did not rule out the presence of an employee-employer relationship. Article 97(f) of the Labor
Code clearly provides that an employee’s wages can be in the form of commissions. 
3. No. The private respondent was illegally dismissed. According to petitioner, private respondent abandoned his job and lied about the confiscation
of his license. To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason
and (2) a clear intention to sever the employer-employee relationship. Mere absence is not sufficient. It is the employer who has the burden of proof
to show a deliberate and unjustified refusal of the employee to resume his employment without any intention of returning. 
In the instant case, petitioner fell short of proving the requisites. To begin with, petitioner’s absence was justified because the LTO, Guadalupe
Branch, did not release his license until after a week. Second, private respondent never intended to sever his employment as he in fact reported for
work as soon as he got his license back. Petitioner offered no evidence to rebut these established facts. Third, labor arbiter Yulo correctly observed
that, if private respondent really abandoned his work, petitioner should have reported such fact to the nearest Regional Office of the Department of
Labor and Employment in accordance with Section 7, Rule XXIII, Book V of Department Order No. 9, series of 1997 (Rules Implementing Book V of
the Labor Code). Petitioner made no such report. 
In addition to the fact that petitioner had no valid cause to terminate private respondent from work, it violated the latter’s right to procedural due
process by not giving him the required notice and hearing. Section 2, Rule XXIII, Book V of Department Order No. 9 provides for the procedure for
dismissal for just or authorized cause: 
SEC. 2. Standards of due process; requirement of notice. – In all cases of termination of employment, the following standards of due process shall
be substantially observed: 
I. For termination of employment based on just causes as defined in Article 282 of the Code: 
(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side; 
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to
respond to the charge, present his evidence or rebut the evidence presented against him; and 
(c ) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination. In case of termination, the foregoing notices shall be served on the employee’s last known address. 
II. For termination of employment as based on authorized causes defined in Article 283 of the Code, the requirements of due process shall be
deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department at least thirty days
before the effectivity of the termination, specifying the ground or grounds for termination. 
III. If termination is brought about by the completion of the contract or phase thereof, no prior notice is required. If the termination is brought about by
the failure of an employee to meet the standards of the employer in case of probationary employment, it shall be sufficient that a written notice is
served the employee within a reasonable time from the effective date of termination.

CORAZON ALMIREZ
VS
INFINITE LOOP TECHNOLOGY CORPORATION
481 SCRA 364 (2006)
Under the control 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.
Petitioner Corazon Almirez was hired by respondent Infinite Loop Technology Corporation (Infinite Loop) to be a Refinery Senior Process Design
Engineer for a specific project starting October 18, 1999 with a guaranty of 12 continuous months of service or until a mutually agreed date.
However, Almirez was later on suspended. Hence, she filed an action before the National Labor Relations Commission (NLRC) against Infinite Loop
and its General Manager/President/co-petitioner Edwin R. Rabino on the ground of breach of contract of employment.
Both the Labor Arbiter and the NLRC ruled that there is an existing employer-employee relationship between Almirez and Infinite Loop since the
latter exercises control over the means and methods used by Almirez in the performance of her duties.
The Court of Appeals ruled that there was no existing employer-employee relationship between the parties since Almirez was hired to render her
professional service only for a specific project.
ISSUE:
Whether or not there is employee-employer relationship between Almirez and Infinite Loop
HELD:
To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, to wit: (1) the manner of
selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the
power of control. Of these four, the last one, the so called “control test” is commonly regarded as the most crucial and determinative indicator of the
presence or absence of an employer-employee relationship.
Under the control 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.
From the earlier-quoted scope of Almirez’ professional services, there is no showing of a power of control over petitioner. The services to be
performed by her specified what she needed to achieve but not on how she was to go about it.
Contrary to the finding of the Labor Arbiter, as affirmed by the NLRC, paragraph No. 6 of the “Scope of [Almirez’] Professional Services” requiring her
to “[m]ake reports and recommendations to the company management team regarding work progress, revisions and improvement of process design
on a regular basis as required by company management team” does not “show that the company’s management team exercises control over the
means and methods in the performance of her duties as Refinery Process Design Engineer.” Having hired Almirez’ professional services on account
of her “expertise and qualifications” as Almirez herself proffers in her Position Paper, the company naturally expected to be updated regularly of her
“work progress,” if any, on the project for which she was specifically hired.
The deduction from Almirez’ remuneration of amounts representing SSS premiums, Philhealth contributions and withholding tax, was made in the
only pay slip issued to Almirez, that for the period of January 16-31, 2000, the other amounts of remuneration having been documented by cash
vouchers. Such pay slip cannot prove the existence of an employer-employee relationship between the parties.
As for the designation of the payments to Almirez as “salaries,” it is not determinative of the existence of an employer-employee relationship. “Salary”
is a general term defined as “a remuneration for services given.” It is the above-quoted contract of engagement of services-letter dated September
30, 1999, together with its attachments, which is the law between the parties. Even Almirez concedes rendering service “based on the contract,”
which, as reflected earlier, is bereft of a showing of power of control, the most crucial and determinative indicator of the presence of an employer-
employee relationship.

LOPEZ v METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM

G.R. No. 154472; June 30, 2005; Tinga, J.
FACTS:
 By virtue of an Agreement, petitioners were engaged by the MWSS as collectors-contractors, wherein the former agreed to collect from the
concessionaires of MWSS, charges, fees, assessments of rents for water, sewer and/or plumbing services which the MWSS bills from time
to time.
 In 1997, MWSS entered into a Concession Agreement with Manila Water Service, Inc. and Benpress-Lyonnaise, wherein the collection of
bills was transferred to said private concessionaires, effectively terminating the contracts of service between petitioners and MWSS.
 Regular employees of the MWSS were paid their retirement benefits, but not petitioners. Instead, they were refused said benefits.
 Petitioners filed a complaint with the CSC, but their claims were denied in a CSC Resolution, stating that:
o their contract of service explicitly provides that a bill collector-contractor is not an MWSS employee
o contract services/job orders are not considered government services, which do not have to be submitted to the CSC for approval,
unlike contractual and plantilla appointments (CSC Memo No. 38)
o crediting of services for purposes of retirement only for such services supported by appointment (CSC Memo No. 4)
o not being permanent employees of MWSS, not entitled to retirement benefits and terminal leave pay (subsequent Memo with no
specific number)
 MR of CSC Resolution denied. CA affirmed CSC Resolution.
ISSUE/RULING: WON petitioners were employees of the MWSS and, consequently, entitled to the benefits they claim - YES
RATIO:
 For purposes of determining the existence of employer-employee relationship, the Court has consistently adhered to the four-fold test,
namely: (1) whether the alleged employer has the power of selection and engagement of an employee; (2) whether he has control of the
employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4)
whether the employee was paid wages. Of the four, the control test is the most important element.
 MWSS wielded its power of selection when it contracted with the individual petitioners, undertaking separate contracts or agreements. The
same goes true for the power to dismiss, with the Agreement stating causes for termination.
 On the issue of remuneration, the “commissions” due petitioners were based on the bills collected as per the schedule indicated in the
Agreement. Significantly, MWSS granted petitioners benefits usually given to employees, to wit: COLA, meal, emergency, and traveling
allowances, hazard pay, cash gift, and other bonuses. Petitioners rendered services to MWSS for which they were paid and given similar
benefits due the other employees of MWSS.
 On the aspect of control, MWSS makes an issue out of the proviso in the Agreement that specifically denies the existence of employer-
employee relationship between it and petitioners. But the employment status of a person is defined and prescribed by law and not by what
the parties say it should be. In addition, the control test merely calls for the existence of the right to control, and not the exercise thereof.
 Petitioners are indeed regular employees of the MWSS. The primary standard of determining 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
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. Likewise, the repeated and continuing need for the performance of the job has been deemed sufficient evidence of the
necessity, if not indispensability of the activity to the business. Some of the petitioners had rendered more than two decades of service to
the MWSS. The continuous and repeated rehiring of these bill collectors indicates the necessity and desirability of their services, as well as
the importance of the role of bill collectors in the MWSS.
DISPOSITION
1. CA Decision and CSC Resolution SET ASIDE.
2. MWSS is ordered to pay terminal leave pay and separation pay and/or severance pay on the basis of remunerations/commissions,
allowances and bonuses each were actually receiving at the time of termination of their employment as contract collectors of MWSS.
3. Case was remanded to the CSC for the computation of the above awards.
Lazaro vs Social Security Commission (2004) G.R. 138254
Facts:
Rosalina Laudato filed a petition before the SSC for social security coverage and remittance of unpaid monthly social security contributions against
her three (3) employers. Among them was Angelito Lazaro, proprietor of Royal Star, which is engaged in the business of selling home appliances.
Laudato alleged 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.
Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that she was a mere sales agent whom he paid purely on
commission basis.  Lazaro also   maintained   that   Laudato was not subjected to definite hours and conditions of work. As such, she could not be
deemed an employee of Royal Star.
Issue: WON Laudato is considered employee of Royal Star Marketing?
Held: Laudato is an employee of Royal Star and as such is entitled to the coverage of Social Security Law.
It is an accepted doctrine that for the purposes of coverage under the Social Security Act, the determination of employer-employee relationship
warrants the application of the “control test,” that is, whether the employer controls or has reserved the right to control the employee, not only as to
the result of the work done, but also as to the means and methods by which the same is accomplished.
The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-employee relationship.  In Grepalife v.
Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its agents, despite the fact that
the compensation that the agents on commission received was not paid by the company but by the investor or the person insured.  The relevant
factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the
work to be done but also as to the means and methods by which the same is to be accomplished.  It should also be emphasized that the SSC, also
as upheld by the Court of Appeals, found that 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.  The SSC examined 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 company.
A piece of documentary evidence appreciated by the SSC is Memorandum dated 3 May 1980 of Teresita Lazaro, General Manager of Royal Star,
directing that no commissions were to be given on all “main office” sales from walk-in customers and enjoining salesmen and sales supervisors to
observe this new policy. The Memorandum evinces the fact that Royal Star exercised control over its sales supervisors or agents such as Laudato
as to the means and methods through which these personnel performed their work.

Manila Electric Co vs Sec of Labor (1999) G.R. 127598

Facts:
MEWA is the duly recognized labor organization of the rank-and-file employees of MERALCO. On September 7, 1995, MEWA informed MERALCO
of its intention to re-negotiate the terms and conditions of their existing 1992-1997 Collective Bargaining Agreement (CBA) covering the remaining
period of two years starting from December 1, 1995 to November 30, 1997. MERALCO signified its willingness to re-negotiate through its letter dated
October 17, 1995 and formed a CBA negotiating panel for the purpose. On November 10, 1995, MEWA submitted its proposal to MERALCO, which,
in turn, presented a counter-proposal. Thereafter, collective bargaining negotiations proceeded. However, despite the series of meetings between
the negotiating panels of MERALCO and MEWA, the parties failed to arrive at “terms and conditions acceptable to both of them.”
On April 23, 1996, MEWA filed a Notice of Strike with the National Capital Region Branch of the National Conciliation and Mediation Board (NCMB)
of the Department of Labor and Employment (DOLE) which was docketed as NCMB-NCR-NS-04-152-96, on the grounds of bargaining deadlock and
unfair labor practices. The NCMB then conducted a series of conciliation meetings but the parties failed to reach an amicable settlement.
MERALCO filed a petition to let the Secretary of DOLE to assume jurisdiction over the case which was granted.
Issue: Whether the members of MEWA are entitled to benefits given as bonuses, being negotiated in the CBA.
Held: The members of MEWA are entitled to the benefits although in the form of benefits which is a subject of the negotiation of CBA.
As a rule, a bonus is not a demandable and enforceable obligation; it may nevertheless be granted on equitable consideration as when the giving of
such bonus has been the company’s long and regular practice. To be considered a “regular practice,” the giving of the bonus should have been done
over a long period of time, and must be shown to have been consistent and deliberate.
The ruling in National Sugar Refineries Corporation vs. NLRC: “The test or rationale of this rule on long practice requires an indubitable showing that
the employer agreed to continue giving the benefits knowing fully well that said employees are not covered by the law requiring payment thereof.”
In this case, the record shows the MERALCO, aside from complying with the regular 13 th month bonus, has further been giving its employees an
additional Christmas bonus at the tail-end of the year since 1988. While the special bonuses differed in amount and bore different titles, it can not be
denied that these were given voluntarily and continuously on or about Christmas time.
The considerable length of time MERALCO has been giving the special grants to its employees indicates a unilateral and voluntary act on its part, to
continue giving said benefits knowing that such act was not required by law.
Indeed, a company practice favorable to the employees has been established and the payments made by MERALCO pursuant thereto ripened into
benefits enjoyed by the employees. Consequently, the giving of the special bonus can no longer be withdrawn by the company as this would
amount to a diminution of the employee’s existing benefits.

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION, ONG PENG, ET AL.,
respondents.,
G.R. No. 100264-81;     Jan 29, 1993
FACTS:
November 14, 1986, private respondents filed with DOLE- Daet, Camarines Norte, 17 individual complaints against Republic Hardwood Inc. (RHI) for
unpaid wages and separation pay. These complaints were thereafter endorsed to Regional Arbitration Branch of the NLRC since the petitioners had
already been terminated from employment.
RHI alleged that it had ceased to operate in 1983 due to the government ban against tree-cutting and that in May 24, 1981, its sawmill was totally
burned resulting in enormous losses and that due to its financial setbacks, RHI failed to pay its loan with the DBP. RHI contended that since DBP
foreclosed its mortgaged assets on September 24,1985, then any adjudication of monetary claims in favor of its former employees must be satisfied
against DBP. Private respondent impleaded DBP.
Labor Arbiter  favored private respondents and held RHI and DBP jointly and severally liable to private respondents. DBP appealed to the NLRC.
NLRC affirmed LA’s judgment. DBP filed M.R. but it was dismissed. Thus, this petition for certiorari.
ISSUE:
(1) Whether the private respondents are entitled to separation pay.
(2) Whether the private respondents’ separation pay should be preferred than the DBP’s lien over the RHI’s mortgaged assets.
RULING:
Yes. Despite the enormous losses incurred by RHI due to the fire that gutted the sawmill in 1981 and despite the logging ban in 1953, the
uncontroverted claims for separation pay show that most of the private respondents still worked up to the end of 1985. RHI would still have continued
its business had not the petitioner foreclosed all of its assets and properties on September 24, 1985. Thus, the closure of RHI’s business was not
primarily brought about by serious business losses. Such closure was a consequence of DBP’s foreclosure of RHI’s assets. The Supreme Court
applied Article 283 which provides:
“. . . 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 1 month pay or at least 1/2 month pay for every year of service, whichever is higher. . . .”
(2) No. Because of the petitioner’s assertion that LA and NLRC incorrectly applied the provisions of Article 110 of the Labor Code, the Supreme
Court was constrained to grant the petition for certiorari.
Article 110 must be read in relation to the Civil Code concerning the classification, concurrence and preference of credits, which is application in
insolvency proceedings where the claims of all creditors, preferred or non-preferred, may be adjudicated in a binding manner. Before the workers’
preference provided by Article 110 may be invoked, there must first be a declaration of bankruptcy or a judicial liquidation of the employer’s
business.
NLRC committed grave abuse of discretion when it affirmed the LA’s ruling. DBP’s lien on RHI’s mortgaged assets, being a mortgage credit, is
a special preferred credit under Article 2242 of the Civil Code while the workers’ preference is an ordinary preferred credit under Article 2244.
A distinction should be made between a preference of credit and a lien. A preference applies only to claims which do not attach to specific
properties. A lien creates a charge on a particular property. The right of first preference as regards unpaid wages recognized by Article 110 does not
constitute a lien on the property of the insolvent debtor in favor of workers. It is but a preference of credit in their favor, a preference in application. It
is a method adopted to determine and specify the order in which credits should be paid in the final distribution of the proceeds of the insolvent’s
assets. It is a right to a first preference in the discharge of the funds of the judgment debtor.
Article 110 of the Labor Code does not create a lien in favor of workers or employees for unpaid wages either upon all of the properties or upon any
particular property owned by their employer. Claims for unpaid wages do not therefore fall at all within the category of specially preferred claims
established under Articles 2241 and 2242 of the Civil Code, except to the extent that such claims for unpaid wages are already covered by Article
2241, (6)- (claims for laborers’ wages, on the goods manufactured or the work done ); or by Article 2242,(3)- (claims of laborers and other workers
engaged in the construction, reconstruction or repair of buildings, canals and other works, upon said buildings, canals and other works .
Since claims for unpaid wages fall outside the scope of Article 2241 (6) and 2242 (3), and not attached to any specific property, they would come
within the category of ordinary preferred credits under Article 2244.
(Note: SC favored DBP kasi yung mortgage nila against RHI was executed prior  to the amendment of Article 110. The amendment can’t be given
retroactive effect daw. Pero sa present, 1st  priority na talaga ang laborer’s unpaid wages  regardless kung may mortgage or wala ang ibang
creditors ng employer)
Article 110 of the Labor Code has been amended by R.A. No. 6715 and now reads:
“Article 110. Worker preference in case of bankruptcy. – In the event of bankruptcy or liquidation of an employers business, his workers shall enjoy
first preference as regards their unpaid wages and other monetary claims, any provision of law to the contrary notwithstanding. Such unpaid wages,
and monetary claims shall be paid in full before the claims of the Government and other creditors may be paid.”
The amendment “expands worker preference to cover not only unpaid wages but also other monetary claims to which even claims of the
Government must be deemed subordinate.” Hence, under the new law, even mortgage credits are subordinate to workers’ claims.
R.A. No. 6715, however, took effect only on March 21, 1989. The amendment cannot therefore be retroactively applied to, nor can it affect, the
mortgage credit which was secured by the petitioner several years prior to its effectivity.
Even if Article 110 and its Implementing Rule, as amended, should be interpreted to mean `absolute preference,’ the same should be given only
prospective effect in line with the cardinal rule that laws shall have no retroactive effect, unless the contrary is provided. To give Article 110
retroactive effect would be to wipe out the mortgage in DBP’s favor and expose it to a risk which it sought to protect itself against by requiring a
collateral in the form of real property.
The public respondent, therefore, committed grave abuse of discretion when it retroactively applied the amendment introduced by R.A. No. 6715 to
the case at bar.
Petition GRANTED. Decision of NLRC SET ASIDE.