vinoya

FACTS: Petitioner Vinoya was hired by RFC as sales representative. He avers that he was
transferred by RFC to PMCI, an agency which provides RFC with additional contractual
workers. In PMCI, he was reassigned to RFC as sales representative and then later informed by
the personnel manager of RFC that his services were terminated. RFC maintains that no
employer-employee relationship existed between petitioner and itself. Petitioner filed complaint
for illegal dismissal. RFC alleges that PMCI is an independent contractor as the latter is a highly
capitalized venture.

ISSUE: Whether or not petitioner was an employee of RFC and thereby, illegally dismissed.

HELD: Yes. PMCI was a labor-only contractor. Although the Neri doctrine stated that it was
enough that a contractor had substantial capital to show it was an independent contractor, the
case of Fuji Xerox clarified the doctrine stating that an independent business must undertake
the performance of the contract according to its own manner and method free from the control
of the principal. In this case, PMCI did not even have substantial capitalization as only a small
amount of its authorized capital stock was actually paid-in. Also, PMCI did not carry on an
independent business or undertake the performance of its contract according to its own manner
and method. Furthermore, PMCI was not engaged to perform a specific and special job or
service, which is one of the strong indicators that is an independent contractor. Lastly, in labor-
only contracting, the employees supplied by the contractor perform activities, which are directly
related to the main business of its principal. It is clear that in this case, the work of petitioner as
sales representative was directly related to the business of RFC. Since due to petitioner’s length
of service, he attained the status of regular employee thus cannot be terminated without just or
valid cause. RFC failed to prove that his dismissal was for cause and that he was afforded
procedural due process. Petitioner is thus entitled to reinstatement plus full backwages from his
dismissal up to actual reinstatement.
271 SCRA 670 – Labor Law – Labor Standards – Abandonment of Work – Loss of Confidence
Norma Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an inspection
was made by the Department of Labor and Employment (DOLE) at Hotel Supreme and the
DOLE inspectors discovered several violations by the hotel management. Immediately, the
owner of the hotel, Peter Ng, directed his employees to execute an affidavit which would purport
that they have no complaints whatsoever against Hotel Supreme. Mabeza signed the affidavit
but she refused to certify it with the prosecutor’s office. Later, when she reported to work, she
was not allowed to take her shift. She then asked for a leave but was not granted yet she’s not
being allowed to work. In May 1991, she then sued Peter Ng for illegal dismissal. Peter Ng, in
his defense, said that Mabeza abandoned her work. In July 1991, Peter Ng also filed a criminal
complaint against Mabeza as he alleged that she had stolen a blanket and some other stuff
from the hotel. Peter Ng went on to amend his reply in the labor case to make it appear that the
reason why he dismissed Mabeza was because of his loss of confidence by reason of the theft
allegedly committed by Mabeza. The labor arbiter who handled the case, a certain Felipe Pati,
ruled in favor of Peter Ng.
ISSUE: Whether or not there is abandonment in the case at bar. Whether or not loss of
confidence as ground for dismissal applies in the case at bar.
HELD: No. The side of Peter Ng is bereft of merit so is the decision of the Labor Arbiter which
was unfortunately affirmed by the NLRC.
Abandonment
Abandonment is not present. Mabeza returned several times to inquire about the status of her
work or her employment status. She even asked for a leave but was not granted. Her asking for
leave is a clear indication that she has no intention to abandon her work with the hotel. Even the
employer knows that his purported reason of dismissing her due to abandonment will not fly so
he amended his reply to indicate that it is actually “loss of confidence” that led to Mabeza’s
dismissal.
Loss of Confidence
It is true that loss of confidence is a valid ground to dismiss an employee. But this is ideally only
applied to workers whose positions require a certain level or degree of trust particularly those
who are members of the managerial staff. Evidently, an ordinary chambermaid who has to sign
out for linen and other hotel property from the property custodian each day and who has to
account for each and every towel or bedsheet utilized by the hotel’s guests at the end of her
shift would not fall under any of these two classes of employees for which loss of confidence, if
ably supported by evidence, would normally apply. Further, the suspicious filing by Peter Ng of
a criminal case against Mabeza long after she initiated her labor complaint against him hardly
warrants serious consideration of loss of confidence as  a ground of Mabeza’s dismissal.

MANILA WATER COMPANY, INC.v PENA,

Manila Water Company, Inc. is contracted by the Metropolitan Waterworks and Sewerage
System (MWSS) to manage the water distribution system in the East Zone of Metro Manila.
Manila Water absorbed the former employees of the MWSS whose names and positions were
in the list furnished by the latter, while the employment of those not in the list was terminated on
the day Manila Water took over the operation of the East Zone. Respondents, being contractual
collectors of the MWSS, were among the 121 employees not included in the list. Manila Water
engaged their services without written contract. Then, they signed a three-month contract to
perform collection services for 8 branches of Manila Water in the East Zone. Before the end of
the three-month contract, the 121collectors incorporated the Association Collectors Group, Inc.
(ACGI), which was contracted by Manila Water to collect charges for the Balara Branch.
Subsequently, most of the 121 collectors were asked by Manila Water to transfer to the
First Classic Courier Services, a newly registered corporation. Respondents remained with
ACGI. Later, Manila Water terminated its contract with ACGI. Respondents filed a complaint for
illegal dismissal and money claims, contending that they were Manila
 Water’s employees as all the methods and procedures of their collections were controlled by
the latter. Manila Water asserts that respondents were employees of ACGI, an independent
contractor. It maintained that it had no control and supervision over private respondents’ manner
of performing their work except as to the results. Thus, Manila Water did not have an employer-
employee relationship with the private respondents, but only a service contractor-client
relationship with ACGI.
ISSUE:
Is ACGI an independent contractor?
HELD:
NO. ACGI was engaged in laboronly contracting, and as such, is considered merely an agent of 
thepetitioner. Since ACGI is only a labor-only contractor, the workers it supplied should be
considered as employees of Manila Water. 
First 
, ACGI does not have substantial capitalization or investment in the form of tools, equipment,
machineries, work premises, and other materials, to qualify as an independent contractor. While
it has an authorized capital stock of P1,000,000.00, only P62,500.00 is paid-in, which cannot be
considered substantial capitalization. The 121 collectors subscribed to four shares each and
paid only the amount of P625.00 in order to comply with the incorporation requirements.
Respondents reported daily to the branch office of Manila Water because ACGI has no office or
work premises. The corporate address of ACGI was the residence of its president, Mr.
Peña. Moreover, in dealing with the consumers, respondents used the receipts and
identification cards issued by Manila Water. 
Second 
, the work of the private respondents was directly related to the principal business or operation
of Manila Water. Being in the business of providing water to the consumers in the East Zone,
the collection of the charges by respondents for Water can only be categorized as clearly
related to, and in the pursuit of the latter’s business.
Lastly 
, ACGI did not carry on an independent business or undertake the performance of its service
contract according to its own manner and method, free from the control and supervision of its
principal, petitioner. Prior to respondents’ alleged employment with ACGI, they were already
working for petitioner, subject to its rules and regulations regarding the manner and method of
performing their tasks. This form of control and supervision never changed although they were
already under the seeming employ of ACGI. Manila Water issued memoranda regarding the
billing methods and distribution of books to the collectors; it required respondents to report daily
and to remit their collections on the same day to the branch office or to deposit them with Bank
of the Philippine Islands; it monitored strictly their attendance as when a collector cannot
perform his daily collection, he must notify petitioner or the branch office in the morning of the
day that he will be absent; and although it was ACGI which ultimately disciplined respondents,
the penalty to be imposed was dictated by petitioner as shown in the letters it sent to ACGI
specifying the penalties to be meted on the erring respondents.  These are indications that
ACGI was not left alone in the supervision and control of its alleged employees. Consequently, it
can be concluded that ACGI was not an independent contractor since it did not carry a distinct
business free from the control and supervision of petitioner.
PRODUCERS BANK OF THE PHILIPPINES, petitioner, 
vs.
NATIONAL LABOR RELATIONS COMMISSION and PRODUCERS BANK EMPLOYEES
ASSOCIATION, respondents.
FACTS: The present petition originated from a complaint filed by private respondent on 11
February 1988 with the Arbitration Branch, NLRC, charging petitioner with diminution of
benefits, non-compliance with Wage Order No. 6 and non-payment of holiday pay. In addition,
private respondent prayed for damages.
Labor arbiter dismissed the complaint for lack of merit. NLRC, however, granted all of private
respondent’s claims, except for damages. Petition filed a Motion for Partial Reconsideration,
which was denied by the NLRC. Hence, recourse to this Court.
Petitioner contends: that the NLRC gravely abused its discretion in ruling as it did for the
succeeding reasons stated: (1) it contravened the Supreme Court decision in Traders Royal
Bank v. NLRC, et al., G.R. No. 88168, promulgated on August 30, 1990, (2) its ruling is not
justified by law and Art. 100 of the Labor Code, (3) its ruling is contrary to the CBA, and (4) the
so-called “company practice invoked by it has no legal and moral bases” (4) petitioner,
under conservatorship and distressed, is exempted under Wage Order No. 6.
ISSUE: WON respondent is entitled for the payment of the above-mentioned monetary claims,
particularly BONUSes.
HELD:
As to the bonuses, private respondent declared in its position papers filed with the NLRC that –
1. Producers Bank of the Philippines, a banking institution, has been providing several
benefits to its employees since 1971 when it started its operation. Among the benefits it
had been regularly giving is a mid-year bonus equivalent to an employee’s one-month
basic pay and a Christmas bonus equivalent to an employee’s one whole month salary
(basic pay plus allowance);
2. When P.D. 851, the law granting a 13thmonth pay, took effect, the basic pay previously
being given as part of the Christmas bonus was applied as compliance to it (P.D. 851),
the allowances remained as Christmas bonus;
3. From 1981 up to 1983, the bank continued giving one month basic pay as mid-year
bonus, one month basic pay as 13thmonth pay but the Christmas bonus was no longer
based on the allowance but on the basic pay of the employees which is higher;
4. In the early part of 1984, the bank was placed under conservatorship but it still provided
the traditional mid-year bonus;
5. By virtue of an alleged Monetary Board Resolution No. 1566, bank only gave a one-half
(1/2) month basic pay as compliance of the 13thmonth pay and none for the Christmas
bonus.
Respondent’s Contention: that the mid-year and Christmas bonuses, by reason of their having
been given for thirteen consecutive years, have ripened into a vested right and, as such, can no
longer be unilaterally withdrawn by petitioner without violating Article 100 of Presidential Decree
No. 4429 which prohibits the diminution or elimination of benefits already being enjoyed by the
employees. Although private respondent concedes that the grant of a bonus is discretionary on
the part of the employer, it argues that, by reason of its long and regular concession, it may
become part of the employee’s regular compensation.
Petitioner asserts: that it cannot be compelled to pay the alleged bonus differentials due to its
depressed financial condition, as evidenced by the fact that in 1984 it was placed under
conservatorship by the Monetary Board. According to petitioner, it sustained losses in the
millions of pesos from 1984 to 1988, an assertion which was affirmed by the labor arbiter.
Moreover, petitioner points out that the collective bargaining agreement of the parties does not
provide for the payment of any mid-year or Christmas bonus. On the contrary, section 4 of the
collective bargaining agreement states that –
Acts of Grace. Any other benefits or privileges which are not expressly provided in this
Agreement, even if now accorded or hereafter accorded to the employees, shall be deemed
purely acts of grace dependent upon the sole judgment and discretion of the BANK to grant,
modify or withdraw.
A bonus is an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer’s business and made possible the realization of
profits. It is an act of generosity granted by an enlightened employer to spur the employee to
greater efforts for the success of the business and realization of bigger profits.12 The granting
of a bonus is a management prerogative, something given in addition to what is ordinarily
received by or strictly due the recipient.13 Thus, a bonus is not a demandable and enforceable
obligation,14 except when it is made part of the wage, salary or compensation of the
employee.15
However, an employer cannot be forced to distribute bonuses which it can no longer afford to
pay. To hold otherwise would be to penalize the employer for his past generosity. Thus,
in Traders Royal Bank v. NLRC,16 we held that –
It is clear x x x that the petitioner may not be obliged to pay bonuses to its employees. The
matter of giving them bonuses over and above their lawful salaries and allowances is entirely
dependent on the profits, if any, realized by the Bank from its operations during the past year.
xxx
In light of these submissions of the petitioner, the contention of the Union that the granting of
bonuses to the employees had ripened into a company practice that may not be adjusted to the
prevailing financial condition of the Bank has no legal and moral bases. Its fiscal condition
having declined, the Bank may not be forced to distribute bonuses which it can no longer afford
to pay and, in effect, be penalized for its past generosity to its employees. –
Private respondent’s contention, that the decrease in the mid-year and year-end bonuses
constituted a diminution of the employees’ salaries, is not correct, for bonuses are not part of
labor standards in the same class as salaries, cost of living allowances, holiday pay, and leave
benefits, which are provided by the Labor Code.
This doctrine was reiterated in the more recent case of Manila Banking Corporation v. NLR1
Petitioner was not only experiencing a decline in its profits, but was reeling from tremendous
losses triggered by a bank-run which began in 1983. In such a depressed financial condition,
petitioner cannot be legally compelled to continue paying the same amount of bonuses to its
employees. Thus, the conservator was justified in reducing the mid-year and Christmas
bonuses of petitioner’s employees. To hold otherwise would be to defeat the reason for the
conservatorship which is to preserve the assets and restore the viability of the financially
precarious bank. Ultimately, it is to the employees’ advantage that the conservatorship achieve
its purposes for the alternative would be petitioner’s closure whereby employees would lose not
only their benefits, but their jobs as well.
Davao Fruits Corporation vs Associated Labor Unions, G.R. No. 85073, August 24, 1993; 225
SCRA 562
Facts: Respondent ALU for and in behalf of all the rank-and-file workers and employees of
petitioner sought to recover from the latter the 13 th month pay differential for 1982 of said
employees, equivalent to their sick, vacation and maternity leaves, premium for work done on
rest days and special holidays, and pay for regular holidays which petitioner, allegedly in
disregard of company practice since 1975, excluded from the computation of the 13 th month pay
for 1982.
Issue: WON in the computation of the 13 th month pay under PD No. 851, payments for sick,
vacation  and maternity leaves, premiums for work done on rest days and special holidays, and
pay for regular holidays may be excluded in the computation and payment thereof.
Held: Yes. Basic salary does not merely exclude the benefits expressly mentioned but all
payments which may be in the form of fringe benefits or allowances.
Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 provides that
“overtime pay, earnings and other remunerations which are not part of the basic salary shall not
be included in the computation of the 13th month pay.
Whatever compensation an employee receives for an 8 hour work daily or the daily wage rate is
the basic salary. Any compensation or remuneration other than the daily wage rate is excluded.
It follows therefore, that payments for sick, vacation and maternity leaves, premiums for work
done on rest days and special holidays, as well as pay for regular holidays, are likewise
excluded in computing the basic salary for the purpose of determining the 13th month pay.