Table of Contents

Topic 1: THE APPLICABLE LAWS..........................................................................................1

Topic 2: BASIC PRINCIPLES.....................................................................................................1
1. Sonza v ABS-CBN [GR No 138051 June 10 2004]..............................................................1
2. Lazaro v Social Security Commission [435 SCRA 472 (2004)]..........................................2
4. ABS-CBN v Nazareno [GR No 164156 (Sep 26, 2006)]......................................................4
5. Francisco v NLRC [500 SCRA 690 [2006]].........................................................................5
6. Nogales et al, v Capitol Medical Center et al [GR No 142625, Dec 19, 2006]...................7
7. Coca-Cola Bottlers Phils v Dr Climaco [GR No 146881, Feb 15, 2007]............................9
8. Calamba Medical Center v NLRC et al [GR No 176484, Nov 25, 2008].........................12
9. Escasinas et al, v Shangri-la Mactan Island Resort et al [GR No 178827, Mar 4, 2009]
....................................................................................................................................................13
10. Tongko v Manufacturer Life Insurance Co. (Phils), Inc., et al [GR No 167622, Jan 25
2011, En Banc (see June 29, 2010 Main Decision)]...............................................................15
11. Semblante et al v CA, et al [GR No 196426, Aug 15, 2011]............................................17
12. Bernarte v PBA, et al [GR No 192084, Sep 14 2011]......................................................18
13. Lirio v Genovia [GR No 169757, Nov 23 2011]...............................................................20
14. Jao v BCC Products Sales, Inc. [GR No 163700, Apr 18 2012].....................................22
15. Legend Hotel (Manila) v Realuyo [GR No 153511, July 18, 2012]................................24
16. The New Philippine Skylanders, Inc v Dakila [GR No 199547, Sep 24, 2011].............25
17. Tesoro, et al v Metro Manila Retreaders Inc, et al [GR No 171482, Mar 12, 2014]....26
18. Royale Homes Marketing Corp v Alcantara [GR No 195190, July 28, 2014]..............27
19. Fuji Television Network Inc v Espiritu [GR 204944-45, Dec 3, 2014]..........................28
20. Cabaobas et al, v Pepsi Col [ GR No 176908, Mar 25 2015]..........................................30
21. Begino, et al v ABS-CBN Corp [GR No 199166, Apr 20, 2015].....................................32
22. SSS v Ubana [GR No 200114, Aug 25, 2015]...................................................................34
23. Century Properties Inc v Babiano, et al [GR No 220978, July 5, 2016]........................34
24. Lu v Enopia, GR No 197899, Mar 6, 2017.......................................................................37
25. Apelanio vs. Arcanys, Inc., GR No. 227098, November 14, 2018..................................38
26. Dr. Loreche-Amit vs. Cageyan De Oro Medical Center, GR No. 216635, June 3, 2019
.......................................................................................................................................................39
27. Fernandez vs. Kalookan SlaughterHouse Inc., GR No. 225075, June 19, 2019...........40

Page | i
Topic 3: Hiring of Employee.......................................................................................................43
1. PT&T vs. NLR [272 SCRA 596 [1997]].............................................................................43
2. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils., [G.R. No. 162994,
Sept. 17, 2004]...........................................................................................................................43
3. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006.......................................44
4. Del Monte Phils vs. Velasco [G.R. No. 153477, March 6, 2007].......................................46
5. Yrasuegui vs. Phil Airlines, G.R. No. 168081, October 17, 2008.....................................47
Topic 4: Wages & Wage Rationalization Act............................................................................49
Topic 4-A: Violation of Wage Order.........................................................................................49
1. S.I.P. Food House et al v Batolina, GR No 192473, Oct 11, 2010....................................49
2. SLL International Cables Specialist v NLRC, GR No 172161, Mar 2, 2011..................50
3. Vergara, Jr v Coca-Cola Bottlers Phils Inc, GR No 176985, Apr 1, 2013......................51
4. Royal Plant Workers Union v Coca-Cola Bottlers Phils Inc - Cebu Plant, [GR No
198783, Apr 15, 2013]..............................................................................................................53
5. NWPC, et al v The Alliance of Progressive Labor, et al, GR No 150326, Mar 12, 2014
....................................................................................................................................................54
6. David/Yiels Hog Dealer v Macasio, [GR No 195466, July 2, 2014].................................56
7. Our Haus Realty Development Corp v Parian et al, [GR No 204651, Aug 6, 2014]......58
8. Milan et al v NLRC, GR No 202961, Feb 4, 2015..............................................................60
9. Toyota Pasig Inc v De Peralta, GR No 213488, Nov 7, 2016............................................61
10. Soriano et al v Secretary of Finance, GR Nos 184450, 184508, 184538, 185234, Jan 24,
2017, En Banc...........................................................................................................................63
11. CCBPI vs. Iloilo Coca-Cola Plant Employees Union, GR No. 195297, December 5,
2018...............................................................................................................................................67
12. Pablico et al., vs. Cerro/Master Pab Resto Bar, GR No. 227200, June 10, 2019..........69
Topic 5: Wage Enforcement and Recovery...............................................................................76
1. Tiger Construction and Development Corp v Abay et al, [GR No 164141, Feb 26, 2010]
....................................................................................................................................................76
2. People’s Broadcasting (Bombo Radyo Phils) v Sec of DOLE et al, GR No 179652, Mar
6, 2012, Resolution on the Main Decision of May 8, 2009....................................................77
3. Superior Packaging Corp v Balagsay et al, GR No 178909, October 10, 2012.............78
4. Department of Labor & Employment vs. Kentex Manufacturing Corp., GR No.
253781, July 8, 2019.....................................................................................................................79
Topic 6: Wage Protection Provisions & Prohibitions Regarding Wages...............................83

Page | ii
 1. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010..............83
2. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169,
November 28, 2011...................................................................................................................84
3. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013............................86
4. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb
26, 2014......................................................................................................................................87
5. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso., GR
No. 181806, March 12, 2014....................................................................................................89
6. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, citing
2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo.................................90
7. Netlink Computer Inc. vs. Delmo, GR No. 160827, June 18, 2014..................................91
8. PLDT vs. Estranero, GR No. 192518, October 15, 2014..................................................93
9. Milan et al vs. NLRC, GR No. 202961, Feb. 4, 2015.........................................................94
10. Galang et al., vs. Boie Takeda Chemicals Inc. et al., GR No. 183934, July 20, 2016...96
11. Coca- Cola Bottlers Phils Inc., vs. CCBPI Sta Rosa Plant Employees Union, GR No.
197494, March 25, 2019..........................................................................................................97
Topic 7: Payment of Wages......................................................................................................100
1. Congson vs. NLRC, 243 SCRA 260 [1995]......................................................................100
2. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]..................................................101
3. House of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006..........................................104
Topic 8: Conditions of Employment........................................................................................106
1. San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997]........................................106
2. Sime Darby vs. NLRC, 289 SCRA 86 [1998]...................................................................107
3. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]...............................................................108
4. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007. .108
5. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008......................110
6. Dasco et al., vs. Philtranco Service Enterprise, GR No. 211141, June 29, 2016...........111
7. HSY Marketing Ltd., Villatique, GR No. 219569, August 17, 2016..............................111
Topic 9: Minimum Labor Standard Benefits..........................................................................115
1. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002............................................115
2. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002.....................................................115
3. Lambo vs. NLRC, 317 SCRA 420.....................................................................................116
4. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004...........................................118
5. Asian Transmission vs. CA, 425 SCRA 478 [2004].........................................................120

Page | iii
 6. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005....................120
7. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005.............................122
8. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006......................123
9. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No.
1577745, October 19, 2007, citing Wellington Investment vs. Trajano, 245 SCRA 561
[1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004.......................................124
10. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan
vs. NLRC, 195 SCRA 533 [1998]..........................................................................................126
11. PNCC Skyway Traffic Management and Security Division Workers Organization,
GR No. 171231, Feb. 17, 2010...............................................................................................128
12. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, Sept. 12, 2012
..................................................................................................................................................129
13. Robina Farms Cebu vs. Villa, GR No. 175869, April 18, 2016....................................131
14. Dasco et al., vs. Philtranco Service Enterprise, GR No. 211141, June 29, 2016.........133
15. HSY Marketing Ltd., vs. Villastique, GR No. 219569, Aug. 17, 2016.........................134
16. Dela Salle Araneta University vs. Bernardo, GR No. 190809, February 13, 2017.....135
Topic 10: Other Special Benefit................................................................................................137
1. Reyes vs. NLRC et al., G.R. No. 160233, August 8, 2007, citing Boie Takeda Chemicals
vs. Dela Serna, 228 SCRA 329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380
[1995].......................................................................................................................................137
2. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco
Metal-NAFLU, G.R. No. 170734, May 14, 2008..................................................................139
3. Universal Robina Sugar Milling Corp. vs. Caballeda, G.R. No. 156644, July 28, 2008
..................................................................................................................................................140
4. Cercado vs. Uniprom, Inc. G.R. No. 188154, October 13, 2010.....................................142
5. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al., G.R. No. 198662,
September 12, 2012................................................................................................................143
6. Padillo vs. Rural Bank of Nabunturan Inc. G.r. No. 199338, Jan. 21, 2013.................144
7. Grace Christian High School vs. Lavandera, GR No. 177845, August 20, 2014..........146
8. Goodyear Philippines Inc. vs. Angus, GR No. 185449, November 12, 2015.................147
9. Banco De Oro Unibank vs.Sagaysay,GR No. 214961, Sept 16, 2015.............................148
10. Perez vs. Camparts Industries Inc. GR No. 197557, October 5, 2016.........................150
11. Dela Salle Araneta University vs. Bernardo, GR No. 190809, February 13, 2017.....151
12. Catotocan vs. Lourdes School of Quezon City, GR No. 213486, April 26, 2017, citing
1996 Pantranco North Express.............................................................................................153

Page | iv
 13. Philippine Airlines vs. Hassaram, GR. No. 217730, June 5, 2017................................155
14. Laya vs. Court of Appeals, GR No. 205813, January 10, 2018, En Banc...................157
15. Maria De Leon Transportation Inc., et al., vs. Macuray, GR No. 214940, June 6, 2018
..................................................................................................................................................158
Topic 11: Jurisdiction of the Labor Arbiter............................................................................160
Topic 12: 2011 NLRC Rules of Procedure, amended.............................................................160
1. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012..............160
2. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012......................161
3. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012...................162
4. McBurnie vs. Ganzon, GR No. 178034/1718117, October 17, 2013, En Banc..............164
5. Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014.........165
6. Manila Mining Corp., vs. Amor GR No. 182800, April 20, 2015, citing 2015 Mcburnie
..................................................................................................................................................167
7. Toyota Alabang Inc vs. Games, GR No. 206612, Aug 17, 2015.....................................169
8. Social Security System vs. Ubana, GR No. 200114, Aug 25, 2015.................................170
9. ILaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils, GR No. 198675,
Sept 23, 2015...........................................................................................................................172
10. Quantum Foods, Inc. vs. Esloyo, GR. No. 213696, December 9, 2015, citing 2015
Mcburnie.................................................................................................................................174
11. Dela Rosa Liner Inc et vs. Borela et GR No. 207286, July 29, 2016............................176
12. Fontana Development Corp., vs. Vukasinovic, GR No. 222424, September 21, 2016
..................................................................................................................................................177

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Topic 1: THE APPLICABLE
LAWS
Topic 2: BASIC PRINCIPLES
1. Sonza v ABS-CBN [GR No 138051
June 10 2004]
Facts
Respondent ABS-CBN Broadcasting
Corporation (“ABS-CBN”) signed an
Agreement (“Agreement”) with the Mel and
Jay Management and Development
Corporation (“MJMDC”). Referred to in the
Agreement as “AGENT,” MJMDC agreed
to provide SONZA’s services exclusively to
ABS-CBN as talent for radio and television.
ABS-CBN agreed to pay 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.
On 30 April 1996, SONZA filed a complaint
against ABS-CBN before the Department of
Labor and Employment, National Capital
Region in Quezon City. SONZA complained
that ABS-CBN did not pay his salaries,
separation pay, service incentive leave pay,
13th month pay, signing bonus, travel
allowance and amounts due under the
Employees Stock Option Plan (“ESOP”).
ABS-CBN filed a Motion to Dismiss on the
ground that no employer-employee
relationship existed between the parties.
After due hearing, the Labor Arbiter
dismissed the complaint for lack of
jurisdiction. On appeal, the National Labor
Relations Commission (NLRC), as well as
the Court of Appeals (CA) affirmed the
decision of the Labor Arbiter. Thus, this
petition for review on certiorari.
Issue
Whether or not an employer-employee
relationship existed between Jay Sonza, as
radio and television talent, and ABS-CBN.
Held
NO. ABS-CBN entered into an agreement
with Jay Sonza to procure his peculiar skills
and talents as radio and television talent not
as an employee, but as an independent
contractor.
The elements of an employer-employee
relationship are:
(a) the selection and engagement of the
employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer’s power to control the
employee on the means and methods
by which the work is accomplished.
As to the element of selection and
engagement of employee, 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.
As to the element of payment of wages,
Sonza’s talent fees amounting to P317,000
monthly are so huge and out of the ordinary
that they indicate more an independent
contractual relationship rather than an
Page | vi
employer-employee relationship. The power
to bargain talent fees way above the salary
scales of ordinary employees is a
circumstance indicative, but not conclusive,
of an independent contractual relationship.
Indeed, 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.
Whatever benefits SONZA enjoyed arose
from contract and not because of an
employer-employee relationship.
As to the element of power of dismissal,
even if ABS-CBN 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. This circumstance
indicates an independent contractual
relationship between SONZA and ABS-
CBN.
As to the last and most important element of
power of control, the Court referred to a US
Court of Appeals decision. Alberty-Vélez v.
Corporación De Puerto Rico Para La
Difusión Pública (“WIPR”) that held that a
television program host is an independent
contractor. Applying the control test to the
present case, it is held that SONZA is not an
employee but an independent contractor.
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’s sole concern was the quality of
the shows and their standing in the ratings.
Clearly, ABS-CBN did not exercise control
over the means and methods of performance
of SONZA’s work. ABS-CBN’s control was
limited only to the result of SONZA’s work,
whether to broadcast the final product or
not. Second, the general rules ABS-CBN
subjected SONZA are merely guidelines
towards the achievement of the mutually
desired result, which are top-rating
television and radio programs that comply
with standards of the industry. Thus, the
rules did not control SONZA’s performance.
Lastly, being an exclusive talent does not by
itself mean that SONZA is an employee of
ABS-CBN. In the broadcast industry,
exclusivity is not necessarily the same as
control.
SONZA seeks the recovery of allegedly
unpaid talent fees, 13th month pay,
separation pay, service incentive leave,
signing bonus, travel allowance, and
amounts due under the Employee Stock
Option Plan. Clearly, the present case does
not call for an application of the Labor Code
provisions but an interpretation and
implementation of the May 1994
Agreement.
WHEREFORE, the petition is DENIED.
____________________________________
2. Lazaro v Social Security Commission
[435 SCRA 472 (2004)]
Facts
Private respondent Laudato filed a petition
before the SSC for social security coverage
and remittance of unpaid monthly social
security contributions against her three
employers. Among the respondents was
herein petitioner Angelito L. Lazaro
(“Lazaro”), proprietor of Royal Star
Page | vii
Marketing (“Royal Star”), which is engaged
in the business of selling home appliances.
Petitioner states that 1) Laudato was not a
sales supervisor of Royal Star, but was a
mere sales agent whom he paid purely on
commission basis.2) Laudato was not
subjected to definite hours and conditions of
work. As such, Laudato could not be
deemed an employee of Royal Star while
respondents contended that despite her
employment as sales supervisor of the sales
agents for Royal Star from April of 1979 to
March of 1986, Lazaro had failed during the
said period, to report her to the SSC for
compulsory coverage or remit Laudato’s
social security contributions.
Issue
Whether or not respondent is an employee,
bringing her under the coverage of the
Social Security Act.
Held
Ladauto is an employee of Royal Star. It is
an accepted doctrine that for the purposes of
coverage under the Social Security Act, the
determination of employer-employee
relationship warrants the application of the
“control test,” that is, whether the employer
controls or has reserved the right to control
the employee, not only as to the result of the
work done, but also as to the means and
methods by which the same is
accomplished. The fact that Laudato was
paid by way of commission does not
preclude the establishment of an employer-
employee relationship. The relevant factor
remains, as stated earlier, whether
the"employer" controls or has reserved the
right to control the "employee" not only as
to the result of the work to be done but also
as to the means and methods by which the
same is to be accomplished. Neither does it
follow that a person who does not observe
normal hours of work cannot be deemed an
employee. A supervisor is exempt from the
observance of normal hours of work for his
compensation is measured by the number of
sales he makes.” Laudato oversaw and
supervised the sales agents of the company,
and thus was subject to the control of
management as to how she implements its
policies and its end results. Royal Star
exercised control over its sales supervisors
or agents such as Laudato as to the means
and methods through which these personnel
performed their work.
____________________________________
3. Phil. Global Communication v De Vera
[459 SCRA 260 (2005)]
Facts
Petitioner Philippine Global
Communications, Inc. (PhilCom), is a
corporation engaged in the business of
communication services and allied activities,
while respondent Ricardo De Vera is a
physician by profession whom petitioner
enlisted to attend to the medical needs of its
employees. The parties agreed and
formalized respondents proposal in a
document denominated as RETAINERSHIP
CONTRACT which will be for a period of
one year subject to annual renewal. The
retainership agreement started in 1981.
However in 1996 De Vera received a letter
Page | viii
from petitioner informing him of the
termination of retainer contract.
This prompted respondent to file a case for
illegal dismissal against petitioner.
Issue
Whether or not de Vera is an employee of
PhilCom or an independent contractor.
Held
Applying the four fold test, de Vera is not an
employee.
a. the selection and engagement of the
employee;
-not met since it was respondent
himself who sets the parameters of
what his duties would be in offering
his services to petitioner.
b. the payment of wages;
not met since respondent had to bill
petitioner for his monthly
professional fees. It simply runs
against the grain of common
experience to imagine that an
ordinary employee has yet to bill his
employer to receive his salary.
c. the power of dismissal; and
not met since power to terminate the
parties relationship was mutually
vested on both. Either may terminate
the arrangement at will, with or
without cause.
d. the power to control the employees
conduct not met since the parties
themselves practically agreed on
every terms and conditions of
respondents engagement, which
thereby negates the element of
control in their relationship
Other indicia:
a. Respondent was never included in
the payroll of the petitioner.
b. Respondent was never deducted any
contribution for remittance to the
Social Security System (SSS)
c. Respondent was subjected by
petitioner to the ten (10%) percent
withholding tax for his professional
fee.
Clearly the respondent was engaged in a
retainer basis, as shown by their various
retainership contracts, so petitioner can put
an end, with or without cause, to their
retainership agreement as therein provided.
____________________________________
4. ABS-CBN v Nazareno [GR No 164156
(Sep 26, 2006)]
Facts
ABS-CBN Broadcasting Corporation (ABS-
CBN) employed Nazareno, Gerzon,
Deiparine, and Lerasan (respondents) as
production assistants (PAs) on different
Page | ix
dates. They were assigned at the news and
public affairs, for various radio programs in
the Cebu Broadcasting Station, with a
monthly compensation of P4,000. They
were issued employee’s identification cards
and were required to work for a minimum of
eight (8) hours a day including Sundays and
holidays. They were under the control and
supervision of Assistant Station Manager
Dante J. Luzon, and News Manager Leo
Lastimosa.
ABS-CBN and the ABS-CBN Rank-and-
File Employees entered into a Collective
Bargaining Agreement effective December
11, 1996 until December, 1999. The
respondents were not included in the CBA
due to ABS-CBN’s refusal. Thereafter,
ABS-CBN issued a Memorandum which re-
assigned the respondents to non-drama
programs causing the revision on their
schedules.
Respondents filed a Complaint for
Recognition of Regular Employment Status,
Underpayment of Overtime Pay, Holiday
Pay, Premium Pay, Service Incentive Pay,
Sick Leave Pay, and 13th Month Pay with
Damages against the petitioner before the
NLRC. The Labor Arbiter dismissed such
petition due to failure of the respondents to
submit their position papers within the
reglementary period. Respondent then filed
a an Earnest Motion to Refile Complaint
with Motion to Admit Position Paper and
Motion to Submit Case For Resolution
which the Labor Arbiter granted.
Respondents, having rendered service for an
average of five years, insisted that they
belonged to a “work pool” from which
ABS-CBN persons to be given specific
assignments and were under its direct
supervision and control regardless of
nomenclature. Moreover, they prayed that
they will be declared as permanent and
regular employees as a condition precedent
for their admission in the existing collective
bargaining unit of the company. Petitioner
for its part alleged that the respondents were
considered as “program employees” as
distinguished from the regular station
employees and that generally they perform
leg work for the anchors during a program
or particular production. And that their
engagement is coterminous with the
completion of the program which can be
renewed or extended. Hence, their
compensation is computed on program
basis, a fixed amount for their performance
irrespective of the time consumed.
Furthermore, it alleged that the Labor
Arbiter has no jurisdiction because it
involves the CBA and its interpretation
which the respondents were not covered.
Labor Arbiter ruled in favor of the
respondents, declared them as regular
employees and thus they were awarded
monetary benefits. However, the Labor
Arbiter did not award the monetary benefit
under the CBA because he has no
jurisdiction to interpret it.
On appeal, NLRC modifies the decision of
the Labor Arbiter. It granted the respondents
the monetary benefits under the CBA
because they are considered as regular
employees and it ruled that the Labor
Arbiter has the jurisdiction over the
complaint of the respondents because they
acted in their individual capacity and not as
members of a union. On certiorari, CA
affirmed the decision.
Issue
WON the respondents are regular employees
and thus they are entitled to thee monetary
Page | x
benefits under the existing CBA in the file employees. Their exclusion from the
company. said CBA on the misplaced belief of the
parties to the said agreement that they are
project employees, is therefore not proper. A
Held
collective bargaining agreement is a contract
Yes. The Court agrees with respondents'
entered into by the union representing the
contention that where a person has rendered
employees and the employer. However,
at least one year of service, regardless of the
even the non-member employees are entitled
nature of the activity performed, or where
to the benefits of the contract.
the work is continuous or intermittent, the
employment is considered regular as long as ____________________________________
the activity exists, the reason being that a
5. Francisco v NLRC [500 SCRA 690
customary appointment is not indispensable
[2006]]
before one may be formally declared as
having attained regular status in consonance
with Article 280 of the Labor Code.

The primary standard of determining regular Facts

employment is the reasonable connection
between the particular activity performed by
In 1995, petitioner was hired by Kasei
the employee in relation to the usual trade or
Corporation as Accountant and Corporate
business of the employer. The test is
Secretary. In 1996, petitioner was
whether the former is usually necessary
designated Acting Manager. For five years,
or desirable in the usual business or trade
petitioner performed the duties of Acting
of the employer. This can be determined
Manager. As of December 31, 2000 her
through the nature of the work in relation to
salary was P27,500.00 plus P3,000.00
the scheme of the industry. Also, if the
housing allowance and a 10% share in the
employee has been performing the job for
profit of Kasei Corporation.
at least a year, even if the performance is
not continuous and merely intermittent,
the law deems repeated and continuing need In January 2001, petitioner was replaced by
for its performance as sufficient evidence of Liza R. Fuentes as Manager. Petitioner
its necessity to the business. In this case, alleged that she was required to sign a
respondents are considered as regular prepared resolution for her replacement but
employees. she was assured that she would still be
connected with Kasei Corporation.
Thereafter, Kasei Corporation reduced her
Additionally, respondents cannot be
salary by P2,500.00 a month beginning
considered as project or program employees
January up to September 2001 for a total
because no evidence was presented to show
reduction of P22,500.00 as of September
that the duration and scope of the project
2001.
were determined or specified at the time of
their engagement.
On October 15, 2001, petitioner asked for
her salary from Acedo and the rest of the
It follows then that respondents are entitled
officers but she was informed that she is no
to the benefits provided for in the existing
longer connected with the company. Since
CBA between petitioner and its rank-and-

Page | xi
she was no longer paid her salary, petitioner the reinstatement of petitioner. However,
did not report for work and filed an action upon appeal by the private respondents, the
for constructive dismissal before the labor Court of Appeals reversed the decision of
arbiter. the NLRC, in effect dismissing the
complaint of petitioner.
Private respondents averred that petitioner is
not an employee of Kasei Corporation. They
alleged that petitioner was hired in 1995 as
one of its technical consultants on
Issue
accounting matters and act concurrently as
Corporate Secretary. As technical 1) Whether there was an employer-
consultant, petitioner performed her work at employee relationship between
her own discretion without control and petitioner and private respondent
supervision of Kasei Corporation. Petitioner Kasei Corporation;
had no daily time record and she came to the
office any time she wanted. The company 2) If the answer to above question is in
never interfered with her work except that the affirmative, whether petitioner
from time to time, the management would was illegally dismissed.
ask her opinion on matters relating to her
profession. Petitioner did not go through the
usual procedure of selection of employees,
but her services were engaged through a
Board Resolution designating her as Held
technical consultant. The money received by
petitioner from the corporation was her
1) Yes. To determine whether an
professional fee subject to the 10%
employer-employee relationship
expanded withholding tax on professionals,
exists, the Court adopts a two-tiered
and that she was not one of those reported to
test involving: (1) the putative
the BIR or SSS as one of the company's
employer's power to control the
employees. Petitioner's designation as
employee with respect to the means
technical consultant depended solely upon
and methods by which the work is to
the will of management. As such, her
be accomplished; and (2) the
consultancy may be terminated any time
underlying economic realities of the
considering that her services were only
activity or relationship.
temporary in nature and dependent on the
needs of the corporation.
The control test initially found
application in the case of Viaña v.
The Labor Arbiter found that petitioner was
Al-Lagadan and Piga, and lately in
an employee of respondent corporation and
Leonardo v. Court of Appeals, where
was illegally dismissed. They ordered her
we held that there is an employer-
reinstatement, and in case reinstatement is
employee relationship when the
no longer feasible, for private respondents to
person for whom the services are
pay petitioner her separation pay plus
performed reserves the right to
backwages. On April 15, 2003, the NLRC
control not only the end achieved but
affirmed with modification the Decision of
the Labor Arbiter. The NLRC did not order

Page | xii
also the manner and means used to
achieve that end.
In determining the underlying
economic realities of the activity, we
consider factors such as: (1) the
extent to which the services
performed are an integral part of the
employer's business; (2) the extent of
the worker's investment in
equipment and facilities; (3) the
nature and degree of control
exercised by the employer; (4) the
worker's opportunity for profit and
loss; (5) the amount of initiative,
skill, judgment or foresight required
for the success of the claimed
independent enterprise; (6) the
permanency and duration of the
relationship between the worker and
the employer; and (7) the degree of
dependency of the worker upon the
employer for his continued
employment in that line of business.
By applying the control test, there is
no doubt that petitioner is an
employee of Kasei Corporation
because she was under the direct
control and supervision of Seiji
Kamura, the corporation's Technical
Consultant. Under the broader
economic reality test, the petitioner
can likewise be said to be an
employee of respondent corporation
because she had served the company
for six years before her dismissal,
receiving check vouchers indicating
her salaries/wages, benefits, 13th
month pay, bonuses and allowances,
as well as deductions and Social
Security contributions from August
1, 1999 to December 18, 2000.
When petitioner was designated
General Manager, respondent
corporation made a report to the SSS
signed by Irene Ballesteros.
Petitioner's membership in the SSS
as manifested by a copy of the SSS
specimen signature card which was
signed by the President of Kasei
Corporation and the inclusion of her
name in the on-line inquiry system of
the SSS evinces the existence of an
employer-employee relationship
between petitioner and respondent
corporation.
2) On the issue of petitioner’s illegal
dismissal, the Court found that the
corporation constructively dismissed
petitioner when it reduced her salary
by P2,500 a month from January to
September 2001. This amounts to an
illegal termination of employment,
where the petitioner is entitled to full
backwages. Since the position of
petitioner as accountant is one of
trust and confidence, and under the
principle of strained relations,
petitioner is further entitled to
separation pay, in lieu of
reinstatement.
____________________________________
6. Nogales et al, v Capitol Medical Center
et al [GR No 142625, Dec 19, 2006]
Facts
Corazon Nogales who was pregnant with her
fourth child was under the exclusive prenatal
care of Dr. Estrada beginning on her fourth
month of pregnancy. While Corazon was on
her last trimester of pregnancy, Dr. Estrada
noted an increase in her blood pressure and
development of leg edema indicating
preeclampsia, which is a dangerous
complication of pregnancy. Subsequently,
Page | xiii
Corazon started to experience mild labor
pains prompting her and Rogelio (her
husband) to see the doctor. Dr. Estrada
advised her immediate admission to Capitol
Medical Center. Rogelio then executed and
signed the “Consent on Admission and
Agreement” and “Admission Agreement”.
Corazon then was brought to the labor room
of the said hospital. While on labor, Corazon
died. The cause of death was “haemorrhage,
postpartum”. Petitioners then file a
complaint for damages with the RTC against
Capitol Medical Center, the doctors, and a
nurse involved in the operation including
Dr. Estrada for the death of Corazon.
Trial court found Dr. Estrada to be solely
liable for damages. On the part of the other
doctors, the nurse and the hospital, the court
finds no legal justification to find them
civilly liable. Petitioners then appealed the
trial court decision. The Court of Appeals
affirmed the trial court decision. It held that
Dr. Estrada is an independent contractor-
physician. It also held that the mere fact that
a hospital permitted a physician to practice
medicine and use its facilities is not
sufficient to render the hospital liable for the
physician’s negligence. A hospital is not
responsible for the negligence of a physician
who is an independent contractor. The court
similarly applied the ‘borrowed servant
doctrine’ for the liability of the other doctors
and nurses stating that since Rogelio
engaged Dr. Estrada as the attending
physician of his wife, any liability for the
malpractice must be Dr. Estrada’s sole
responsibility.
Issue
1) Whether there exists an employer-
employee relationship on the part of
Dr. Estrada and Capitol Medical
Center
2) Whether or not Capitol Medical
Center is vicariously liable for the
negligence of Dr. Estrada.
Held
1) No. There is no employer-employee
relationship between Dr. Estrada and
respondent hospital. The court took
note that there are times where there
might be an employer-employee
relationship that exists between the
physician and the hospital. In the
case in Ramos v. Court of Appeals as
cited, hospitals exercise significant
control in the hiring and firing of
consultants and in the conduct of
their work within the hospital
premises. Doctors who apply for
“consultant” slots, visiting or
attending are required to submit
different documents as requirements
that would be scrutinized by
members of the hospital. After the
physicians are accepted, they are also
required to do tasks and
responsibilities for the privilege of
being able to maintain a clinic in the
hospital and/or for the privilege of
admitting patients into the hospitals.
In other words, private hospitals like
hire, fire, and exercise real control
over their attending and visiting
“consultant” staff. While they are not
technically employees, a point which
respondent hospital asserts in
denying all responsibility for the
patient’s condition, the control
exercised, the hiring and the right to
terminate consultants all fulfill the
Page | xiv
 important hallmarks of an employer-
employee relationship, with the
exception of the payment of wages.
The control test is determining. For
the purpose of allocating
responsibility in medical negligence
cases, an employer-employee
relationship exists between hospitals
and their attending and visiting
physicians.
This degree of control is however
absent in the case of CMC and Dr.
Estrada. The court finds no single
evidence pointing to CMC’s exercise
of control over Dr. Estrada’s
treatment and management of
Corazon’s condition. Throughout
Corazon’s pregnancy up to her
delivery, she was under the exclusive
care and attendance of Dr. Estrada.
There was no showing that CMC had
a part in diagnosing Corazon’s
condition. While Dr. Estrada enjoyed
staff privileges at CMC, such fact
alone did not make him an employee
of CMC. CMC merely allowed Dr.
Estrada to use its facilities.
Considering these circumstances, Dr.
Estrada is not an employer of CMC
but an independent contractor.
2) Yes. The hospital is liable for the
negligence of Dr. Estrada.
Although in general, a hospital is not
liable for the negligence of an
independent contractor-physician.
There is however exception to this
principle. That is when the physician
is the “ostensible” agent of the
hospital. Applying the “doctrine of
apparent authority”, a hospital can be
held vicariously liable for the
negligent acts of a physician
providing care at the hospital,
regardless of whether the physician
is an independent contractor, unless
the patient knows or should have
known that the physician is an
independent contractor.
Doctrine of apparent authority
essentially involves two factors to
determine the liability of an
independent-contractor physician.
First factor focuses on the hospital’s
manifestations and is sometimes
described as an inquiry whether the
hospital acted in a manner which
would lead a reasonable person to
conclude that the individual who was
alleged to be negligent was an
employee of the said hospital. The
hospital need not make express
representations to the patient that the
treating physician is an employee of
the hospital; rather a representation
may be general and implied. In the
case, the hospital through its acts
impliedly held out Dr. Estrada as a
member of its medical staff. Firstly,
CMC has granted staff privileges to
Dr. Estrada, extended its health and
medical facilities to him, and upon
his request, readily accommodated
Corazon for admission and updated
Dr. Estrada of her condition.
Secondly, CMC also asked Rogelio
to sign the Consent and Admission
on Agreement as well as the release
forms which reinforced Rogelio’s
belief that Dr. Estrada was a member
of the hospital’s staff. Thirdly, Dr.
Estrada’s referral of Corazon’s
vaginal bleeding to Dr. Espinola who
was then the head of the Obstetrics
department of CMC gave the
impression that Dr. Estrada was a
member of CMC’s medical staff
collaborating with other CMC-
Page | xv
 employed specialists in treating
Corazon.
The second factor focuses on the
patient’s reliance. Records of the
case shows that spouses Nogales had
relied upon a perceived employment
relationship with CMC in accepting
Dr. Estrada’s services. They choose
the doctor because of his
“connection with a reputable
hospital”.
____________________________________
7. Coca-Cola Bottlers Phils v Dr Climaco
[GR No 146881, Feb 15, 2007]
Facts
Respondent Dr. Dean N. Climaco is a
medical doctor who was hired by petitioner
Coca-Cola Bottlers Phils., Inc. by virtue of a
Retainer Agreement. Pursuant to this
agreement, he was provided with a
Comprehensive Medical Plan containing the
duties and responsibilities of respondent.
The Retainer Agreement, which began on
January 1, 1988, was renewed annually. The
last one expired on December 31, 1993.
Despite the non-renewal of the Retainer
Agreement, respondent continued to
perform his functions as company doctor to
Coca-Cola.
As early as September 1992, petitioner made
inquiries regarding his status with petitioner
company. He wrote a letter addressed to Dr.
Willie Sy, the Acting President and
Chairperson of the Committee on
Membership, Philippine College of
Occupational Medicine, who then wrote a
letter to the Personnel Officer of petitioner,
stating that respondent should be considered
as a regular part-time physician, having
served the company continuously for four
(4) years. He also stated that respondent
must receive all the benefits and privileges
of an employee under Article 157 (b) of the
Labor Code.
Petitioner company, however, did not take
any action. Hence, respondent made another
inquiry directed to the Assistant Regional
Director of the Department of Labor and
Employment (DOLE) in Bacolod City, who
referred the inquiry to the Legal Service of
the DOLE in Manila. Director Dennis P.
Ancheta, Legal Service, DOLE, stated that
he believed that an employer-employee
relationship existed between petitioner and
respondent based on the Retainer Agreement
and the Comprehensive Medical Plan, and
the application of the "four-fold" test.
However, Director Ancheta emphasized that
the existence of employer-employee
relationship is a question of fact and that
their opinion was strictly advisory.
Petitioner also made an inquiry to the Social
Security System (SSS). Mr. Romeo R.
Tupas, OIC-FID of SSS-Bacolod City,
wrote a letter to the Personnel Officer of
petitioner company informing them that the
legal staff of his office was of the opinion
that the services of respondent partook of
the nature of work of a regular company
doctor and that he was, therefore, subject to
social security coverage.
Respondent inquired from the management
of petitioner company whether it was
agreeable to recognizing him as a regular
Page | xvi
employee. The management refused to do
so. Hence, on February 24, 1994, respondent
filed a Complaint before the NLRC,
Bacolod City, seeking recognition as a
regular employee of petitioner company and
prayed for the payment of all benefits of a
regular employee, including 13th Month Pay,
Cost of Living Allowance, Holiday Pay,
Service Incentive Leave Pay, and Christmas
Bonus.
While the complaint was pending before the
Labor Arbiter (LA), respondent received a
letter dated March 9, 1995 from petitioner
company concluding their retainership
agreement effective thirty (30) days from
receipt thereof. This prompted respondent to
file a complaint for illegal dismissal against
petitioner company with the NLRC.
The Labor Arbiter found that petitioner
company lacked the power of control over
respondent's performance of his duties, and
recognized as valid the Retainer Agreement
between the parties. Thus, the Labor Arbiter
dismissed respondent's complaint seeking
recognition as a regular employee. In
another decision, the Labor Arbiter also
dismissed the complaint for illegal dismissal
in view of the previous finding in the first
case that petitioner is not an employee of
Coca-Cola Bottlers Phils., Inc. Respondent
then appealed both decisions to the NLRC,
Fourth Division, Cebu City.
The NLRC dismissed the appeal in both
cases for lack of merit. It declared that no
employer-employee relationship existed
between petitioner company and respondent
based on the provisions of the Retainer
Agreement which contract governed
respondent's employment.
Undaunted, respondent appealed to the
Court of Appeals which then reversed the
decisions of the LA and NLRC. The CA
ruled that an employer-employee
relationship existed between petitioner
company and respondent after applying the
four-fold test. All elements of the four-fold
test were present. Moreover, the Court of
Appeals declared that respondent should be
classified as a regular employee having
rendered six years of service as plant
physician by virtue of several renewed
retainer agreements. It also held that the
termination of respondent's services without
any just or authorized cause constituted
illegal dismissal. In a Resolution
promulgated on January 30, 2001, the Court
of Appeals also stated that respondent was a
"regular part-time employee and should be
accorded all the proportionate benefits due
to this category of employees of petitioner
Corporation.”
Hence, this petition filed by Coca-Cola
Bottlers Phils., Inc.
Issues
1) Whether or not there exists an
employer-employee relationship
between the petitioner company and
respondent
2) Whether or not the termination of
respondent's employment is illegal
Held
1) NO. There is no employer-employee
relationship between the parties.
Page | xvii
 The Court, in determining the
existence of an employer-employee
relationship, has invariably adhered
to the four-fold test: (1) the selection
and engagement of the employee; (2)
the payment of wages; (3) the power
of dismissal; and (4) the power to
control the employee's conduct, or
the so-called "control test,"
considered to be the most important
element.
The SC agreed with the finding of
the Labor Arbiter and the NLRC that
the circumstances of this case
showed that no employer-employee
relationship existed between the
parties. The Labor Arbiter and the
NLRC correctly found that petitioner
company lacked the power of control
over the performance by respondent
of his duties. Petitioner company,
through the Comprehensive Medical
Plan, provided guidelines merely to
ensure that the end result was
achieved, but did not control the
means and methods by which
respondent performed his assigned
tasks.
The Labor Arbiter also correctly
found that the provision in the
Retainer Agreement that respondent
was on call during emergency cases
did not make him a regular
employee. The schedule of work and
the requirement to be on call for
emergency cases do not amount to
such control, but are necessary
incidents to the Retainership
Agreement.
2) NO. Respondent was not illegally
dismissed.
SC stated that the Retainership
Agreement granted to both parties
the power to terminate their
relationship upon giving a 30-day
notice. Hence, petitioner company
did not wield the sole power of
dismissal or termination. It further
added that there was nothing wrong
with the employment of respondent
as a retained physician of petitioner
company. The Retainership
Agreement clearly stated that no
employer-employee relationship
existed between the parties and that
it was only for a period of 1 year but
it was renewed on a yearly basis.
Considering that there is no
employer-employee relationship
between the parties, the termination
of the Retainership Agreement,
which is in accordance with the
provisions of the Agreement, does
not constitute illegal dismissal of
respondent.
Petition is GRANTED.
____________________________________
8. Calamba Medical Center v NLRC et al
[GR No 176484, Nov 25, 2008]
Facts
Petitioner is a privately owned hospital
which engaged the services of the
respondent spouses Ronald Lanzanas and
Merceditha Lanzanas, as resident
physicians. The problem arose when Dr.
Ronald was suspended by the medical
director when he was caught in the
telephone discussing the low “census” of the
admission of patients to the hospital which
was deemed to be inimical to the hospital’s
interest. Subsequently, Dr. Merceditha was
not given any work schedule.
Page | xviii
Meanwhile, the rank-and –file employees
union went on strike due to unsolved
grievances over the terms and conditions of
their employment. The DOLE Secretary
then certified the labor dispute to the NLRC
for compulsory arbitration and issued return-
to-work Order. The medical director later on
echoed the said order through a
memorandum but excluded those terminated
or those serving disciplinary action.
The medical director sent Dr. Ronald a
notice of termination on the grounds that he
failed to report to work despite the DOLE
order and his participation in the said rank-
and-file strike even though his position is
managerial in nature. Such participation is
expressly prohibited by the New Labor Code
and which prohibition was sustained by the
Med-Arbiter’s Order.
Both respondent spouses then filed a
complaint for illegal dismissal before the
Labor Arbiter. Their cases were
consolidated. The petitioner contended that
there is no employer-employee relationship
since respondents’ position is managerial.
Therefore, they are prohibited from joining
the rank-and-file union.
The LA dismissed the said complaints for
want of jurisdiction for lack of employer-
employee relationship between the parties.
On appeal however, the NLRC reversed the
LA decision. Petitioner’s motion for
reconsideration was denied hence the case
was elevated to the CA.
CA favored the petitioners and set aside the
NLRC ruling. Upon filing of motion for
reconsideration CA amended its decision
reinstating the NLRC decision on the ground
that there exists an employer-employee
relationship between the parties. Hence this
petition.
Issue
Whether or not there exists an employer-
employee relationship between the parties
Held
Yes, there exists an employer-employee
relationship since the fourth element of the
four-fold test which is the control test is
present in this case. Dr. Ronald was neither
managerial nor supervisory employee but
part of the rank-and-file. Hence, his
dismissal is illegal because he is not barred
from being a member of the union.
Under the control test, an employment
relationship exists between the physician
and a hospital if the hospital controls both
the means and details of the process by
which the physician is to accomplished his
task.
In the present case, although the petitioner
claims that the twice-a-week reporting
schedule allows the respondents to freely
practice their profession elsewhere the rest
of the week, the Supreme Court held that the
petitioner maintained specific work-
schedules and that he still exercises control
over them. The respondents cannot operate
without the petitioner’s approval or consent.
Also, the share of the respondents in some
hospital fees does not indicate managerial
status since such merely constitute
additional incentive or compensation which
is allowed under the Labor Code. Their job
is also routinary in nature and consequently
they cannot be considered supervisory
Page | xix
employees. In short, they are not barred
from joining the union of the rank-and-file.
The ID cards, the payslips, BIR W-2 and the
SSS and the Philhealth program are
incontrovertible evidence of the employment
status of the respondents. Notably, the SSS
Law is premised on the existence of an
employer-employee relationship.
As for the case of Dr Merceditha, her
termination based on her conjugal
relationship is not analogous to any cases
enumerated in Article 282 of the Labor
Code. Hence, her dismissal was also illegal.
The SC affirmed the decision of CA that
there exists an employer-employee
relationship.
____________________________________
9. Escasinas et al, v Shangri-la Mactan
Island Resort et al [GR No 178827, Mar 4,
2009]
Facts
Registered nurses Jeromie D. Escasinas and
Evan Rigor Singco (petitioners) were
engaged by Dr. Pepito (respondent doctor)
to work in her clinic at respondent Shangri-
la's Mactan Island Resort (Shangri-la) of
which she was a retained physician.
Petitioners filed with the NLRC a complaint
for regularization, underpayment of wages,
non-payment of holiday pay, night shift
differential and 13th month pay differential
against respondents, claiming that they are
regular employees of Shangri-la.
Shangri-la claimed, however, that petitioners
were not its employees but of respondent
doctor whom it retained via Memorandum
of Agreement pursuant to Article 157 of the
Labor Code, as amended, and that
respondent doctor is a legitimate contractor
who has the power to hire and supervise the
work of nurses under her.
Respondent doctor for her part claimed that
petitioners were already working for the
previous retained physicians of Shangri-la
before she was retained by Shangri-la; and
that she maintained petitioners' services
upon their request.
The Labor Arbiter declared petitioners to be
regular employees of Shangri-la. It noted
that they usually perform work which is
necessary and desirable to Shangri-la's
business; that they observe clinic hours and
render services only to Shangri-la's guests
and employees; and that respondent doctor
was Shangri-la's "in-house" physician,
hence, also an employee;
However, on appeal, the NLRC rendered a
decision finding that no employer-employee
relationship exists between petitoner and
Shangri-la. Likewise, the Court of Appeals
affirmed the NLRC decision.
Petitioners insist that under the Labor Code,
Shangri-la is required to hire a full-time
registered nurse, hence, their engagement
should be deemed as regular employment
and that respondent doctor is a labor-only
contractor.
Page | xx
Issue
1) Is there an employer-employee
relationship between petitioners and
Shangri-la?
2) Is respondent doctor a legitimate
independent contractor?
Held
1) No, they are not employees of
Shangri-la. Art. 157 of the Labor
Code does not require the
engagement of full-time nurses as
regular employees of a company
employing not less than 50 workers.
In cases of hazardous workplaces, no
employer shall engage the services
of a physician or dentist who cannot
stay in the premises of the
establishment for at least two (2)
hours, in the case of those engaged
on part-time basis, and not less than
eight (8) hours in the case of those
employed on full-time basis. Where
the undertaking is nonhazardous in
nature, the physician and dentist may
be engaged on retained basis, subject
to such regulations as the Secretary
of Labor may prescribe to insure
immediate availability of medical
and dental treatment and attendance
in case of emergency.
Under the foregoing, Shangri-la
which employs more than 200
workers is mandated to furnish its
employees services of a full-time
registered nurse, a part-time
physician and dentist, and an
emergency clinic which means that it
should provide or make available
such medical and allied services to
its employees, but Shangri-la does
not necessarily have to hire or
employ.
Existence of an employer- employee
relationship is established by the
presence of the following
determinants: (1) the selection and
engagement of the workers; (2)
power of dismissal; (3) the payment
of wages by whatever means; and (4)
the power to control the worker's
conduct, with the latter assuming
primacy in the overall consideration.
With respect to the supervision and
control of the nurses and clinic staff,
it is not disputed that a document,
"Clinic Policies and Employee
Manual" claimed to have been
prepared by respondent doctor exists,
to which petitioners gave their
conformity and in which they
acknowledged their co-terminus
employment status. It is thus
presumed that said document, and
not the employee manual being
followed by Shangri-la’s regular
workers, governs how they perform
their respective tasks and
responsibilities.
Since Shangri-la does not control
how the work performed by
petitioners should be done, the
former cannot be considered as the
petitioners’ employer. On the other
hand, respondent doctor who
supervises and controls petitioners’
work should be considered as their
employer.
2) Yes, respondent doctor is a
legitimate independent contractor.
Page | xxi
 That Shangri-la provides the clinic
premises and medical supplies for
use of its employees and guests does
not necessarily prove that respondent
doctor lacks substantial capital and
investment. Besides, the
maintenance of a clinic and
provision of medical services to its
employees is required under Art.
157, which are not directly related to
Shangri-la's principal business -
operation of hotels and restaurants.
____________________________________
10. Tongko v Manufacturer Life
Insurance Co. (Phils), Inc., et al [GR No
167622, Jan 25 2011, En Banc (see June
29, 2010 Main Decision)]
Facts
Manufacturers Life Insurance Co. (Phils.),
Inc. (Manulife) is a domestic corporation
engaged in life insurance business. Renato
A. Vergel De Dios was, during the period
material, its President and Chief Executive
Officer. Gregorio V. Tongko started his
professional relationship with Manulife on
July 1, 1977 by virtue of a Career Agent's
Agreement (Agreement) he executed with
Manulife.
In the Agreement, it is provided that:
It is understood and agreed that the Agent is
an independent contractor and nothing
contained herein shall be construed or
interpreted as creating an employer-
employee relationship between the
Company and the Agent.
The Company may terminate this Agreement
for any breach or violation of any of the
provisions hereof by the Agent by giving
written notice to the Agent within fifteen
(15) days from the time of the discovery of
the breach. No waiver, extinguishment,
abandonment, withdrawal or cancellation of
the right to terminate this Agreement by the
Company shall be construed for any
previous failure to exercise its right under
any provision of this Agreement.
Either of the parties hereto may likewise
terminate his Agreement at any time without
cause, by giving to the other party fifteen
(15) days notice in writing.
In 1983, Tongko was named as a Unit
Manager in Manulife's Sales Agency
Organization. In 1990, he became a Branch
Manager. As the CA found, Tongko's gross
earnings from his work at Manulife,
consisting of commissions, persistency
income, and management overrides. The
problem started sometime in 2001, when
Manulife instituted manpower development
programs in the regional sales management
levels. So in 2001, De Dios addressed a
letter to Tongko, then one of the Metro
North Managers, regarding meetings
wherein De Dios found Tongko's views and
comments to be unaligned with the
directions the company was taking. De Dios
also expressed his concern regarding the
Metro North Managers' interpretation of the
company's goals. He maintains that
Tongko's allegations are unfounded. Some
allegations state that some Managers are
unhappy with their earnings, that they're
earning less than what they deserve and that
these are the reasons why Tonko's division
is unable to meet agency development
Page | xxii
objectives. However, not a single Manager
came forth to confirm these allegations.
Finally, De Dios related his worries about
Tongko's inability to push for company
development and growth.
De Dios subsequently sent Tongko a letter
of termination in accordance with Tongko's
Agents Contract. Tongko filed a complaint
with the NLRC against Manulife for illegal
dismissal, alleging that he had an employer-
employee relationship with De Dios instead
of a revocable agency by pointing out that
the latter exercised control over him through
directives regarding how to manage his area
of responsibility and setting objectives for
him relating to the business. Tongko also
claimed that his dismissal was without basis
and he was not afforded due process. The
NLRC ruled that there was an employer-
employee relationship as evidenced by De
Dios's letter which contained the manner
and means by which Tongko should do his
work.
NLRC ruled in favor of Tongko, affirming
the existence of the employer-employee
relationship.
The Court of Appeals, however, set aside
the NLRC's ruling. It applied the four-fold
test for determining control and found the
elements in this case to be lacking, basing its
decision on the same facts used by the
NLRC. It found that Manulife did not exert
control over Tongko, there was no
employer-employee relationship and thus
the NLRC did not have jurisdiction over the
case.
The Supreme Court, in 2008, reversed the
ruling of the Court of Appeals and ruled in
favor of Tongko. However, the Supreme
Court issued another Resolution dated June
29, 2010, reversing its decision. Tongko
filed a motion for reconsideration, which is
now the subject of the instant case.
Issue
Whether or not the Supreme Court correctly
reversed its 2008 decision thus declaring the
absence of an employer-employee
relationship between Manulife and Tongko
Held
YES, the Supreme Court is correct in
reversing its 2008 decision thereby declaring
that there is no employer-employee
relationship between Manulife and Tongko
since Petitioner Tongko failed to to show
that the control Manulife exercised over him
was the control required to exist in an
employer-employee relationship;|||
Control over the performance of the task of
one providing service — both with respect
to the means and manner, and the results of
the service — is the primary element in
determining whether an employment
relationship exists.
Petitioner Tongko asserts in his Motion that
Manulife's labor law control over him was
demonstrated (1) when it set the objectives
and sales targets regarding production,
recruitment and training programs; and (2)
when it prescribed the Code of Conduct for
Agents and the Manulife Financial Code of
Conduct to govern his activities. SC found
no merit in these contentions.
Page | xxiii
There are built-in elements of control
specific to an insurance agency, which do
not amount to the elements of control that
characterize an employment relationship
governed by the Labor Code. The
Insurance Code provides definite
parameters in the way an agent negotiates
for the sale of the company's insurance
products, his collection activities and his
delivery of the insurance contract or
policy. In addition, the Civil Code defines
an agent as a person who binds himself to
do something in behalf of another, with
the consent or authority of the latter.
Article 1887 of the Civil Code also
provides that in the execution of the
agency, the agent shall act in accordance
with the instructions of the principal.
All these, read without any clear
understanding of fine legal distinctions,
appear to speak of control by the insurance
company over its agents. They are,
however, controls aimed only at specific
results in undertaking an insurance
agency, and are, in fact, parameters set by
law in defining an insurance agency and
the attendant duties and responsibilities an
insurance agent must observe and
undertake. They do not reach the level of
control into the means and manner of
doing an assigned task that invariably
characterizes an employment relationship
as defined by labor law. From this
perspective, the petitioner's contentions
cannot prevail.
To reiterate, guidelines indicative of labor
law "control" do not merely relate to the
mutually desirable result intended by the
contractual relationship; they must have
the nature of dictating the means and
methods to be employed in attaining the
result. Tested by this norm, Manulife's
instructions regarding the objectives and
sales targets, in connection with the
training and engagement of other agents,
are among the directives that the principal
may impose on the agent to achieve the
assigned tasks. They are targeted results
that Manulife wishes to attain through its
agents. Manulife's codes of conduct,
likewise, do not necessarily intrude into
the insurance agents' means and manner of
conducting their sales. Codes of conduct
are norms or standards of behavior rather
than employer directives into how specific
tasks are to be done. These codes, as well
as insurance industry rules and
regulations, are not per se indicative of
labor law control under our jurisprudence.
The duties that the petitioner enumerated
in his Motion are not supported by
evidence and, therefore, deserve scant
consideration. Even assuming their
existence, however, they mostly pertain to
the duties of an insurance agent such as
remitting insurance fees to Manulife,
delivering policies to the insured, and
after-sale services. For agents leading
other agents, these include the task of
overseeing other insurance agents, the
recruitment of other insurance agents
engaged by Manulife as principal, and
ensuring that these other agents comply
with the paperwork necessary in selling
insurance. That Manulife exercises the
power to assign and remove agents under
the petitioner's supervision is in keeping
with its role as a principal in an agency
relationship; they are Manulife agents in
the same manner that the petitioner had all
along been a Manulife agent.
The petitioner also questions Manulife's
act of investing him with different titles
and positions in the course of their
relationship, given the respondents'
position that he simply functioned as an
insurance agent.
Under this scheme — an arrangement
that pervades the insurance industry —
petitioner in effect became a "lead agent"
and his own commissions increased as
Page | xxiv
they included his share in the commissions
of the other agents; he also received
greater reimbursements for expenses and
was allowed to use Manulife's facilities.
His designation also changed from unit
manager to branch manager and then to
regional sales manager, to reflect the
increase in the number of agents he
recruited and guided, as well as the
increase in the area where these agents
operated. However, these arrangements,
and the titles and positions the petitioner
was invested with, did not change his
status from the insurance agent that he had
always been (as evidenced by the
Agreement that governed his relationship
with Manulife from the start to its
disagreeable end). The petitioner simply
progressed from his individual agency to
being a lead agent who could use other
agents in selling insurance and share in the
earnings of these other agents.
Thus, there is absolutely no evidence of
labor law control which would qualify the
parties’ relationship into one of an
employer-employee relationship.
____________________________________
11. Semblante et al v CA, et al [GR No
196426, Aug 15, 2011]
Facts
Petitioners Marticio Semblante (Semblante)
and Dubrick Pilar (Pilar) assert that they
were hired by respondents-spouses Vicente
and Maria Luisa Loot, the owners of Gallera
de Mandaue (the cockpit), as the official
masiador and sentenciador, respectively, of
the cockpit sometime in 1993.
Semblante receives PhP 2,000 per week or a
total of PhP 8,000 per month, while Pilar
gets PhP 3,500 a week or PhP 14,000 per
month. They work every Tuesday,
Wednesday, Saturday, and Sunday every
week, excluding monthly derbies and
cockfights held on special holidays. Their
working days start at 1:00 p.m. and last until
12:00 midnight, or until the early hours of
the morning depending on the needs of the
cockpit. Petitioners had both been issued
employees’ identification card.
Petitioners were, on November 14, 2003,
however denied entry into the cockpit upon
the instructions of respondents, and were
informed of the termination of their services
effective that date. This prompted petitioners
to file a complaint for illegal dismissal with
the Labor Arbiter.
The Labor Arbiter ruled in favor of
petitioners. Upon appeal to the NLRC
however, this was reversed, with the
Commission ruling that there was no
employer-employee relationship between
petitioners and respondents. The petitioners
were akin to independent contractors. This
was affirmed by the Court of Appeals. Thus,
this petition for review on certiorari.
Issue
Whether or not there exists an employer-
employee relationship between respondents
as the owner of the cockpit, and petitioners
who were the masiador and sentenciador of
the said cockpit.
Page | xxv
Held
No. The petitioners are not employees of the
respondents but are independent contractors.
It is evident that petitioners are not
employees of respondents, since their
relationship fails to pass muster the four-fold
test of employment the Court has repeatedly
mentioned in countless decisions:
(1) the selection and engagement of the
employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the power to control the employee’s
conduct, which is the most important
element.
Anent the four fold test, respondents had no
part in petitioners’ selection and
management; petitioners’ compensation was
paid out of the arriba; and petitioners
performed their functions as masiador and
sentenciador free from the direction and
control of respondents. In the conduct of
their work, petitioners relied mainly on their
“expertise that is characteristic of the
cockfight gambling, and were never given
by respondents any tool needed for the
performance of their work.
In view of the foregoing, the petitioners are
thus not employees of respondents and could
not have been illegally dismissed.
WHEREFORE, petition is hereby
DENIED.
____________________________________
12. Bernarte v PBA, et al [GR No 192084,
Sep 14 2011]
Facts
Petitioner Jose Mel Bernarte aver that he
was invited to join the Philippine Basketball
Association (hereinafter “PBA”) as referee.
Initially, he was made to sign contracts on a
year-to-year basis; however during the term
of respondent Commissioner Eala, changes
were made on the terms of their
employment.
Bernarte was not made to sign a contract
during the first conference of the Filipino
All-Filipino Cup, but during the second
conference of the All-Filipino Cup.
Sometime later, he received a letter from
the Office of the Commissioner advising
him that his contract would not be renewed
due to his unsatisfactory performance on and
off court. He then filed a complaint before
the Labor Arbiter for illegal dismissal.
Respondents aver, nonetheless, that the
petitioner entered into contracts of retainer
with the PBA in 2003. After the expiration
of the second contact, PBA decided not to
renew his contract. Respondent argued that
the the petitioner were not illegally
dismissed because he was not an employee
of the PBA.
The Labor Arbiter (hereinafter “LA”)
declared that the petitioner was an employee
of the PBA and ruled that the dismissal was
illegal. National Labor Relations
Commission (hereinafter “NLRC”) affirmed
the ruling of the LA. Aggrieved, the
respondents then filed a petition for
certiorari with the Court of Appeals
Page | xxvi
(hereinafter CA) which reversed the
decisions of the LA and the NLRC. CA
found petitioner an independent contractor
since respondents did not exercise any form
of control over the means and methods by
which petitioner performed his work as a
basketball referee.
Petitioner then filed a petition for review
with the Supreme Court.
Issue
Whether or not Bernante is an employee of
the Philippine Basketball Association, which
in turn determines whether petitioner was
illegally dismissed
Held
No. Bernante is not an employee of the
Philippine Basketball Association; therefore,
he was not illegally dismissed.
The existence of an employer-employee
relationship is ultimately a question of fact.
As a general rule, the Court cannot review
facts found by the lower courts. However,
this rule admits of exceptions, one of which
is where there are conflicting findings of
fact between the Court of Appeals, on one
hand, and the NLRC and Labor Arbiter, on
the other, such as in the present case.
To determine the existence of an employer-
employee relationship, case law has
consistently applied the four-fold test, to
wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer's
power to control the employee on the means
and methods by which the work is
accomplished. The so-called “control test” is
the most important indicator of the presence
or absence of an employer-employee
relationship.
Petitioner asserts that he is an employee of
respondents since the latter exercise control
over the performance of his work. Petitioner
cites the following stipulations in the
retainer contract which evidence control:
(1) respondents classify or rate a
referee;
(2) respondents require referees to
attend all basketball games
organized or authorized by the
PBA, at least one hour before the
start of the first game of each day;
(3) respondents assign petitioner to
officiate ballgames, or to act as
alternate referee or substitute;
(4) referee agrees to observe and
comply with all the requirements
of the PBA governing the conduct
of the referees whether on or off
the court;
(5) referee agrees (a) to keep himself
in good physical, mental, and
emotional condition during the
life of the contract; (b) to give
always his best effort and service,
and loyalty to the PBA, and not to
officiate as referee in any
basketball game outside of the
PBA, without written prior
consent of the Commissioner; (c)
Page | xxvii
 always to conduct himself on and
off the court according to the
highest standards of honesty or
morality; and
(6) imposition of various sanctions
for violation of the terms and
conditions of the contract.
per game. In addition, there are no
deductions for contributions to the Social
Security System, Philhealth or Pag-Ibig,
which are the usual deductions from
employees' salaries. These undisputed
circumstances buttress the fact that
petitioner is an independent contractor, and
not an employee of respondents.

In addition, the fact that PBA repeatedly

The aforementioned stipulations hardly
hired petitioner does not by itself prove that
demonstrate control over the means and
petitioner is an employee of the former. For
methods by which petitioner performs his
a hired party to be considered an employee,
work as a referee officiating a PBA
the hiring party must have control over the
basketball game. They do not pertain to,
means and methods by which the hired party
much less dictate, how and when petitioner
is to perform his work, which is absent in
will blow the whistle and make calls;
this case.
however on the contrary, they merely serve
as rules of conduct or guidelines in order to
maintain the integrity of the professional If PBA decides to discontinue petitioner's
basketball league. services at the end of the term fixed in the
contract, whether for unsatisfactory services,
or violation of the terms and conditions of
Once in the playing court, the referees
the contract, or for whatever other reason,
exercise their own independent judgment,
the same merely results in the non-renewal
based on the rules of the game, as to when
of the contract, as in the present case. The
and how a call or decision is to be made.
non-renewal of the contract between the
The referees decide whether an infraction
parties does not constitute illegal dismissal
was committed, and the PBA cannot
of petitioner by respondents.
overrule them once the decision is made on
the playing court. The referees are the only,
absolute, and final authority on the playing ____________________________________
court. Respondents or any of the PBA 13. Lirio v Genovia [GR No 169757, Nov
officers cannot and do not determine which 23 2011]
calls to make or not to make and cannot
control the referee when he blows the
whistle because such authority exclusively
belongs to the referees. The very nature of
petitioner's job of officiating a professional Facts
basketball game undoubtedly calls for
freedom of control by respondents.
Respondent Genovia alleged, among others,
that he was hired as studio manager by
Unlike regular employees who ordinarily petitioner Lirio, owner of Celkor Ad
report for work eight hours per day for five Sonicmix Recording Studio (Celkor). He
days a week, petitioner is required to report was employed to manage and operate Celkor
for work only when PBA games are and to promote and sell the recording
scheduled or three times a week at two hours

Page | xxviii
studio's services to music enthusiasts and
other prospective clients. He received a
monthly salary of P7,000.00. They also
agreed that he was entitled to an additional
commission of P100.00 per hour as
recording technician. He was made to report
for work from Monday to Friday from 9:00
a.m. to 6 p.m. On Saturdays, he was
required to work half-day only, but most of
the time, he still rendered eight hours of
work or more.
Respondent stated that a few days after he
started working as a studio manager,
petitioner approached him and told him
about his project to produce an album for his
15-year-old daughter, Celine Mei Lirio.
Petitioner asked respondent to compose and
arrange songs for Celine and promised that
he would draft a contract to assure
respondent of his compensation for such
services. The technical aspect in producing
the album, such as digital editing, mixing
and sound engineering would be performed
by respondent in his capacity as studio
manager for which he was paid on a
monthly basis.
Respondent alleged that before the end of
September 2001, he reminded petitioner
about his compensation as composer and
arranger of the album. Petitioner verbally
assured him that he would be duly
compensated. On February 26, 2002,
respondent again reminded petitioner about
the contract on his compensation as
composer and arranger of the album.
Petitioner told respondent that since he was
practically a nobody and had proven nothing
yet in the music industry, respondent did not
deserve a high compensation, and he should
be thankful that he was given a job to feed
his family. Petitioner informed respondent
that he was entitled only to 20% of the net
profit, and not of the gross sales of the
album, and that the salaries he received and
would continue to receive as studio manager
of Celkor would be deducted from the said
20% net profit share. Respondent objected
and insisted that he be properly
compensated. On March 14, 2002, petitioner
verbally terminated respondent's services,
and he was instructed not to report for
work.Respondent asserts that he was
illegally dismissed as he was terminated
without any valid grounds, and no hearing
was conducted before he was terminated.
Respondent prayed for his reinstatement
without loss of seniority rights, or, in the
alternative, that he be paid separation pay,
backwages and overtime pay; and that he be
awarded unpaid commission in the amount
of P2,000.00 for services rendered as a
studio technician as well as moral and
exemplary damages.
In defense, petitioner stated that respondent
was not hired as studio manager, composer,
technician or as an employee in any other
capacity of Celkor. He looked for a
composer/arranger who would compose the
songs for the album of his daughter. In July
2001, Bob Santiago, his son-in-law,
introduced him to respondent, who claimed
to be an amateur composer, an arranger with
limited experience and musician without any
formal musical training. Respondent
verbally agreed with petitioner to co-
produce the album. Petitioner asserted that
from the aforesaid terms and conditions, his
relationship with respondent is one of an
informal partnership under Article 1767 of
the New Civil Code, since they agreed to
contribute money, property or industry to a
common fund with the intention of dividing
the profits among themselves. Petitioner had
no control over the time and manner by
which respondent composed or arranged the
songs, except on the result thereof.
Respondent reported to the recording studio
between 10:00 a.m. and 12:00 noon. Hence,
petitioner contended that no employer-
Page | xxix
employee relationship existed between him
and the respondent, and there was no illegal
dismissal to speak of.
On October 31, 2003, Labor Arbiter
Renaldo O. Hernandez rendered a decision,
finding that an employer-employee
relationship existed between petitioner and
respondent. Upon appeal, the NLRC stated
that respondent failed to prove his
employment tale with substantial evidence.
Upon filing a petition for certiorari with the
Court of Appeals, the appellate court
rendered a decision reversing and setting
aside the resolution of the NLRC, and
reinstating the decision of the Labor Arbiter,
with modification in regard to the award of
commission and damages. Hence, petitioner
Lirio filed this petition.
Issue
Whether or not employer-employee
relationship existed between petitioner and
respondent.
Held
Before a case for illegal dismissal can
prosper, it must first be established that an
employer-employee relationship existed
between petitioner and respondent.The
elements to determine the existence of an
employment relationship are: (a) the
selection and engagement of the employee;
(b) the payment of wages; (c) the power of
dismissal; and (d) the employer's power to
control the employee's conduct. The most
important element is the employer's control
of the employee's conduct, not only as to the
result of the work to be done, but also as to
the means and methods to accomplish it.
The documentary evidence (payroll and two
petty cash vouchers) presented by
respondent showed that petitioner hired
respondent as an employee and he was paid
monthly wages of P7,000.00. Petitioner
wielded the power to dismiss as respondent
stated that he was verbally dismissed by
petitioner. Petitioner also stated in his
Position Paper that it was agreed that he
would help and teach respondent how to use
the studio equipment. In such case,
petitioner certainly had the power to check
on the progress and work of respondent.
On the other hand, petitioner failed to prove
that his relationship with respondent was
one of partnership. Such claim was not
supported by any written agreement.
In termination cases, as stated in Article 277
(b), the burden is upon the employer to show
by substantial evidence that the termination
was for lawful cause and validly made. For
an employee's dismissal to be valid, (a) the
dismissal must be for a valid cause, and (b)
the employee must be afforded due process.
Petitioner failed to comply with these legal
requirements; hence, the Court of Appeals
correctly affirmed the Labor Arbiter's
finding that respondent was illegally
dismissed, and entitled to the payment of
backwages, and separation pay in lieu of
reinstatement.
____________________________________
14. Jao v BCC Products Sales, Inc. [GR
No 163700, Apr 18 2012]
Facts
Page | xxx
Petitioner maintained that respondent BCC
Product Sales, Inc. (BCC) and its President,
respondent Terrance Ty (Ty), employed him
as comptroller starting from September 1995
with a monthly salary of P20,000.00 to
handle the financial aspect of BCC's
business; that on October 19, 1995, the
security guards of BCC, acting upon the
instruction of Ty, barred him from entering
the premises of BCC where he then worked;
that his attempts to report to work in
November and December 12, 1995 were
frustrated because he continued to be barred
from entering the premises of BCC; and that
he filed a complaint dated December 28,
1995 for illegal dismissal, reinstatement
with full backwages, non-payment of wages,
damages and attorney's fees.
Respondents countered that petitioner was
not their employee but the employee of
Sobien Food Corporation (SFC), the major
creditor and supplier of BCC; and that SFC
had posted him as its comptroller in BCC to
oversee BCC's finances and business
operations and to look after SFC's interests
or investments in BCC.; that their issuance
of the ID to petitioner was only for the
purpose of facilitating his entry into the
BCC premises in relation to his work of
overseeing the financial operations of BCC
for SFC; that the ID should not be
considered as evidence of petitioner's
employment in BCC; that petitioner
executed an affidavit in March 1996, 20
stating, among others, as follows:
1. I am a CPA (Certified Public
Accountant) by profession but
presently associated with, or employed
by, Sobien Food Corporation with the
same business address as abovestated;
2. In the course of my association with,
or employment by, Sobien Food
Corporation (SFC, for short), I have
been entrusted by my employer to
oversee and supervise collections on
account of receivables due SFC from
its customers or clients; for instance,
certain checks due and turned over by
one of SFC's customers is BCC
Product Sales, Inc., operated or run by
one Terrance L. Ty, (President and
General manager).
Petitioner counters, however, that the
affidavit did not establish the absence of an
employer-employee relationship between
him and respondents because it had been
executed in March 1996, or after his
employment with respondents had been
terminated on December 12, 1995; and that
the affidavit referred to his subsequent
employment by SFC following the
termination of his employment by BCC.
Issue
Whether or not an employer-employee
relationship existed between petitioner and
BCC.
Held
In determining the presence or absence of an
employer-employee relationship, the Court
has consistently looked for the following
incidents, to wit: (a) the selection and
engagement of the employee; (b) the
Page | xxxi
payment of wages; (c) the power of
dismissal; and (d) the employer's power to
control the employee on the means and
methods by which the work is
accomplished. The last element, the so-
called control test, is the most important
element.
Petitioner presented no document setting
forth the terms of his employment by BCC.
The failure to present such agreement on
terms of employment may be
understandable and expected if he was a
common or ordinary laborer who would not
jeopardize his employment by demanding
such document from the employer, but may
not square well with his actual status as a
highly educated professional.
Petitioner's admission that he did not receive
his salary for the three months of his
employment by BCC, as his complaint for
illegal dismissal and non-payment of wages
and the criminal case for estafa he later filed
against the respondents for non-payment of
wages indicated, further raised grave doubts
about his assertion of employment by BCC.
If the assertion was true, we are puzzled
how he could have remained in BCC's
employ in that period of time despite not
being paid the first salary of
P20,000.00/month. Moreover, his name did
not appear in the payroll of BCC despite him
having approved the payroll as comptroller.
Lastly, the confusion about the date of his
alleged illegal dismissal provides another
indicium of the insincerity of petitioner's
assertion of employment by BCC. In the
petition for review on certiorari, he averred
that he had been barred from entering the
premises of BCC on October 19, 1995, 27
and thus was illegally dismissed. Yet, his
complaint for illegal dismissal stated that he
had been illegally dismissed on December
12, 1995 when respondents' security guards
barred him from entering the premises of
BCC, 28 causing him to bring his complaint
only on December 29, 1995, and after BCC
had already filed the criminal complaint
against him. The wide gap between October
19, 1995 and December 12, 1995 cannot be
dismissed as a trivial inconsistency
considering that the several incidents
affecting the veracity of his assertion of
employment by BCC earlier noted herein
transpired in that interval.
With all the grave doubts thus raised against
petitioner's claim, we need not dwell at
length on the other proofs he presented, like
the affidavits of some of the employees of
BCC, the ID, and the signed checks, bills
and receipts. Suffice it to be stated that such
other proofs were easily explainable by
respondents and by the aforestated
circumstances showing him to be the
employee of SFC, not of BCC.
____________________________________
15. Legend Hotel (Manila) v Realuyo [GR
No 153511, July 18, 2012]
Facts
This labor case for illegal dismissal involves
a pianist employed to perform in the
restaurant of a hotel. On August 9, 1999,
respondent, whose stage name was Joey R.
Roa, filed a complaint for alleged unfair
labor practice, constructive illegal dismissal,
and the underpayment/nonpayment of his
premium pay for holidays, separation pay,
Page | xxxii
service incentive leave pay, and Php13,111
month pay.
Respondent averred that he had worked as a
pianist at the Legend Hotel’s Tanglaw
Restaurant from September 1992 with an
initial rate of P400.00/night that was given
to him after each night’s performance; that
his rate had increased to P750.00/night; and
that during his employment, he could not
choose the time of performance, which had
been fixed from 7:00 pm to 10:00 pm for
three to six times/week. He added that the
Legend Hotel’s restaurant manager had
required him to conform with the venue’s
motif; that he had been subjected to the rules
on employees’ representation checks and
chits, a privilege granted to other
employees; that on July 9, 1999, the
management had notified him that as a cost-
cutting measure his services as a pianist
would no longer be required effective July
30, 1999; that he disputed the excuse,
insisting that Legend Hotel had been
lucratively operating as of the filing of his
complaint; and that the loss of his
employment made him bring his complaint.
The labour arbiter dismissed Respondent’s
complaint agreeing with Petitioner that there
was no employee-employer relationship.
Respondent appealed with the NLRC which
in turn affirmed the labor arbiter’s decision.
Respondent filed a motion for certiorari in
the Court of Appeals which reversed the
decision of the NLRC and granted
respondent’s petition.
Issue
Whether there exists an employer-employee
relationship
Held
Employer-employee relationship existed
between the parties. The issue of whether or
not an employer-employee relationship
existed between petitioner and respondent is
essentially a question of fact. The factors
that determine the issue include who has the
power to select the employee, who pays the
employee’s wages, who has the power to
dismiss the employee, and who exercises
control of the methods and results by which
the work of the employee is accomplished.
Although no particular form of evidence is
required to prove the existence of the
relationship, and any competent and relevant
evidence to prove the relationship may be
admitted, a finding that the relationship
exists must nonetheless rest on substantial
evidence, which is that amount of relevant
evidence that a reasonable mind might
accept as adequate to justify a conclusion.
A review of the circumstances reveals that
respondent was, indeed, petitioner’s
employee. He was undeniably employed as
a pianist in petitioner’s Madison Coffee
Shop/Tanglaw Restaurant from September
1992 until his services were terminated on
July 9, 1999.
First of all, petitioner actually wielded the
power of selection at the time it entered into
the service contract dated September 1, 1992
with respondent. This is true,
notwithstanding petitioner’s insistence that
respondent had only offered his services to
provide live music at petitioner’s Tanglaw
Restaurant, and despite petitioner’s position
that what had really transpired was a
negotiation of his rate and time of
availability. The power of selection was
firmly evidenced by, among others, the
express written recommendation dated
January 12, 1998 by Christine Velazco,
petitioner’s restaurant manager, for the
increase of his remuneration.
Page | xxxiii

Secondly, petitioner argues that whatever
remuneration was given to respondent were
only his talent fees that were not included in
the definition of wage under the Labor
Code. Respondent was paid P400.00 per
three hours of performance from 7:00 pm to
10:00 pm, three to six nights a week. Such
rate of remuneration was later increased to
P750.00 upon restaurant manager Velazco’s
recommendation. There is no denying that
the remuneration denominated as talent fees
was fixed on the basis of his talent and skill
and the quality of the music he played
during the hours of performance each night,
taking into account the prevailing rate for
similar talents in the entertainment industry.
____________________________________
16. The New Philippine Skylanders, Inc v
Dakila [GR No 199547, Sep 24, 2011]
Facts
In May 1997, Respondent Dakila was
rehired by petitioner corporation as
consultant under a Contract for Consultancy
Services dated April 30, 1997 after he was
terminated when the corporation was sold.
Thereafter, in April 19, 2007, respondent
Dakila informed petitioners of his
compulsory retirement effective May 2,
2007 and sought for the payment of his
retirement benefits pursuant to the
Collective Bargaining Agreement. His
request, however, was not acted upon.
Instead, he was terminated from service
effective May 1, 2007.
Consequently, respondent filed a complaint
against the petitioners for constructive
illegal dismissal, non-payment of retirement
benefits, under/non-payment of wages and
other benefits of a regular employee, and
damages. He averred that the consultancy
contract was a scheme to deprive him of the
benefits of regularization, claiming to have
assumed tasks necessary and desirable in the
trade or business of petitioners and under
their direct control and supervision.
On the other hand, petitioners asserted that
respondent was a consultant and not their
regular employee. The latter was not
included in petitioners’ payroll and paid a
fixed amount under the consultancy
contract. He was not required to observe
regular working hours and was free to adopt
means and methods to accomplish his task
except as to the results of the work required
of him. Hence, no employer-employee
relationship existed between them.
Moreover, respondent terminated his
contract in a letter dated April 19, 2007,
thus, negating his dismissal.
LA and NLRC: found that the respondent
was illegally dismissed
CA; dismissed the petition for failure to
show that the NLRC committed grave abuse
of discretion in affIrming the LA's Decision.
Issue
Whether or not Dakila was illegally
dismissed.
Held
Yes, Dakila was illegally dismissed. The
issue of illegal dismissal is premised on the
existence of an employer-employee
relationship between the parties herein. It is
essentially a question of fact, beyond the
ambit of a petition for review on certiorari
under Rule 45 of the Rules of Court unless
Page | xxxiv
there is a clear showing of palpable error or
arbitrary disregard of evidence which does
not obtain in this case.
Following Article 279 of the Labor Code, an
employee who is unjustly dismissed from
work is entitled to reinstatement without loss
of seniority rights and other privileges and
to his full backwages computed from the
time he was illegally dismissed. However,
considering that respondent Dakila was
terminated on May 1, 2007, or one (1) day
prior to his compulsory retirement on May
2, 2007, his reinstatement is no longer
feasible. Accordingly, the NLRC correctly
held him entitled to the payment of his
retirement benefits pursuant to the CBA. On
the other hand, his backwages should be
computed only for days prior to his
compulsory retirement which in this case is
only a day.
____________________________________
17. Tesoro, et al v Metro Manila
Retreaders Inc, et al [GR No 171482, Mar
12, 2014]
Facts
The petitioners used to work as salesmen for
the respondents, collectively called
“Bandag”.
The petitioners quit their jobs as salesmen
and entered into separate Service Franchise
Agreements (SFAs) with Bandag for the
operation of their respective franchises.
Under the SFAs, Bandag would provide
funding support to the petitioners’ subject to
a regular or periodic liquidation of their
revolving funds. The expenses out of these
funds would be deducted from petitioners’
sales to determine their income.
The petitioners evidently began to default on
their obligations to submit periodic
liquidations of their operational expenses in
relation to the revolving funds Bandag
provided them.
Bandag terminated their respective SFA.
The petitioners filed a complaint for
constructive dismissal, non-payment of
wages, incentive pay, 13th month pay and
damages against Bandag with the National
Labor Relations Commission (NLRC).
The petitioners contended that they
remained the employees of Bandag and the
SFA was a circumvention of their status as
regular employees.
The respondents contended that the
petitioners freely resigned from their
employment and decided to avail themselves
of the opportunity to be independent
entrepreneurs. Thus, no employer-employee
relationship existed between the parties.
The Labor Arbiter rendered a decision,
dismissing the complaint on the ground that
no employer-employee relationship existed
between the parties.
The NLRC affirmed the decision of the
Labor Arbiter.
The Court of Appeals upon a special civil
action for certiorari initiated by the
petitioner dismissed the complaint for lack
of merit.
Issue
Page | xxxv
Whether or not petitioners remained to be
Bandag’s salesmen under the franchise
scheme it entered into with them.
Held
The Supreme Court dismissed the petition
and affirmed the decision of the Court of
Appeals applying the control test, the
respondent still continued, like an employer,
exercising control over the petitioners’ work
by retaining the right to adjust the price rates
of products and services; impose minimum
processed tire requirement (MPR); review
and regulate credit applications; and retain
the power to suspend the petitioners’
services for failure to meet service
standards. The petitioner cannot use the
revolving funds of the SFA as evidence of
their employer-employee relationship with
Bandag. These funds do not represent
wages. They are more in the nature of
capital advances for operations that Bandag
conceptualized in their respective franchises.
The decisions of the Labor Arbiter, NLRC
and The Court of Appeals must be
considered with great weight and respect in
determining the facts on hand and thus
should generally not be disturbed.
____________________________________
18. Royale Homes Marketing Corp v
Alcantara [GR No 195190, July 28, 2014]
Facts
In 1994, the petitioners engaged in
marketing real estates, appointed the
respondent as their Marketing Director for a
fixed period of one year. His work
consisted mainly of marketing Petitioners’
real estate inventories on an exclusive basis.
Petitioners reappointed him for several
consecutive years, the last of which covered
the period January 1 to December 31, 2003
where he held the position of Division 5
Vice-President-Sales.
On December 17, 2013, respondent filed a
Complaint for Illegal Dismissal against the
Petitioners. He alleged that he is a regular
employee of the said petitioners since he is
performing tasks that are necessary and
desirable to their business; that in 2003 the
petitioners gave him 1.2 million pesos for
the services he rendered to them; that in the
first of November 2013, however, the
petitioners told him that they were
wondering why he still had the gail to come
to office and sit at his table, and that the acts
of the petitioners amounted to his dismissal
from work without any valid or just cause
and in gross disregard of the proper
procedure for dismissing employees. Thus,
he also impleaded the petitioners who, he
averred, effected his dismissal in bad faith
and in an oppressive manner.
On the other hand, the petitioners
vehemently denied that respondent is their
employee. They argued that the appointment
paper of respondent is clear that they
engaged his services as an independent sales
contractor for a fixed term of one year only.
He never received any salary, 13th month
pay, overtime pay or holiday pay from them
as he was paid purely on commission basis.
In addition, petitioners had no control on
how respondents would accomplish his tasks
and responsibilities as he was free to solicit
sales at any time and by any manner which
he deem appropriate and necessary. He is
even free to recruit his own sales personnel
to assist him in pursuance of his sales target.
According to the petitioners, respondent
decided to leave the company after his wife,
who was once connected with them as a
Page | xxxvi
sales agent, had a formed a brokerage
company that directly competed with their
business, and even recruited some of their
sales agents. In a special management
committee meeting on October 8, 20013,
respondent announced publicly and openly
that he would leave the company by the end
of October 2003 and that he would no longer
finish the unexpired term of his contract. He
has decided to join his wife and pursue their
own brokerage business. Petitioners
accepted respondent’s decision.
Issue
Whether or not Alcantara was an
independent contractor
Held
Yes. The contract between the petitioners
and the respondent conspicuously provides
no employer-employee relationship exists
between them.One of the statements of the
contract clearly leaves no doubt upon the
intention of the contracting parties: “It is
understood, however, that no employer-
employee relationship exists between us,
that of your sales personnel/agents.”
Although power to control is one of the four
fold test to determine the existence of an
employer-employee relationship, not every
form of control is indicative of such
relationship. A person who performs work
for another and is subjected to its rules,
regulations, and code of ethics does not
necessarily become an employee. As long as
the level of control does not interfere with
the means and methods of accomplishing the
assigned tasks, the rules imposed by the
hiring party on the hired party do not
amount to the labor law concept of control
that is indicative of employer-employee
relationship.
The Court agrees with the petitioners that
the rules, regulations, code of ethics, and
periodic evaluation alluded to by them do
not involve control over the means and
methods by which he was to perform his
job.
The respondent has the burden of proof to
prove the elements of petitioners’ power of
control over the means and methods of
accomplishing the work but he failed to cite
specific rules, regulations or code of ethics
that supposedly imposed control on his
means and methods of soliciting sales and
dealing with prospective clients. Notably,
Alcantara was not required to observe
definite working hours. Except for soliciting
sales, petitioners did not assign other tasks
to him. He had full control over the means
and methods of accomplishing his tasks as
he can “solicit sales at any time and by any
manner which (he may) deem appropriate
and necessary.” He performed his tasks on
his own account free from the control and
direction of petitioners in all matters
connected therewith, except as to the results
thereof.
The element of payment of wages is also
absent in this case. As provided in the
contract, respondent’s remunerations consist
only of commission override of 0.5%,
budget allocation, sales incentive and other
forms of company support. There is no proof
that he received fixed monthly salary. No
payslip or payroll was ever presented and
there is no proof that petitioners deducted
from his supposed salary withholding tax or
that it registered him with the Social
Security System, Philippine Health
Page | xxxvii
Insurance Corporation, or Pag-Ibig Fund. In
fact, his Complaint merely states a ballpark
figure of his alleged salary of P100,000.00,
more or less. All of these indicate an
independent contractual relationship.
____________________________________
19. Fuji Television Network Inc v Espiritu
[GR 204944-45, Dec 3, 2014]
Facts
In 2005 Arlene S. Espiritu ("Arlene") was
engaged by Fuji Television Network, Inc.
("Fuji") as a news correspondent/producer
with employment contract initially provided
for a term of 1 year but was successively
renewed on a yearly basis with salary
adjustment upon every renewal.
Sometime in January 2009, Arlene was
diagnosed with lung cancer, and
subsequently informed the company. In turn,
the Chief of News Agency of Fuji, Yoshiki
Aoki, informed Arlene "that the company
will have a problem renewing her contract"
since it would be difficult for her to perform
her job. She "insisted that she was still fit to
work as certified by her attending
physician." After several verbal and written
communications, Arlene and Fuji signed a
non-renewal contract on May 5, 2009 where
it was stipulated that her contract would no
longer be renewed after its expiration. The
contract also provided that the parties
release each other from liabilities and
responsibilities under the employment
contract.
In consideration of the non-renewal contract,
Arlene "acknowledged receipt of the total
amount of US$18,050.00 representing her
monthly salary from March 2009 to May
2009, year-end bonus, mid-year bonus, and
separation pay." However, Arlene affixed
her signature on the non-renewal contract
with the initials "U.P." for "under protest."
The day after Arlene signed the non-renewal
contract, she filed a complaint for illegal
dismissal with the NCR Arbitration Branch
of NLRC. Arlene claimed that she was left
with no other recourse but to sign the non-
renewal contract.
Labor Arbiter Corazon C. Borbolla
dismissed Arlene's complaint saying that she
was an independent contractor. The National
Labor Relations Commission reversed the
Labor Arbiter's decision. It held that Arlene
was a regular employee.
The CA, on appeal, affirmed the NLRC with
the modification that Fuji immediately
reinstate Arlene to her position as News
Producer without loss of seniority rights,
and pay her backwages, 13th-month pay,
mid-year and year-end bonuses, sick leave
and vacation leave with pay until reinstated,
moral damages, exemplary damages,
attorney's fees, and legal interest of 12% per
annum of the total monetary awards.
Issue
1) Whether Arlene was a regular
employee.
2) Whether Arlene was illegally
dismissed.
Page | xxxviii
 This is precisely what Article 280
seeks to avoid. The ruling in Brent
remains as the exception rather than
Held
the general rule. Further, an
employee can be a regular employee
1) Yes, Arlene was a regular employee with a fixed-term contract. The law
with a fixed-term contract. The test does not preclude the possibility that
for determining regular employment a regular employee may opt to have
is whether there is a reasonable a fixed-term contract for valid
connection between the employee's reasons. This was recognized in
activities and the usual business of Brent: For as long as it was the
the employer. Article 280 provides employee who requested, or
that the nature of work must be bargained, that the contract have a
"necessary or desirable in the usual "definite date of termination," or that
business or trade of the employer" as the fixed-term contract be freely
the test for determining regular entered into by the employer and the
employment. Arlene's contract employee, then the validity of the
indicating a fixed term did not fixed-term contract will be upheld.
automatically mean that she could
never be a regular employee.
2) Yes, as a regular employee, Arlene
Another classification of employees,
was entitled to security of tenure and
i.e.,employees with fixed-term
could be dismissed only for just or
contracts, was recognized in Brent
authorized causes and after the
School, Inc. v. Zamora where this
observance of due process.
court discussed that:

Article 279 of the Labor Code also

Logically, the decisive determinant
provides for the right to security of
in the term employment should not
tenure. Thus, on the right to security
be the activities that the employee is
of tenure, no employee shall be
called upon to perform, but the day
dismissed, unless there are just or
certain agreed upon by the parties for
authorized causes and only after
the commencement and termination
compliance with procedural and
of their employment relationship, a
substantive due process is conducted.
day certain being understood to be
"that which must necessarily come, ____________________________________
although it may not be known 20. Cabaobas et al, v Pepsi Col [ GR No
when." 176908, Mar 25 2015]

This court further discussed that

there are employment contracts
where "a fixed term is an essential
and natural appurtenance" such as Facts
overseas employment contracts and
officers in educational institutions. Pepsi-Cola Products Philippines, Inc.’s
Tanauan Plant in Tanauan, Leyte incurred
business losses in the total amount of

Page | xxxix
29,167,390.00. To avert further losses, The Labor Arbiter ruled that the dismissal of
PCPPI implemented a company-wide the petitioners was illegal. On appeal of both
retrenchment program and retrenched 47 parties, the Fourth Division of the NLRC
employees of its Tanauan Plant. reversed the decision of the labor arbiter.

Petitioners, who are permanent and regular The petitioners’ appeal was dismissed and
employees of the Tanauan Plant, received the CA affirmed the NLRC’s Fourth
their respective letters, informing them of Division’s decision. However, acting on the
the cessation of their employment. petition for certiorari filed by Molon, et al.,
Petitioners then filed their respective the CA reversed its own decision and
complaints for illegal dismissal before the declaring that the retrenchment was contrary
National Labor Relations Commission to the prescribed rules and procedure and
Regional Arbitration Branch No. VIII in declaring that petitioners were illegally
Tacloban City. terminated. Their reinstatement to their
former positions or its equivalent is hereby
ordered, without loss of seniority rights and
Petitioners alleged that PCPPI was not
privileges and PEPSI-COLA is also ordered
facing serious financial losses because after
the payment of their backwages from the
their termination, it regularized four (4)
time of their illegal dismissal up to the date
employees and hired replacements for the
of their actual reinstatement. If reinstatement
forty-seven (47) previously dismissed
is not feasible because of strained relations
employees. They also alleged that PCPPI's
or abolition of their respective positions, the
CRP was just designed to prevent their
payment of separation pay equivalent to 1
union, Leyte Pepsi-Cola Employees Union-
month salary for every year of service, a
Associated Labor Union (LEPCEU-ALU),
fraction of at least 6 months shall be
from becoming the certified bargaining
considered a whole year. The monetary
agent of PCPPI's rank-and-file employees.
considerations received by some of the
employees shall be deducted from the total
PCPPI countered that petitioners were amount they ought to receive from the
dismissed pursuant to its CRP to save the company.
company from total bankruptcy and
collapse; thus, it sent notices of termination
to them and to the Department of Labor and
Employment.
Issue
In support of its argument that its CRP is a
valid exercise of management prerogative, Whether or not the dismissal was legal and
PCPPI submitted audited financial valid.
statements showing that it suffered financial
reverses in 1998 in the total amount of
SEVEN HUNDRED MILLION
(P700,000,000.00) PESOS, TWENTY-
SEVEN MILLION (P27,000,000.00) Held
PESOS of which was allegedly incurred in
the Tanauan Plant in 1999. The petition has no merit.

Page | xl
Essentially, the prerogative of an employer
to retrench its employees must be exercised
only as a last resort, considering that it will
lead to the loss of the employees' livelihood.
It is justified only when all other less drastic
means have been tried and found insufficient
or inadequate. Corollary thereto, the
employer must prove the requirements for a
valid retrenchment by clear and convincing
evidence; otherwise, said ground for
termination would be susceptible to abuse
by scheming employers who might be
merely feigning losses or reverses in their
business ventures in order to ease out
employees.
REQUISITES:
(1) That retrenchment is reasonably
necessary and likely to prevent
business losses which, if already
incurred, are not merely de minimis,
but substantial, serious, actual and
real, or if only expected, are
reasonably imminent as perceived
objectively and in good faith by the
employer;
(2) That the employer served written
notice both to the employees and to
the Department of Labor and
Employment at least one month prior
to the intended date of retrenchment;
(3) That the employer pays the
retrenched employees separation pay
equivalent to one (1) month pay or at
least one-half (½) month pay for
every year of service, whichever is
higher;
(4) That the employer exercises its
prerogative to retrench employees in
good faith for the advancement of its
interest and not to defeat or
circumvent the employees’ right to
security of tenure; and
(5) That the employer used fair and
reasonable criteria in ascertaining
who would be dismissed and who
would be retained among the
employees, such as status, efficiency,
seniority, physical fitness, age, and
financial hardship for certain
workers.
In due regard of these requisites, the Court
observes that Pepsi had validly implemented
its retrenchment program.
It is axiomatic that absent any clear showing
of abuse, arbitrariness or capriciousness, the
findings of fact by the NLRC, especially
when affirmed by the CA – as in this case –
are binding and conclusive upon the Court.
Thus, given that there lies no discretionary
abuse with respect to the foregoing findings,
the Court sees no reason to deviate from the
same.
Moreover, it must be underscored that
Pepsi’s management exerted conscious
efforts to incorporate employee participation
during the implementation of its
retrenchment program. Records indicate that
Pepsi had initiated sit-downs with its
employees to review the criteria on which
the selection of who to be retrenched would
be based.
____________________________________
21. Begino, et al v ABS-CBN Corp [GR
No 199166, Apr 20, 2015]
Facts
ABS-CBN Regional Network Group in
Naga City employed Amalia Villafuerte as a
Page | xli
manager. In 1996, ABS-CBN employed 1. They performed functions
then petitioners Begino and Del Valle as necessary and desirable in ABS-
cameramen/Editors for TV broadcasting, CBN business;
ABS-CBN also employed Sumayao and
Monina. Petitioners engaged their services
2. They are mandated to wear
thru Talent Contracts which are regularly
company ID’s;
renewed over three months to 1 year.
Petitioners were also given Project
Assignment forms which determined the 3. They are provided all the
duration of a particular project as well as the equipment needed;
budget and the technical requirements
thereof. Petitioners were then tasked to work 4. They worked under the direct
on subsequent daily airings in respondent’s control and supervision of
TV Patrol Bicol Program. The Talent respondent Villafuerte;
contracts specifically provided that there is
no employee-employer (ER-EE) relationship
between petitioners and respondents, but it 5. They were also bound on ABS-
additionally provided for: CBN’s policy on attendance and
punctuality;
1. Creation and performance of
work according to ABS-CBN’s 6. That ABS-CBN due to the
standards, policies and guidelines; Contracts, they earn less than
what respondents usually pay
their regular rank-and-file
2. The petitioners should not work employees.
for ABS-CBN’s competing
companies or any of the same that
had an adverse interest to that of Respondents refuted the petitioners claim
ABS-CBN; saying that:

3. The work they are doing is results 1. The petitioners are independent
oriented, which does not require contractors, they employed them
them to have fixed or normal due to lack of manpower to man
hours of work; the business;

4. Petitioner’s remunerations were 2. They are known as talents and

denominated as talent fees. required to inform ABS-CBN of
their availability through Talent
Information Forms to facilitate
Petitioners, claiming that they are employees their appearance on designated
of the respondent, filed a complaint against project days;
ABS-CBN in the NLRC Sub-Regional
Arbitration Brannch for regularization,
underpayment of overtime pay, holiday pay, 3. They cannot afford employing
13th month pay, Service incentive leave pay, regular workers due to
damages and atty’s fees, contending that: unpredictable viewer preferences;

Page | xlii
 4. That through the talent contracts,
petitioners were engaged because
of their skills, knowledge and
expertise;
5. That the policies were general
guidelines only and does not
subject petitioners to control;
6. They were never subjected to
control over the means and
methods by which they do their
tasks.
During the pendency of their case,
petitioners were dismissed and they filed a
second complaint, adding illegal dismissal
and unfair labor practice to their previous
claims 2nd claim of petitioners were
dismissed for violation of rules against non-
forum shopping because the issues in the 1st
complaint must be resolved first before
resolving the 2nd complaint.
Labor Arbiter resolved the first complaint in
favor of petitioners, ordering ABS-CBN to
pay a total of P2, 440,908.36 representing
salaries/wage differentials, holiday pay, SIL,
13th month pay and atty’s fees. LA also
ordered respondents to admit back
complainants under the same terms
prevailing prior to their separation. LA said
that they are employees because:
1. Petitioners have worked for
more than a year;
2. Petitioners are bound by
exclusivity clause in the talent contracts;
3. There was substantial control
over them;
Respondents appealed to the NLRC which
affirmed the LA’s decision. Appealed to the
CA, CA reversed, Petitioners then appealed
to SC
Issue
Whether or not there is an employer-
employee relationship
Held
SC finds the petition impressed with merit.
SC applied the four-fold test and the control
test and found that there is a presence of an
EE-ER relationship. Based on article 280 of
the Labor Code, petitioners are regular
employees of ABS-CBN due to the
reasonable connection between the activity
performed by the petitioners and the
business or trade of ABS-CBN. Also
petitioners were continuously rehired over
the years for its long running news program
which indicates that petitioners are regular
employees. Even if the performance is not
continuous or merely intermittent, the law
deems the repeated or continuing
performance as sufficient evidence of the
necessity, if not indispensability of that
activity in the business. Indeed, an
employment stops being co-terminous with
specific projects where the employee is
continuously re-hired due to the demands of
the employer’s business. Exclusivity clause
Page | xliii
and the provision on equipments essential constantly assured of being absorbed into
for their functions shows that petitioners the SSS plantilla.
were subject to control of the respondents.
Even if the performance is not continuous or
Because of the oppressive and prejudicial
merely intermittent, the law deems the
treatment by SSS, she was forced to resign
repeated or continuing performance as
on August 26, 2002 as she could no longer
sufficient evidence of the necessity, if not
stand being exploited, the agony of
indispensability of that activity in the
dissatisfaction, anxiety, demoralization, and
business. Indeed, an employment stops
injustice.
being co-terminous with specific projects
where the employee is continuously re-hired
due to the demands of the employer’s Respondent then filed for damages against
business. SC Reversed the CA decision and petitioners before the RTC of Daet,
reinstated NLRC decision Camarines Norte.

____________________________________ Petitioner and its co-defendants SSS

Retirees Association and DBP Service
Corporation filed their respective motions to
22. SSS v Ubana [GR No 200114, Aug 25,
dismiss, arguing that the subject matter of
2015]
the case and respondent’s claims arose out
of employer-employee relations, which are
beyond the RTC’s jurisdiction and properly
cognizable by the National Labor Relations
Commission (NLRC).
Facts

Respondent applied for employment with

petitioner in 1995 but she has been referred
to DBP Service Corporation for transitory Issue
employment. She was then assigned to
petitioner under a six-month Service
Whether or not RTC has jurisdiction to hear
Contract Agreement as clerk with a daily
the case for damages filed by petitioner.
wage of only P171.00. She was assigned as
“Frontliner” (1999), Data Encoder (2001)
and as Processor until her resignation on
August 26, 2002. As Processor, she was paid
only 229.00 daily or 5,038.00 monthly, Held
while a regular SSS Processor receives a
monthly salary of 18,622.00 or 846.45 daily
wage. Her May 28, 1996 Service Contract Yes. In Home Development Mutual Fund v.
Agreement with DBP Service Corporation Commission on Audit, it was held that while
was never renewed, but she was required to they performed the work of regular
work for SSS continuously under different government employees, DBP Service
assignments with a maximum daily salary of Corporation personnel are not government
only 229.00; at the same time, she was personnel, but employees of DBP Service
Corporation acting as an independent

Page | xliv
contractor. Applying the foregoing
pronouncement to the present case, it can be
said that during respondent’s stint with
petitioner, she never became an SSS
employee, as she remained an employee of
DBP Service Corporation and SSS Retirees
Association – the two being independent
contractors with legitimate service contracts
with SSS.
For Article 217 of the Labor Code to apply,
and in order for the Labor Arbiter to acquire
jurisdiction over a dispute, there must be an
employer-employee relation between the
parties thereto. Since there is no employer-
employee relationship between the parties
herein, then there is no labor dispute
cognizable by the Labor Arbiters or the
NLRC. There being no employer-employee
relation or any other definite or direct
contract between respondent and petitioner,
the latter being responsible to the former
only for the proper payment of wages,
respondent is thus justified in filing a case
against petitioner, based on Articles 19 and
20 of the Civil Code, to recover the proper
salary due her as SSS Processor.
____________________________________
23. Century Properties Inc v Babiano, et
al [GR No 220978, July 5, 2016]
Facts
Babiano was hired by CPI as Director of
Sales, and was eventually appointed as Vice
President for Sales. As CPFs Vice President
for Sales, Babiano was remunerated with,
inter alia, the following benefits: (a)
monthly salary of P70,000.00; (b )
allowance of P50,000.00; and (c ) 0.5%
override commission for completed sales.
His employment contract also contained a
"Confidentiality of Documents and Non-
Compete Clause" which barred him from
disclosing confidential information and from
working in any business enterprise that is in
direct competition with CPI "while he is
employed and for a period of one year from
date of resignation or termination from
CPI." And if there is a breach on such terms,
Babiano’s forms of compensation, including
commissions and incentives will be
forfeited.
Concepcion on the other hand was hired by
CPI as Sales Agent and was thereafter
promoted as Project Director. In her
employment contract, it was provided
therein that she would directly report to
Babiano, and she would receive a monthly
subsidy of P60,000.00, 0.5% commission,
and cash incentives. Another similar
contract was executed which provides that
she would receive a monthly subsidy of
P50,000.00, 0.5% commission, and cash
incentives. In both contracts, it was stated
that no employee-employer relationship
exist between Concepcion and CPI.
CPI received reports that Babiano provided
a competitor with information regarding its
marketing strategies, spread false
information regarding CPI and its projects,
recruited CPI's personnel to join the
competitor, and for being absent without
official leave (AWOL) for five days. They
then sent a Notice to Explain to Babiano.
However, Babiano submitted a resignation
letter and revealed that he has been accepted
as Vice-President in the First Global BYO
Development Corporation, a competitor of
CPI. As such, CPI issued a Notice of
Termination to Babiano. Concepcion on the
other hand resigned as Project Director.
Page | xlv
Respondents then now filed a Complaint
before the NLRC for non-payment of
commissions and damages against CPI.
CPI for its part contends that Babiano is a
mere agent, his termination was with just
causes and that he has forfeited his
commission due to a breach of the
"Confidentiality of Documents and Non-
Compete Clause" on his contract. For
Concepcion, NLRC has no jurisdiction
because there was no employee-employer
relationship and thus it should be filed as an
ordinary civil action.
The Labor Arbiter ruled in favor of CPI and
dismissed the respondents’ petition. On
appeal, NLRC reversed and set aside LA’s
ruling, and order CPI to pay Babiano and
Concepcion their commissions, as well as
10% attorney’s fees of the total monetary
award. Moreover, it contends that the
forfeiture of the commission under the
contract is confiscatory in nature and thus
contrary to law and public policy. However,
the NLRC limited the grant of the money
claims in light of Article 306 of the Labor
Code which provides for a prescriptive
period of three (3) years. It also ruled that
Concepcion is CPI’s employee considering
that CPI: (a ) repeatedly hired and promoted
her since 2002; (b ) paid her wages despite
referring to it as "subsidy"; and (c )
exercised the power of dismissal and control
over her. On certiorari, CA affirmed
NLRC’s decision but modified it by
increasing the amount of the unpaid
commissions.
Issue
WON CPI is liable for the unpaid
commissions of the respondents despite the
breach in the "Confidentiality of Documents
and Non-Compete Clause" in the
employment contract and the stipulation in
Concepcion’s contract that no employer-
employee relationship exist.
Held
No, with respect to Babiano since his unpaid
commissions were forfeited pursuant to the
"Confidentiality of Documents and Non-
Compete Clause" in his employment
contract. However, with respect to
Concepcion, she is thus entitled to her
unpaid commissions granting that she is
considered as an employee of CPI.
Where the language of a written contract
is clear and unambiguous, the contract
must be taken to mean that which, on its
face, it purports to mean, unless some
good reason can be assigned to show that
the words should be understood in a
different sense.
In the case at bar, CPI invoked the
"Confidentiality of Documents and Non-
Compete Clause" which is not only clear but
also unambiguous in stating that Babiano is
not allowed to work in whatever capacity in
any person whose business is in direct
competition with CPI while he is employed
and for a period of one year after his
resignation or termination, and if there is a
breach of any of its terms, forms of
compensation including commissions and
incentives will be forfeited.
Babiano held a highly sensitive and
confidential managerial position thus to
allow him to freely move to direct
competitors during and soon after his
employment with CPI would make the
latter's trade secrets vulnerable to exposure,
Page | xlvi
especially in a highly competitive marketing
environment. Thus such stipulation is
reasonable.
Moreover, obligations arising from
contracts, including employment
contracts, have the force of law between
the contracting parties and should be
complied with in good faith. Hence, they
are bound by the stipulations therein. In
this case, CPI correctly invoked the same
before the labor tribunals to resist Babiano’s
claim for unpaid commissions on account of
the breach in the said stipulation while the
employer-employee relationship subsist.
Records reveal that before Babiano’s
resignation letter, he was already employed
in the First Global. Being a clear violation of
the stipulation in his employment contract, it
is just that his unpaid commissions were
forfeited.
Anent to Concepcion’s employment, the
presence of the following elements evince
the existence of an employer-employee
relationship: (a) the power to hire, i.e., the
selection and engagement of the employee;
(b) the payment of wages; (c) the power of
dismissal; and (d ) the employer's power to
control the employee's conduct, or the so
called "control test."
Guided by these parameters, the Court finds
that Concepcion was an employee of CPI
considering that: (a) CPI continuously hired
and promoted Concepcion from October
2002 until her resignation on thus, showing
that CPI exercised the power of selection
and engagement over her person and that
she performed functions that were necessary
and desirable to the business of CPI; (b) the
monthly "subsidy" and cash incentives that
Concepcion was receiving from CPI are
actually remuneration in the concept of
wages as it was regularly given to her on a
monthly basis. (c) CPI had the power to
discipline or even dismiss Concepcion as her
engagement contract with CPI expressly
conferred upon the latter "the right to
discontinue her service anytime during the
period of engagement should she fail to
meet the performance standards," and that
CPI actually exercised such power to
dismiss when it accepted and approved
Concepcion's resignation letter; and most
importantly, (d) CPI possessed the power of
control over Concepcion because in the
performance of her duties as Project
Director she did not exercise independent
discretion thereon, but was still subject to
the direct supervision of CPI, acting through
Babiano.
The existence of an employer-employee
relationship cannot be negated by
expressly repudiating it in the
management contract. For, the
employment status of a person is defined
and prescribed by law and not by what the
parties say it should be. In determining the
status of the management contract, the
"four-fold test" on employment earlier
mentioned has to be applied. Thus,
Concepcion is entitled to her unpaid
commissions.
____________________________________
24. Lu v Enopia, GR No 197899, Mar 6,
2017
Facts
Respondents were hired from January 20,
1994 to March 20, 1996 as crew members of
the fishing mother boat F/B MG-28 owned
by respondent Joaquin "Jake" Lu who is the
sole proprietor of Mommy Gina Tuna
Resources [MGTR] based in General Santos
City. Petitioners and Lu had an income-
Page | xlvii
sharing arrangement wherein 55% goes to
Lu, 45% to the crew members, with an
additional 4% as "backing incentive." They
also equally share the expenses for the
maintenance and repair of the mother boat,
and for the purchase of nets, ropes and
payaos.
Sometime in August 1997, Lu proposed the
signing of a Joint Venture Fishing
Agreement between them, but petitioners
refused to sign the same as they opposed the
one-year term provided in the agreement.
According to petitioners, during their
dialogue on August 18, 1997, Lu terminated
their services right there and then because of
their refusal to sign the agreement. On the
other hand, Lu alleged that the master
fisherman (piado) Ruben Salili informed
him that petitioners still refused to sign the
agreement and have decided to return the
vessel F/B MG-28.
On August 25, 1997, petitioners filed their
complaint for illegal dismissal, monetary
claims and damages. In their Position Paper,
petitioners alleged that their refusal to sign
the Joint Venture Fishing Agreement is not a
just cause for their termination. On the other
hand, Lu denied having dismissed
petitioners, claiming that their relationship
was one of joint venture where he provided
the vessel and other fishing paraphernalia,
while petitioners, as industrial partners,
provided labor by fishing in the high seas.
Lu alleged that there was no employer-
employee relationship as its elements were
not present: it was the piado who hired
petitioners; they were not paid wages but
shares in the catch, which they themselves
determine; they were not subject to his
discipline; and respondent had no control
over the day-to-day fishing operations,
although they stayed in contact through
respondent's radio operator or checker.
On June 30, 1998, the LA rendered a
Decision dismissing the case for lack of
merit finding that there was no employer-
employee relationship existing between
petitioner and the respondents but a joint
venture. Respondents appealed to the
National Labor Relations Commission
(NLRC), which affirmed the LA Decision in
its Resolution dated March 12, 1999. On
October 22, 2010, the CA rendered its
assailed Decision reversing the NLRC.
Issue
Whether or not there exists an employee-
employer relationship between the petitioner
and respondents.
Held
Yes. In determining the existence of an
employer-employee relationship, the
following elements are considered: (1) the
selection and engagement of the workers;
(2) the power to control the worker's
conduct; (3) the payment of wages by
whatever means; and (4) the power of
dismissal. We find all these elements present
in this case.
In this case, petitioner contends that it was
the piado who hired respondents, however,
it was shown by the latter's evidence that the
employer stated in their Social Security
System (SSS) online inquiry system
printouts was MGTR, which is owned by
petitioner. Second, it was established that
petitioner exercised control over
respondents. It should be remembered that
the control test merely calls for the existence
of the right to control, and not necessarily
the exercise thereof. It is not essential that
the employer actually supervises the
performance of duties by the employee. It is
Page | xlviii
enough that the former has a right to wield
the power. Third, the payment of
respondents' wages based on the percentage
share of the fish catch would not be
sufficient to negate the employer-employee
relationship existing between them. Lastly,
petitioner wielded the power of dismissal
over respondents when he dismissed them
after they refused to sign the joint fishing
venture agreement.
____________________________________
25. Apelanio vs. Arcanys, Inc., GR No.
227098, November 14, 2018
Facts: On April 10, 2012, Apelanio was
hired by Arcanys, Inc. as a Usability/Web
Design Expert. He was placed on a
"probationary status" for a period of six
months. Due to low evaluation ratings,
Arcanys served Apelanio a letter, informing
him that Arcanys would not convert his
status into a regular employee. Apelanio was
given his final pay and he signed a Waiver,
Release and Quitclaim" in favor of
respondents. Apelanio averred that when
this probationary contract was terminated,
he was   immediately offered a retainership
agreement lasting from October 10, 2012
until October 24, 2012, which involved a
similar scope of work and responsibilities
but on a project basis, without security of
tenure, with lesser pay, and without any
labor standard benefits. Apelanio was
confused with the arrangement, but agreed
since he had a family to support. He
believed that he was still undergoing
Arcanys’ evaluation. On October 26, 2012,
after the lapse of the retainership agreement,
Apelanio was offered another retainership
agreement, from October 25, 2012 to
November 12, 2012, again with an identical
scope of work but at a reduced daily
rate.  As a result, Apelanio became
suspicious of Arcanys’ motives and
consulted with a lawyer, who informed him
that said practice was illegal. He then
refused to sign the second retainership
agreement, and questioned why they offered
him another retainership agreement if he
was deemed unqualified for the
position. Apelanio filed a complaint for
illegal dismissal. 
Issues: Whether or not Apelanio was
illegally dismissed.
Ruling: NO.  The SC cited the CA’s ruling:
The first agreement, which supposedly re-
hired Apelanio for the same position, did not
bear his signature. This fact alone stirs doubt
on whether the aforementioned agreement
really got finalized. The NLRC gave full
credence to Apelanio's proposition that it
is normal for an employee not to sign his
copy and that if Apelanio really wanted to,
he could have signed his copy before
submitting it as evidence. 
Unfortunately, We cannot align our view
with that of the NLRC considering that x x
x the absence of Apelanio's signature in the
first agreement was also coupled with
other indicators that sup support the
conclusion that such agreement was never
really carried out. 
The draft of the second agreement,
which Apelanio claimed to be another
extension of the first, indicated that such
agreement was entered into, and supposed to
be signed by the parties on the 10th of
October 2012 (the date supposedly of the
first agreement). 
Page | xlix
The Skype conversation
between Apelanio and
Arcanys’ representative on October 24, 2012
x x x showed that they were discussing
possible compensation at P18,000.00, which
was the remuneration indicated in the first
agreement. If the first agreement got
finalized and was already implemented, then
why would the draft of the second one still
indicate the 10th October 2012 as the date of
execution and signing of the first
agreement? 
Although it may be argued that the dates
were merely clerical errors or
unreplaced entries resulting to oversight, the
Skype conversation between Apelanio
and Arcanys’ representative on October 24,
2012, confirmed the non-conclusion of
the first agreement; for it would be illogical
for the parties to still discuss
the remuneration indicated in the first
agreement if the same had already
been implemented, and, in fact, was about to
end on the day that the conversation
took place . Furthermore, a review of the
retainership agreements indicates that
Apelanio was merely engaged as a
consultant, in relation to the hacking
incidents endured by
Arcanys. Apelanio merely alleged that he
was hired as an employee under said
retainership agreements, but has yet to
provide evidence to support such claim. "It
is a basic rule in evidence that each party
must prove his affirmative
allegations." Therefore, Article 281 of the
Labor Code finds no application in this case.
Petition denied.
Doctrine: Although it may be argued that
the dates were merely clerical errors or
unreplaced entries resulting to oversight, the
Skype conversation between Apelanio and
Arcanys’ representative on October 24,
2012, confirmed the non-conclusion of the
first agreement. Apelanio merely alleged
that he was hired as an employee under said
retainership agreements, but has yet to
provide evidence to support such claim. "It
is a basic rule in evidence that each party
must prove his affirmative allegations."
Therefore, Article 281 of the Labor Code
finds no application in this case, absent any
evidence to prove that Apelanio worked
beyond his probationary employment.
____________________________________
26. Dr. Loreche-Amit vs. Cageyan De Oro
Medical Center, GR No. 216635, June 3,
2019
Facts: Petitioner Dr. Mary Jean Loreche-
Amit started working with respondent
Cagayan De Oro Medical Center Inc.
(CDMC) sometime in May 1996 when she
was engaged by the late Dr. Jose Gaerlan as
associate pathologist in the Department of
Laboratories. Upon the demise of Dr.
Gaerlan, CDMC’s board of directors
formally appointed her as chief pathologist
for five years.
On June 13, 2007, CDMC’s board of
directors passed a resolution recalling
petitioner’s appointment as chief
pathologist. Petitioner filed a complaint for
illegal dismissal against 
In defense, respondents CDMC, Dr.
Francisco Oh and Dr. Hernando Emano
averred that petitioner was not hired by them
as she merely assisted Dr. Gaerlan in
operating the hospital’s laboratory. They
maintained that petitioner worked at the
same time as pathologist in Capitol College
Hospital and J.R. Borja Memorial Hospital
as she was not prohibited to do so.
Issue: Whether or not there merit to this
Page | l
defense?
Ruling: Yes. The power to control the work
of the employee is considered the most
significant determinant of the existence of
an employer-employee relationship. This
test is premised on whether the person for
whom the services are performed reserves
the right to control both the end achieved
and the manner and means used to achieve
that end.
As the labor arbiter, National Labor
Relations Commission and the Court of
Appeals aptly observed, petitioner was
working for two other hospitals aside from
CDMC, not to mention those other hospitals
which she caters to when her services are
needed. Such fact evinces that petitioner
controls her working hours. On this note,
relevant is the economic reality test which
this Court has adopted in determining the
existence of employer-employee
relationship.
Under this test, the economic realities
prevailing within the activity or between the
parties are examined, taking into
consideration the totality of circumstances
surrounding the true nature of the
relationship between the parties.
Thus, the fact that petitioner continued to
work for other hospitals strengthens the
proposition that petitioner was not wholly
dependent on CDMC.
Petitioner likewise admitted that she
receives in full her four percent share in the
clinical section of the hospital regardless of
the number of hours she worked therein.
Alternatively put, petitioner manages her
method and hours of work.
The rule is that where a person who works
for another performs his job more or less at
his own pleasure, in the manner he sees fit,
not subject to definite hours or conditions of
work, and is compensated according to the
result of his efforts and not the amount
thereof, no employer-employee relationship
exists. (Dr. Mary Jean Loreche-Amit vs.
Cagayan De Oro Medical Center Inc.
(CDMC) et al., G.R. 216635, June 3, 2019).
27. Fernandez vs. Kalookan
SlaughterHouse Inc., GR No. 225075,
June 19, 2019
Facts: Petitioner was hired in 1994 as a
butcher by Kalookan Slughterhouse Inc., a
single proprietorship owned by respondent
Ernesto Canunan. Petitioner worked from
Monday to Sunday, from 6:30 P.M.-7:30
A.M., with a daily wage of P700.00 which
was later on reduced to P500.00. He further
claimed that he met an accident while
driving Kalookan Slaughterhouse’s truck in
December 2013 and that deductions were
made from his wage. When questioned
about the deductions in July 2014, he was
thereafter treated unreasonably. On July 21,
2014, petitioner suffered from a headache
and did not report for work, the next day he
was shocked when he only received P200.00
due to his previous undertime and was
informed that he could no longer report for
work.
Kalookan Slaughterhouse, on the
other hand, asserted that petitioner is an
independent butcher working under its
Operation Supervisor, Cirilo Tablit.
Page | li
Petitioner received payment based on the
number of hogs he butchered and was only
required to be in the Slaughterhouse when
customers brought hogs to be slaughtered.
Kalookan Slaughterhouse alleged that it
imposed policies on the entry to the
premises, which applied to employees,
dealers, independent butchers, hog and meat
dealers and trainees.  According to
Kalookan Slaughterhouse, petitioner
violated the policies and he misconstrued the
disallowance to enter the slaughterhouse as
an act of dismissal.
Labor Arbiter: requisites of an employer-
employee relationship were established as
follows: petitioner was hired by
Kalookan Slaughterhouse through Tablit and
petitioner was paid his daily wage for his
butchering services.
Kalookan Slaughterhouse had authority to
discipline petitioner as regards his work
activities through
Kalookan Slaughterhouse's personnel named
Noelberto De Guzman and also ruled that
Kalookan Slaughterhouse failed to prove its
claim that petitioner was not its employee.
The LA ruled that
Kalookan Slaughterhouse failed to prove
that Tablit, who was its employee, was an
independent or job contractor. As its
Operations Supervisor, Tablit was deemed
to have acted in the interest of
Kalookan Slaughterhouse. And since Tablit
engaged petitioner, petitioner is deemed an
employee of Kalookan Slaughterhouse.
National Labor Relation Commission: the
facts and circumstances in this case showed
that there was no employer-employee
relationship. Petitioner was an independent
contractor and not an employee of
Kalookan Slaughterhouse because there was
no regular payroll showing his name and the
legal deductions made from his salary.
There were also no pay slips, and the money
he received from Tablit showed that he was
an independent butcher and not an employee
of Kalookan Slaughterhouse.
Court of Appeals: petitioner's claim of the
existence of an employer-employee
relationship is not supported by substantial
evidence as he failed to submit salary
vouchers, pay slips, daily work schedule and
even a certificate of withholding tax on
compensation income.
Issue: Whether or not petitioner Fernandez
is an employee of Kalookan Slaughterhouse
Inc.
Ruling: it is undisputed that petitioner
rendered butchering services at
Kalookan Slaughterhouse. The LA found
that petitioner was engaged by
Kalookan Slaughterhouse itself since
petitioner submitted log sheets and gate
passes. the totality of petitioner's evidence
and the admissions of
Kalookan Slaughterhouse convinces the
Court that petitioner was indeed an
employee of Kalookan Slaughterhouse.
Petitioner was able to present an I.D., gate
passes, log sheets, and a trip ticket.
Kalookan Slaughterhouse even admitted
through De Guzman that uniforms were
given to all personnel, including petitioner.
Further, by denying that petitioner was its
employee but alleging that he rendered
services as Tablit's employee,
Kalookan Slaughterhouse effectively
admitted the substantial fact that petitioner
has been rendering butchering services for
20 years from the filing of the complaint on
August 5, 2014.
Page | lii
Page | liii
Topic 3: Hiring of Employee Whether or not the alleged concealment of
civil status of private respondent De
1. PT&T vs. NLR [272 SCRA 596 [1997]]
Guzman is a valid ground to terminate her.

Facts
Held

Private respondent Grace de Guzman was

NO. The alleged concealment of civil status
initially hired by petitioner as a reliever for a
by De Guzman was borne out of the
fixed period, vice an employee who went on
discriminatory and prohibited policy of
maternity leave. Private respondent had
PT&T of not accepting married women into
made representations that she is single,
the company. Thus, it is not a ground for her
although she contracted marriage in May
dismissal.
1991, in the two successive reliever
agreement. She was asked to join the
company as a probationary employee in Article 136 of the Labor Code explicitly
September 1991 with the same prohibits discrimination merely by reason of
representation that she is still single. the marriage of a female employee, to wit:

Upon learning of such discrepancy, her ART. 136. Stipulation against

Branch Supervisor sent her a memorandum marriage. - It shall be unlawful for
requiring her to explain such discrepancy. an employer to require as a condition
She was also reminded about the company’s of employment or continuation of
policy of not accepting married women employment that a woman shall not
for employment. She was thereafter get married, or to stipulate expressly
dismissed in January 1992. She filed a or tacitly that upon getting married, a
complaint for illegal dismissal, coupled with woman employee shall be deemed
a claim for non-payment of cost of living resigned or separated, or to actually
allowance (COLA), before the Regional dismiss, discharge, discriminate or
Arbitration Branch of the National Labor otherwise prejudice a woman
Relations Commission in Baguio City. The employee merely by reason of
Labor Arbiter declared such dismissal to be marriage.
illegal. This was affirmed by the NLRC
upon appeal, with modification stating that
In the case at bar, petitioner’s policy of not
De Guzman deserved to be suspended for 3
accepting or considering as disqualified
months for her misrepresentation regarding
from work any woman worker who
her civil status. Thus, this writ of certiorari
contracts marriage runs afoul of the test of,
from petitioner PT&T.
and the right against, discrimination,
afforded all women workers by our labor
laws and by no less than the Constitution.
Contrary to petitioners assertion that it
dismissed private respondent from
Issue
employment on account of her dishonesty,
the record discloses clearly that her ties with

Page | liv
the company were dissolved principally
because of the company’s policy that
married women are not qualified for
employment in PT&T, and not merely
because of her supposed acts of dishonesty.
WHEREFORE, the petition is hereby
DISMISSED.
____________________________________
2. Duncan Asso. Of Detailman-PTGWO
vs. Glaxo Wellcome Phils., [G.R. No.
162994, Sept. 17, 2004]
Facts
Petitioner Pedro A. Tecson (Tecson) was
hired by respondent Glaxo Wellcome
Philippines, Inc. (Glaxo) as medical
representative. Among the company’s rules
with which he subscribed to was for him to
disclose to management any existing or
future relationship by consanguinity or
affinity with co-employees or employees of
competing drug companies and should
management find that such relationship
poses a possible conflict of interest, that her
resign from the company.
Tecson was initially assigned to market
Glaxos products in the Camarines Sur-
Camarines Norte sales area. She met and
eventually married Bettsy, an employee of
Astra Pharmaceuticals (Astra), a competitor
of Glaxo. Bettsy was Astras Branch
Coordinator in Albay. She supervised the
district managers and medical
representatives of her company and prepared
marketing strategies for Astra in that area.
Tecson was then transferred to the Butuan
City-Surigao City-Agusan del Sur sales area.
He however defied the transfer order.
To settle their issues, Tecson and Glaxo
submitted the matter for voluntary
arbitration. The National Conciliation and
Mediation Board (NCMB) rendered its
Decision declaring as valid Glaxo’s policy
on relationships between its employees and
persons employed with competitor
companies, and affirming Glaxos right to
transfer Tecson to another sales territory.
The Court of Appeals upheld the decision of
NCMB. Thus, this petition from Tecson.
Issue
Whether or not Glaxo’s policy against its
employees marrying employees from
competitor companies is invalid, and
violated the equal protection clause of the
Constitution.
Held
NO. Glaxo’s policy on relationships
between its employees and persons
employed with competitor companies is
valid as it is a valid exercise of management
prerogative.
As held in a Georgia, U.S.A case, it is a
legitimate business practice to guard
business confidentiality and protect a
competitive position by even-handedly
disqualifying from jobs male and female
applicants or employees who are married to
a competitor. Consequently, the court ruled
than an employer that discharged an
Page | lv
employee who was married to an employee
of an active competitor did not violate Title
VII of the Civil Rights Act of 1964.
The prohibition against personal or marital
relationships with employees of competitor
companies upon Glaxos employees is
reasonable under the circumstances because
relationships of that nature might
compromise the interests of the company.
Further, the challenged company policy does
not violate the equal protection clause as it
can be addressed only to the state or those
acting under color of its authority. Such is
clearly wanting in the case at bar.
Lastly, Since Tecson knowingly and
voluntarily entered into a contract of
employment with Glaxo, the stipulations
therein have the force of law between them
and, thus, should be complied with in good
faith. He is therefore estopped from
questioning said policy.
WHEREFORE, petition is DENIED.
____________________________________
3. Star Paper Corp., vs. Simbol, G.R. No.
164774, April 12, 2006
Facts
Petitioner Star Paper Corporation (the
company) is a corporation engaged in
trading - principally of paper products.
Respondents Ronaldo D. Simbol (Simbol),
Wilfreda N. Comia (Comia) and Lorna E.
Estrella (Estrella) were all regular
employees of the company. The company
promulgated a policy in 1995, to wit:
“New applicants will not be allowed
to be hired if in case he/she has [a]
relative, up to [the] 3rd degree of
relationship, already employed by
the company. In case of two of our
employees (both singles [sic], one
male and another female) developed
a friendly relationship during the
course of their employment and then
decided to get married, one of them
should resign to preserve the policy
stated above.”
Due to aforesaid company policy,
respondents were compelled to resign. They
later filed a complaint for unfair labor
practice, constructive dismissal, separation
pay and attorney's fees. They averred that
the aforementioned company policy is
illegal and contravenes Article 136 of the
Labor Code.
The Labor Arbiter dismissed their complaint
as it was management prerogative to
institute such policy. The National Labor
Relations Commission upheld such decision.
The Court of Appeals, however, reversed the
decision. Aggrieved, petitioner now come to
the Supreme Court.
Issue
Whether the policy of the employer banning
spouses from working in the same company
does not violate the rights of the employee
under the Constitution and the Labor Code
and is a valid exercise of management
prerogative.
Page | lvi
Held
NO. The policy of herein petitioner banning
spouses from working in the same company
contravenes Article 136 of the Labor Code,
absent any bona fide occupational
qualification.
The case at bar involves Art. 136 of the
Labor Code which provides:
Art. 136. It shall be unlawful for an
employer to require as a condition of
employment or continuation of
employment that a woman employee
shall not get married, or to stipulate
expressly or tacitly that upon getting
married a woman employee shall be
deemed resigned or separated, or to
actually dismiss, discharge,
discriminate or otherwise prejudice a
woman employee merely by reason
of her marriage.
The Court notes that two types of
employment policies involve spouses exist:
policies banning only spouses from working
in the same company (no-spouse
employment policies), and those banning
all immediate family members, including
spouses, from working in the same company
(anti-nepotism employment policies). In
challenging the anti-nepotism employment
policies in the United States, complainants
utilize two theories of employment
discrimination: the disparate treatment and
the disparate impact analyses. In the
disparate treatment analysis, the plaintiff
must prove that an employment policy is
discriminatory on its face. On the other
hand, to establish disparate impact, the
complainants must prove that a facially
neutral policy has a disproportionate effect
on a particular class.
An employer’s no-spouse rule may only be
justified upon finding of a bona fide
occupational qualification. To justify a
BFOQ, the employer must prove two
factors:
(1) that the employment qualification is
reasonably related to the essential
operation of the job involved; and
(2) that there is a factual basis for
believing that all or substantially all
persons meeting the qualification
would be unable to properly perform
the duties of the job.
In the case at bar, there was no showing of a
bona fide occupational qualification. There
was no reasonable business necessity to
institute the no-spouse employment policy.
Petitioners' sole contention that "the
company did not just want to have two (2)
or more of its employees related between the
third degree by affinity and/or
consanguinity" is lame. Petitioners failed to
show how the marriage of Simbol, then a
Sheeting Machine Operator, to Alma Dayrit,
then an employee of the Repacking Section,
could be detrimental to its business
operations. The questioned policy may not
facially violate Article 136 of the Labor
Code but it creates a disproportionate effect
and under the disparate impact theory, the
only way it could pass judicial scrutiny is a
showing that it is reasonable despite the
discriminatory, albeit disproportionate,
effect.
Thus, for failure of petitioners to present
undisputed proof of a reasonable business
necessity, the Court ruled that the
questioned policy is an invalid exercise of
management prerogative.
WHEREFORE, petition is DENIED.
Page | lvii
____________________________________
4. Del Monte Phils vs. Velasco [G.R. No.
153477, March 6, 2007]
Facts
Lolita M. Velasco (respondent) started
working with Del Monte Philippines
(petitioner) on October 21, 1976 as a
seasonal employee and was regularized on
May 1, 1977. Her latest assignment was as
Field Laborer.
On June 16, 1987, respondent was warned in
writing due to her absences. On May 4,
1991, respondent, thru a letter, was again
warned in writing by petitioner about her
absences without permission and a forfeiture
of her vacation leave entitlement for the year
1990-1991 was imposed against her. On
January 10, 1995, after hearing, the
petitioner terminated the services of
respondent effective January 16, 1994 due to
excessive absences without permission.
Feeling aggrieved, respondent filed a case
for illegal dismissal against petitioner
asserting that her dismissal was illegal
because she was on the family way suffering
from urinary tract infection, a pregnancy-
borne, at the time she committed the alleged
absences.
The Labor Arbiter, in dismissing the
complaint, held that the respondent was an
incorrigible absentee. The NLRC reversed
said decision and declared the dismissal of
Velasco as illegal. The NLRC held that,
under the company rules, the employee may
make a subsequent justification of her
absenteeism, which she was able to do in the
instant case, and that petitioner is guilty of
unlawfully discharging respondent on
account of her pregnancy under Article
137(2) of the Labor Code. The CA affirmed
the NLRC Decision in toto. Thus, this
instant petition.
Issue
Whether the employment of respondent had
been validly terminated on the ground of
excessive absences due to respondent’s
pregnancy without permission.
Held
NO. The petitioner illegally dismissed
respondent even if the former knew that
respondent was suffering from effects of her
pregnancy, causing her to be commit
absences in excess of what was allowable
under company policy.
In this jurisdiction tardiness and
absenteeism, like abandonment, are
recognized forms of neglect of duties, the
existence of which justify the dismissal of
the erring employee. Respondent's rule
penalizing with discharge any employee
who has incurred six (6) or more absences
without permission or subsequent
justification is admittedly within the
purview of the foregoing standard.
The Court agrees with the CA in concluding
that respondent's sickness was pregnancy-
related and, therefore, the petitioner cannot
terminate respondent's services because in
doing so, petitioner will, in effect, be
Page | lviii
violating the Labor Code which prohibits an ____________________________________
employer to discharge an employee on 5. Yrasuegui vs. Phil Airlines, G.R. No.
account of the latter's pregnancy. Article 137 168081, October 17, 2008
of the Labor Code provides:

Art. 137. Prohibited acts. - It shall

be unlawful for any employer:
Fact
x
x Petitioner Armando G. Yrasuegui was a
x former international flight steward of
x Philippine Airlines, Inc. (PAL). He stands
five feet and eight inches (5'8") with a large
body frame. The proper weight for a man of
(2) To discharge such his height and body structure is from 147 to
woman on account of her 166 pounds, the ideal weight being 166
pregnancy, while on leave pounds, as mandated by the Cabin and Crew
or in confinement due to Administration Manual of PAL.
her pregnancy;

On April 26, 1989, petitioner weighed 209

x pounds, 43 pounds over his ideal weight. In
x line with company policy, he was removed
x from flight duty effective May 6, 1989 to
x July 3, 1989. He was requested to trim down
to conform with company standard. After
failed attempts at adhering to the ideal
weight, on November 13, 1992, PAL finally
served petitioner a Notice of Administrative
The undeniable fact is that during her Charge for violation of company standards
complained absences in 1994, respondent on weight requirements. On June 15, 1993,
was pregnant and suffered related illnesses. petitioner was formally informed by PAL
Again, it must be stressed that respondent's that due to his inability to attain his ideal
discharge by reason of absences caused by weight, "and considering the utmost
her pregnancy is covered by the prohibition leniency" extended to him "which spanned a
under the Labor Code. Since her last string period covering a total of almost five (5)
of absences is justifiable and had been years," his services were considered
subsequently explained, the petitioner had terminated "effective immediately”.
no legal basis in considering these absences Petitioner thereafter filed a complaint for
together with her prior infractions as gross illegal dismissal against PAL.
and habitual neglect.

The Labor Arbiter ruled in favor of

WHEREFORE, petition is DENIED. Yrasuegui. The NLRC affirmed said ruling.
The CA, in reversing the NLRC, declared
that the weight standards of PAL are meant
to be a continuing qualification for an

Page | lix
employee's position. The failure to adhere to
the weight standards is an analogous cause
for the dismissal of an employee under
Article 282(e) of the Labor Code in
relation to Article 282(a).
The CA further held that the weight
standards of PAL are a bona fide
occupational qualification which, in case of
violation, "justifies an employee's separation
from the service”. Aggrieved, petitioner
filed this instant petition.
Issue
Whether the Court of Appeals erred in
holding that the weight standards of PAL are
a bona fide occupational qualification
justifying the dismissal of petitioner who
violated such standards.
Held
NO. The Court of Appeals correctly held
that PAL was justified in maintaining weight
standards for its flight stewards as a bona
fide occupational qualification.
The weight standards of PAL constitute a
continuing qualification of an employee in
order to keep the job. The failure to meet the
employer's qualifying standards is in fact a
ground that does not squarely fall under
grounds (a) to (d) and is therefore one that
falls under Article 282(e) - the "other causes
analogous to the foregoing." By its nature,
these "qualifying standards" are norms that
apply prior to and after an employee is
hired. They apply prior to employment
because these are the standards a job
applicant must initially meet in order to be
hired. They apply after hiring because an
employee must continue to meet these
standards while on the job in order to keep
his job.
The dismissal of petitioner can be predicated
on the bona fide occupational qualification
defense. In Star Paper Corporation v.
Simbol, the Court held that in order to justify
a BFOQ, the employer must prove that (1)
the employment qualification is reasonably
related to the essential operation of the job
involved; and (2) that there is factual basis
for believing that all or substantially all
persons meeting the qualification would be
unable to properly perform the duties of the
job.
Anent the first element, the weight
standards of PAL show its effort to comply
with the exacting obligations imposed upon
it by law by virtue of being a common
carrier. A common carrier, from the nature
of its business and for reasons of public
policy, is bound to observe extraordinary
diligence for the safety of the passengers it
transports.
As to the second requirement, the primary
objective of PAL in the imposition of the
weight standards for cabin crew is light
safety. On board an aircraft, the body weight
and size of a cabin attendant are important
factors to consider in case of emergency.
Aircrafts have constricted cabin space, and
narrow aisles and exit doors. Being
overweight necessarily impedes mobility.
Evacuation might slow down just because a
wide-bodied cabin attendant is blocking the
narrow aisles. These possibilities are not
remote.
Page | lx
Thus, there exists a bona fide occupational
qualification for PAL to require its flight
stewards to maintain certain weight
standards. Failure to comply with said
standards is a valid ground for dismissal
under Art 282(e) in relation to Art 282(a) of
the Labor Code.

WHEREFORE, petition is DENIED.

Page | lxi
Topic 4: Wages & Wage
Rationalization Act
Topic 4-A: Violation of Wage
Order
1. S.I.P. Food House et al v Batolina, GR
No 192473, Oct 11, 2010
Facts
The GSIS Multi-Purpose Cooperative
(GMPC) is an entity organized by the
employees of the Government Service
Insurance System (GSIS). It engaged the
services of the petitioner S.I.P. Food House
(SIP), owned by the spouses Alejandro and
Esther Pablo, to operate a canteen in the new
GSIS Building, as concessionaire.
Respondents Restituto Batolina and nine (9)
others (the respondents) worked as waiters
and waitresses in the canteen.
GMPC terminated SIP's "contract as GMPC
concessionaire,". The termination of the
concession contract caused the termination
of the respondents' employment, prompting
them to file a complaint for illegal dismissal,
with money claims, against SIP and the
spouses Pablo.
In the Compulsory Arbitration proceedings,
respondents allege that SIP did not
implement Wage Order Nos. 5 to 11 for the
years 1997 to 2004. They did not receive
overtime pay although they worked from
6:30 in the morning until 5:30 in the
afternoon, or other employee benefits such
as service incentive leave, and maternity
benefit (for their co-employee Flordeliza
Matias). Their employee contributions were
also not remitted to the Social Security
System. SIP argued that it operated the
canteen in behalf of GMPC since it had no
authority by itself to do so. The respondents
were not its employees, but GMPC's, as
shown by their Identification cards.
The Labor Arbiter dropped the complaint
finding that respondents were employees of
GMPC and not of SIP. Although they were
paid only P160.00 to PP220.00 daily, the
employees were provided with free board
and lodging seven (7) days a week. NLRC
found that SIP was the respondents'
employer, but it sustained the labor arbiter's
ruling that the employees were not illegally
dismissed. For failure of SIP to present
proof of compliance with the law on the
minimum wage, 13th month pay, and
service incentive leave, the NLRC awarded
the respondents a total of P952,865.53 in
salary and 13th month pay differentials and
service incentive leave pay. The CA
affirmed the award but modified as to the
basis of computation, from 26 working days
a month to 20. It also sustained the NLRC's
findings that SIP was the respondents'
employer. Thus, this petition from SIP.
Issue
Whether respondents were not employees of
petitioner SIP, and that they are not entitled
with their respective money claims.
Held
NO. The respondents were employees of
SIP and were entitled with their respective
money claims.
Page | lxii
In a protest letter dated April 14, 2004 to
GMPC no less than petitioners, thru their
counsel, admitted that respondents herein
were their employees. That respondents
were employees of petitioner is further
bolstered by the fact that petitioner do not
deny that they were the ones who paid
respondents’ salary. IDs issued to
complainants bear the signature of,
petitioner Alejandro C. Pablo. Likewise, the
memoranda issued to complainants
regarding their absences without leave were
signed by respondent Alejandro C. Pablo.
SIP exercised the essential elements of an
employment relationship with the
respondents such as hiring, payment of
wages and the power of control, not to
mention that SIP operated the canteen on its
own account as it paid a fee for the use of
the building and for the privilege of running
the canteen.
The CA ruling on monetary award are also
affirmed. The free board and lodging SIP
furnished the employees cannot operate as a
set-off for the underpayment of their wages.
In Mabeza v. National Labor Relations
Commission, it was held that the employer
cannot simply deduct from the employee's
wages the value of the board and lodging
without satisfying the following
requirements:
(1) proof that such facilities are
customarily furnished by the trade;
(2) voluntary acceptance in writing by
the employees of the deductible
facilities; and
(3) proof of the fair and reasonable value
of the facilities charged.
SIP clearly failed to comply with these
requirements.
Thus, its is verily held that respondents were
employees of SIP and that they are entitled
to their respective money claims.
WHEREFORE, petition is DENIED.
____________________________________
2. SLL International Cables Specialist v
NLRC, GR No 172161, Mar 2, 2011
Facts
Sometime in 1996 and 1997, private
respondents Lopez, Canete and Zuniga were
hired by petitioner Lagon as apprentice or
trainee cable/lineman. The three of them are
paid the full minimum wage and other
benefits but since they were only trainees,
they do not report for work regularly but
came in as substitutes to the regular workers
or in undertakings that needed extra workers
to expedite completion of work. After their
training, the three of them were engaged as
project employees by the petitioners in their
Islacom project in Bohol. Upon the
completion of their project, their
employment was also terminated. They
received the amount of P145.00 which is the
prescribed minimum daily wage for Region
7. In July 1997, the amount of P145 was
increased to P150 by the Regional Wage
Board and in October of the same year, it
was again increased to P155. In 1998,
Canete and Zuniga were again engaged by
Lagon as project employees for a project in
Rizal. After the project was done, their
employment was again terminated. Canete
and Zuniga however, only received P145
pesos. The minimum prescribed wage at that
time in Rizal was P160.00. Canete and
Zuniga were again reemployed for the third
time for another project in Bulacan but just
Page | lxiii
the same, upon their termination, they are
only given P145 as their wage. In 1999, for
the 4th time, the 3 private respondents
worked for Lagon for a project in Caloocan.
From May 1997- December 1999, they
received the wage of P145. At this time, the
minimum prescribed rate for Manila was
P198. In January to February, the three
received the wage of P165 but the existing
rate at that time was P213.
Due to the delay on the delivery of imported
materials, the Camarin project (4th project)
was not completed on the scheduled date of
completion. Facing with economic problem,
Lagon was constrained to cut down the
overtime work of its workers including the
private respondents. Lagon also refused the
request of the three to render overtime work.
Lagon also told the respondents that if they
insist, they would not anymore be given
time nor allowed to stay in the quarters.
Because of this, private respondents leave
their work, and subsequently filed a
complaint for illegal dismissal, non-payment
of wages, holiday pay, 13th month pay for
1997 and 1998 and service incentive leave
pay.
Petitioners on their part claimed that the
private respondents were only project
employees. They further alleged that the
allowances it gave that should be added to
their basic pay makes their wage higher than
that prescribed in Rizal and Manila.
The Labor Arbiter opined as to the status of
their employment, private respondents were
regular employees because they were
repeatedly hired by the petitioners and they
performed activities which were usual,
necessary and desirable in the business or
trade of the employer. The labor arbiter also
found that private respondents were
underpaid. The free board and lodging,
electricity, water and food enjoyed by them
could not be included in the computation of
their wages because these were given
without their written consent. The employers
are however not liable for illegal dismissal.
These findings by the Labor Arbiter are
affirmed by the NLRC. The case is now
raised on the Court of Appeals. The CA
affirmed the findings that the private
respondents were regular employees. CA
also found that the private petitioners are
underpaid. It further added that these
employees are entitled to 13th month pay. It
also agrees with the CA that there is no
illegal dismissal. Case is then raised to the
Supreme Court.
Issue
Whether or not the value of the facilities
should be included in the computation of the
wages received by private respondents.
Held
No. the facilities are not included in the
computation of wages.
There are requisites before the value of the
facilities can be deducted. The following
requisites are: (1) proof must be shown that
such facilities are customarily furnished by
the trade, (2) the provision of deductible
facilities must be voluntarily accepted in
writing by the employee, and (3) facilities
must be charged at a reasonable value. The
requisites are not met in this case. SLL
Page | lxiv
failed to present any company policy or
guideline showing that provisions for meals
and lodging were part of the employer’s
written authorization, much less show how
they arrived at their valuations. It is not even
clear whether private respondents actually
enjoyed such facilities. The court also noted
that the food and lodging, or the electricity
and water allegedly consumed by private
respondents are not facilities but
supplements and therefore, not wage
deductible.
____________________________________
3. Vergara, Jr v Coca-Cola Bottlers Phils
Inc, GR No 176985, Apr 1, 2013
Facts
Petitioner Ricardo E. Vergara, Jr. was an
employee of respondent Coca-Cola Bottlers
Philippines, Inc. from May 1968 until he
retired on January 31, 2002 as a District
Sales Supervisor (DSS) for Las Piñas City,
Metro Manila. As stipulated in respondent’s
existing Retirement Plan Rules and
Regulations at the time, the Annual
Performance Incentive Pay of RSMs, DSSs,
and SSSs shall be considered in the
computation of retirement benefits, as
follows: Basic Monthly Salary + Monthly
Average Performance Incentive (which is
the total performance incentive earned
during the year immediately preceding ÷ 12
months) × No. of Years in Service
Claiming his entitlement to an additional
PhP474,600.00 as Sales Management
Incentives (SMI) and to the amount of
PhP496,016.67 which respondent allegedly
deducted illegally, representing the unpaid
accounts of two dealers within his
jurisdiction, petitioner filed a complaint
before the NLRC for the payment of his
“Full Retirement Benefits, Merit Increase,
Commission/Incentives, Length of Service,
Actual, Moral and Exemplary Damages, and
Attorney’s Fees.”
After a series of mandatory conference, both
parties partially settled with regard the issue
of merit increase and length of service.
Subsequently, they filed their respective
Position Paper and Reply thereto dealing on
the two remaining issues of SMI entitlement
and illegal deduction.
On September 30, 2003, the LA rendered a
Decision in favor of petitioner, directing
respondent to reimburse the amount illegally
deducted from petitioner’s retirement
package and to integrate therein his SMI
privilege. Upon appeal of respondent,
however, the NLRC modified the award and
deleted the payment of SMI.
Petitioner then moved to partially execute
the reimbursement of illegal deduction,
which the LA granted. Later, without
prejudice to the pendency of petitioner’s
petition for certiorari before the CA, the
parties executed a Compromise Agreement
whereby petitioner acknowledged full
payment by respondent of the amount of
PhP496,016.67 covering the amount
illegally deducted.
The CA subsequently dismissed petitioner’s
case. Petitioner insistently avers that many
DSSs who retired without achieving the
sales and collection targets were given the
average SMI in their retirement package.
Hence, this present petition.
Issue
Whether or not the SMI should be included
in the computation of petitioner’s retirement
Page | lxv
benefits on the ground of consistent
company practice
Held
● NO, the inclusion of the SMI in the
computation for retirement benefits
does not constitute consistent
company practice.
Generally, employees have a vested right
over existing benefits voluntarily granted to
them by their employer. Thus, any benefit
and supplement being enjoyed by the
employees cannot be reduced, diminished,
discontinued or eliminated by the employer
for it would violate the principle of non-
diminution of benefits.
There is diminution of benefits when the
following requisites are present: (1) the
grant or benefit is founded on a policy or has
ripened into a practice over a long period of
time; (2) the practice is consistent and
deliberate; (3) the practice is not due to error
in the construction or application of a
doubtful or difficult question of law; and (4)
the diminution or discontinuance is done
unilaterally by the employer.
To be considered as a regular company
practice, the employee must prove by
substantial evidence that the giving of the
benefit is done over a long period of time,
and that it has been made consistently and
deliberately. The common denominator in
previously decided cases appears to be the
regularity and deliberateness of the grant of
benefits over a significant period of time. It
requires an indubitable showing that the
employer agreed to continue giving the
benefit knowing fully well that the
employees are not covered by any provision
of the law or agreement requiring payment
thereof. In sum, the benefit must be
characterized by regularity, voluntary and
deliberate intent of the employer to grant the
benefit over a considerable period of time.
The Court found no substantial evidence to
prove that the grant of SMI to all retired
DSSs regardless of whether or not they
qualify to the same had ripened into
company practice. Petitioner utterly failed to
adduce proof to establish his allegation that
SMI has been consistently, deliberately and
voluntarily granted to all retired DSSs
without any qualification or conditions
whatsoever.
Petition is DENIED.
____________________________________
4. Royal Plant Workers Union v Coca-
Cola Bottlers Phils Inc - Cebu Plant, [GR
No 198783, Apr 15, 2013]
Facts
This case involves a Coca-Cola bottling
plant in Cebu wherein the bottling operators
complained about the removal of the chairs
they used during their duty. They alleged
that they have used chairs for 30 years and
such removal is not valid since diminution
of benefits is not allowed under Article 100
of the Labor Code. The chairs were removed
when petitioner issued a national directive
which reinforces the tasks of the bottling
operators to move about in the performance
of their duties. Such removal of the chairs
Page | lxvi
sought to avoid sleeping in the workplace
because such would affect the efficiency of
the operations.
The bottling operators, represented by their
union initiated the grievance machinery of
the CBA, however the respondent still
insisted on the removal of chair. They
availed the conciliation mediation
proceedings but they failed to arrive at an
amicable settlement. The parties then
submitted the issue of whether the removal
of the chairs is valid to arbitration. They
appointed the chairperson and its members
as outlined in their CBA and submitted their
position papers.
The respondent herein argued that the
removal was valid since it is a legitimate
exercise of management prerogative and is
not contrary to the CBA and the Labor
Code. The petitioners argued that they have
been performing satisfactorily with the
chairs for a long period, and the removal of
would violate the Occupational Health and
Safety Standards which assure right of
workers to just and humane conditions.
The Arbitration Committee favored the
petitioners herein and decided that the
removal of the chairs is invalid. The
Committee ordered the respondent to restore
the chairs since it has been company
practice for 30 years. In accordance with
Article 100 of the Labor Code, removing
such benefit enjoyed by the workers is
prohibited. There was also no evidence of
instances of sleeping, accident or injury
when the operators used chairs.
The respondent appealed the decision to the
CA which reversed the Arbitration
Committee’s decision and favored the
respondent. The CA held that such removal
is within the province of the management
prerogative. Chairs are not provided as
benefit in the CBA, hence cannot be covered
by the Article 100. The petitioners elevated
the case to the SC.
Issue: Whether or not the removal of the
chairs is valid.
Held
The removal of the chairs is valid because it
is a legitimate exercise of management
prerogative. Respondent is free to regulate,
according to its own discretion and
judgment, all aspect of employment,
including hiring, work assignments, working
methods, time, place, and manner of work,
processes to be followed, supervision of
workers, working regulations, transfer of
employees, work supervision, lay-off
workers, and discipline, dismissal and recall
of workers. This is not absolute however as
it must be exercised in good faith and in
accordance to the right of labor.
In the case at hand, the removal was not
done indiscriminately instead it was done
based on the study that there is a health risk
in prolonged sitting. Also, the removal was
also compensated by a reduction of the
operating hours of the operators from 2 ½
hour rotation to 1 ½ hour rotation period and
also there is an increase of break period
from 15 to 30 minutes between rotations.
Such removal was done in good faith and
was designed to increase work efficiency.
There is no violation the Occupational
Health and Safety since the removal is justly
compensated and it does not expose the
operators to safety and health hazards.
Page | lxvii
Furthermore, the removal is valid since the
CBA between the union and the respondent
does not require the respondent to provide
chairs to the operators while they are on
duty. Since it is not expressly stated in the
CBA it is to be understood that it was purely
voluntary on the part of the respondent and
the long practice for several years did not
convert it into a vested right in favor of the
union.
Lastly, the removal is also valid because
chairs cannot be also considered as one of
the benefits under Article 100. The non-
diminution rule refers to monetary benefits
or privileges given to employee with
monetary equivalents. Equating the chairs as
benefits under Article 100 would unduly
stretched the coverage of law.
The Supreme Court, recognizing that the
law must protect not only the welfare of the
employees, but also the right of the
employers, denied the petition of the union.
____________________________________
5. NWPC, et al v The Alliance of
Progressive Labor, et al, GR No 150326,
Mar 12, 2014
Overview: This case concerns the authority
of the National Wages and Productivity
Commission (NWPC) and the Regional
Tripartite Wages and Productivity Board
(RTWPB) created under Republic Act No.
6727, otherwise known as the Wage
Rationalization Act, to issue wage orders,
and to receive, process and act on
applications for exemption from the
prescribed wage rates.
Facts
RTWPB-NCR issued Wage Order No.
NCR-07 on October 14, 1999 imposing an
increase of P25.50/day on the wages of all
private sector workers and employees in the
NCR and pegging the minimum wage rate in
the NCR at P223.50/day. However, Section
2 and Section 9 of Wage Order No. NCR-07
exempted certain sectors and industries from
its coverage.
Feeling aggrieved by their non-coverage by
the wage adjustment, the Alliance of
Progressive Labor (APL) and the Tunay na
Nagkakaisang Manggagawa sa Royal
(TNMR) filed an appeal with the NWPC
assailing Section 2(A) and Section 9(2) of
Wage Order No. NCR-07. They contended
that neither the NWPC nor the RTWPB-
NCR had the authority to expand the non-
coverage and exemptible categories under
the wage order; hence, the
assailed sections of the wage order should
be voided.
In its decision, the NWPC upheld the
validity of Section 2(A) and Section 9(2) of
Wage Order No. NCR-07. It observed that
the RTWPB’s power to determine
exemptible categories was adjunct to its
wage fixing function conferred by Article
122(e) of the Labor Code, as amended by
Republic Act No. 6727.
The APL and TNMR assailed the decision
of the NWPC on certiorari in the CA which
held that the powers and functions of the
NWPC and RTWPB-NCR as set forth in
Republic Act No. 6727 did not include the
power to grant additional exemptions from
Page | lxviii
the adjusted minimum wage. Thus, the CA
granted the petition and declared the assailed
sections of Wage Order No. NCR-07 null
and void. Hence, the present appeal by
petition for review by the NWPC and
RTWPB-NCR.
Issue
Is the RTWPB authorized to provide
additional exemptions in the minimum wage
adjustments such as in Wage Order No.
NCR-07.
Held
Yes, the RTWPB has the authority to
provide additional exemptions in
minimum wage adjustments such as in
Wage Order No. NCR-07
The NWPC had the authority to prescribe
the rules and guidelines for the
determination of the minimum wage and
productivity measures, and the RTWPB-
NCR had the power to issue wage orders.
Section 1 of Rule VIII of NWPC Guidelines
No. 001-95 recognized the power of the
RTWPBs to issue exemptions from the
application of the wage orders subject to the
guidelines issued by the NWPC. Under Sec
2 of Rule VIII of NWPC Guidelines No.
00195, the RTWPBs could issue exemptions
from the application of the wage orders as
long as the exemptions complied with the
rules of the NWPC. In its rules, the NWPC
enumerated four exemptible establishments,
but the list was not exclusive. The RTWPBs
have the authority to include in the wage
orders establishments that belonged to, or to
exclude from the four enumerated
exemptible categories. Such may be allowed
only if they are in accord with the rationale
for exemption reflected in the rules.
If the exempted category was one of the
listed ones, the RTWPB issuing the wage
order must see to it that the requisites stated
in Section 3 and Section 4 of the NWPC
Guidelines No. 01, Series of 1996 were
complied with before granting fully or
partially the application of an establishment
seeking to avail of the exemption.
On the other hand, if the exemption was
outside of the four exemptible categories,
like in the present case, the exemptible
category should be: (1) in accord with the
rationale for exemption; (2)
reviewed/approved by the NWPC; and (3)
upon review, the RTWPB issuing the wage
order must submit a strong and justifiable
reason or reasons for the inclusion of such
category which shall be subject to
review/approval by the Commission. It is
the compliance with the second requisite
that is at issue here.
In the case at bar, APL and TNMR appealed
submitting to the NWPC precisely the issue
of the validity of the Section 2(A) and
Section 9(2) of Wage Order No. NCR-07.
The NWPC ruled that the RTWPB-NCR had
Page | lxix
justifiable reasons in exempting the sectors
and establishments enumerated in the
assailed sections. Lastly, Wage Order No.
NCR-07 is presumed to be regularly issued
in the absence of any strong showing of
grave abuse of discretion on the part of
RTWPB-NCR. The presumption of validity
is made stronger by the fact that its validity
was upheld by the NWPC upon review.
____________________________________
6. David/Yiels Hog Dealer v Macasio, [GR
No 195466, July 2, 2014]
Facts
In January 2009, Macasio filed before the
LA a complaint against petitioner Ariel L.
David, doing business under the name and
style "Yiels Hog Dealer," for non-payment
of overtime pay, holiday pay and 13th
month pay. He also claimed payment for
moral and exemplary damages and
attorney’s fees. Macasio also claimed
payment for service incentive leave (SIL).
Macasio alleged before the LA that he had
been working as a butcher for David since
January 6, 1995. Macasio claimed that
David exercised effective control and
supervision over his work, pointing out that
David: (1) set the work day, reporting time
and hogs to be chopped, as well as the
manner by which he was to perform his
work; (2) daily paid his salary of P700.00,
which was increased from P600.00 in 2007,
P500.00 in 2006 and P400.00 in 2005; and
(3) approved and disapproved his leaves.
Macasio added that David owned the hogs
delivered for chopping, as well as the work
tools and implements; the latter also rented
the workplace. Macasio further claimed that
David employs about twenty-five (25)
butchers and delivery drivers.
In his defense, David claimed that he started
his hog dealer business in 2005 and that he
only has ten employees. He alleged that he
hired Macasio as a butcher or chopper on
"pakyaw" or task basis who is, therefore, not
entitled to overtime pay, holiday pay and
13th month pay pursuant to the provisions of
the Implementing Rules and Regulations
(IRR) of the Labor Code. David pointed out
that Macasio: (1) usually starts his work at
10:00 p.m. and ends at 2:00 a.m. of the
following day or earlier, depending on the
volume of the delivered hogs; (2) received
the fixed amount of P700.00 per
engagement, regardless of the actual number
of hours that he spent chopping the
delivered hogs; and (3) was not engaged to
report for work and, accordingly, did not
receive any fee when no hogs were
delivered.
David claims that Macasio was not his
employee as he hired the latter on “pakyaw”
or task basis. He also claimed that he issued
the Certiicate of Employment, upon
Macasio’s request, only for overseas
employment purposes. He pointed to the
“Pinagsamang Sinumpaang Salaysay,”[14]
executed by Presbitero Solano and
Christopher (Antonio Macasio’s co-
butchers), to corroborate his claims.
LA concluded that as Macasio was engaged
on “pakyaw” or task basis, he is not entitled
to overtime, holiday, SIL and 13th month
pay.
NLRC ruled that since Macasio was paid by
result and not in terms of the time that he
spent in the workplace, Macasio is not
covered by the Labor Standards laws on
overtime, SIL and holiday pay, and 13th
Page | lxx
month pay under the Rules and Regulations
Implementing the 13th month pay law.
The CA awarded Macasio’s claim for
holiday, SIL and 13th month pay for three
years. It ruled that as defined by the Labor
Code, a “field personnel” is one who
performs the work away from the office or
place of work and whose regular work hours
cannot be determined with reasonable
certainty. In Macasio’s case, the elements
that characterize a “field personnel” are
evidently lacking as he had been working as
a butcher at David’s “Yiels Hog Dealer”
business in Sta. Mesa, Manila under David’s
supervision and control, and for a fixed
working schedule that starts at 10:00 p.m.
Issue
1) Whether or not Macasio, paid on pakyaw
basis, is an employee of David
2) Whether the CA correctly found the
NLRC in grave abuse of discretion in
ruling that Macasio is entitled to Holiday
Pay, SIL and 13th month pay.
Held
1) YES, Macasio is an employee of David
because engagement on pakyaw or task
basis does not characterize the
relationship that may exist between the
parties, ie., whether one of employment
or independent contractorship.
Article 97 (6) of the Labor Code defines
wages as ". . . the remuneration or earnings,
however designated, capable of being
expressed in terms of money, whether fixed
or ascertained on a time, task, piece, or
commission basis, or other method of
calculating the same, which is payable by an
employer to an employee under a written or
unwritten contract of employment for work
done or to be done, or for services rendered
or to be rendered[.]" In relation to Article 97
(6), Article 101 of the Labor Code speaks of
workers paid by results or those whose pay
is calculated in terms of the quantity or
quality of their work output which includes
"pakyaw" work and other non-time work.
To determine the existence of an employer-
employee relationship, four elements
generally need to be considered, namely: (1)
the selection and engagement of the
employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to
control the employee's conduct. These
elements or indicator comprise the so-called
"four-fold" test of employment relationship.
Macasio's relationship with David satisfies
this test.
First, the petitioner engaged the services of
respondent thus satisfying the element of
“selection and engagement of the
employee.” Second, the petitioner paid
Macasio’s wages. Third, the petitioner had
been setting the day and time when the
respondent should report for work. And
fourth, the petitioner had the right and power
to control and supervise respondent’s work
as to the mans and methods of performing it.
Therefore, the employer-employee
relationship is existing in this case.
The existence of employment relationship
between the parties is determined by
applying the “four- fold” test; engagement
Page | lxxi
on pakyaw or task basis does not determine
the parties’ relationship as it is simply a
method of pay computation. Accordingly,
respondent is petitioner’s employee, albeit
engaged on pakyaw or task basis.
2) The CA is correct in holding that
David is liable for Holiday Pay and SIL
Pay but not with the 13th month pay.
Art. 82. Coverage. — The provisions of
[Title I] shall apply to employees in all
establishments and undertakings whether
for profit or not, but not to government
employees, managerial employees, field
personnel, members of the family of the
employer who are dependent on him for
support, domestic helpers, persons in the
personal service of another, and workers
who are paid by results as determined
by the Secretary of Labor in
appropriate regulations.
xxxx
“Field personnel” shall refer to non-
agricultural employees who regularly
perform their duties away from the principal
place of business or branch office of the
employer and whose actual hours of work in
the field cannot be determined with
reasonable certainty. [emphases and
underscores ours]
Among the Title I provisions are the
provisions on holiday pay (under Article 94
of the Labor Code) and SIL pay (under
Article 95 of the Labor Code). Under Article
82, “field personnel” on one hand and
“workers who are paid by results” on the
other hand, are not covered by the Title I
provisions. The wordings of Article 82 of
the Labor Code additionally categorize
workers “paid by results” and “field
personnel” as separate and distinct types of
employees who are exempted from the Title
I provisions of the Labor Code.
On the other hand, the IRR provides that
Section 1. Coverage. – This rule shall apply
to all employees except:
xxxx
(e) Field personnel and other employees
whose performance is unsupervised by
the employer including those who are
engaged on task or contract basis, purely
commission basis, or those who are paid a
fixed amount for performing work
irrespective of the time consumed in the
performance thereof.
Under these provisions, the general rule is
that holiday and SIL pay provisions cover
all employees. To be excluded from their
coverage, an employee must be one of those
that these provisions expressly exempt,
strictly in accordance with the exemption.
Under the IRR, exemption from the
coverage of holiday and SIL pay refer to
“field personnel and other employees whose
time and performance is unsupervised by the
employer including those who are engaged
on task or contract basis.
Unlike the IRR of the Labor Code on
holiday and SIL pay, Section 3 (e) of the
Rules and Regulations Implementing PD
No. 851 on 13th month pay exempts
Page | lxxii
employees "paid on task basis" without any
reference to "field personnel." This could
only mean that insofar as payment of the
13th month pay is concerned, the law did
not intend to qualify the exemption from its
coverage with the requirement that the task
worker be a "field personnel" at the same
time.
Therefore, Macasio as a paykaw basis
employee not being a field personnel is
entitled to holiday pay and SIL Pay but not
to 13th month pay.
____________________________________
7. Our Haus Realty Development Corp v
Parian et al, [GR No 204651, Aug 6, 2014]
Facts
Respondents Alexander Parian, Jay Erinco,
Alexander Canlas, Jerry Sabulao and
Bernardo Tenedero were all laborers
working for petitioner Our Haus Realty
Development Corporation (Our Haus) , a
company engaged in the construction
business.
After being asked to take vacation leaves
due to financial distress, respondents were
asked to report back to work but instead of
doing so, they file with the LA a complaint
for underpayment of their daily wages. They
also alleged that Our Haus failed to pay
them their holiday, service incentive leave
(SIL), 13th month and overtime pays.
Our Haus alleged that aside the monetary
amount of respondents’ wages, it also
subsidized their meals (3 times a day), and
gave them free lodging near the construction
project they were assigned to. Thus, their
wages were actually higher than that of the
minimum wage.
The LA ruled in favor of Our Haus. The
NLRC however reversed the LA. The Court
of Appeals affirmed the NLRC in toto,
ruling that it cannot consider the values of
its meal and housing facilities in the
computation of the respondents’ total wages.
Thus, this petition from Our Haus to the SC.
Issue
Whether or not the meals and lodging
provided by Our Haus to respondents are
facilities that are deemed included in the
latters’ wages.
Held
No. The meals and lodging provided by Our
Haus to respondents are not facilities. Thus,
the wages of respondents were well below
the minimum wage.
To test whether these benefits can be
considered facilities, the requisites must be
met, to wit:
a. proof must be shown that such
facilities are customarily furnished
by the trade;
b. the provision of deductible facilities
must be voluntarily accepted in
writing by the employee; and
c. The facilities must be charged at a
fair and reasonable value.
Page | lxxiii
Anent the first requisite, Our Haus failed to
prove if other employees of Our Haus
consistently enjoyed such benefits. There
was also no existence of an industry-wide
practice of furnishing the benefits in
question among enterprises engaged in the
same line of business. Further, as a
construction business, Our Haus is mandated
to provide such benefits to its employees by
virtue of Section 16 of DOLE Department
Order (DO) No. 13, series of 1998.
Employers engaged in the construction
business are required to provide the
following welfare amenities:
16.1 Adequate supply of safe drinking
water;
16.2 Adequate sanitary and washing
facilities;
16.3 Suitable living accommodation
for workers, and as may be applicable,
for their families;
16.4 Separate sanitary, washing and
sleeping facilities for men and women
workers.
Moreover, DOLE DO No. 56, series of
2005, which sets out the guidelines for the
implementation of DOLE DO No. 13,
mandates that the cost of the implementation
of the requirements for the construction
safety and health of workers, shall be
integrated to the overall project cost. As
part of the project cost that construction
companies already charge to their clients,
the value of the housing of their workers
cannot be charged again to their employees’
salaries.
As to the purpose test, the benefits provided
by the employer to his employee will be
determined as to whether they are facilities
or supplements, depending on the purpose
of such provision. The benefit or privilege
given to the employee which constitutes an
extra remuneration above and over his basic
or ordinary earning or wage is supplement;
and when said benefit or privilege is part of
the laborers' basic wages, it is a facility. The
real difference lies not on the kind of the
benefit but on the purpose why it was given
by the employer. If it is primarily for the
employee’s gain, then the benefit is a
facility; if its provision is mainly for the
employer’s advantage, then it is a
supplement. Under the purpose test,
substantial consideration must be given to
the nature of the employer’s business in
relation to the character or type of work
performed by the employees involved. Our
Haus is in the construction business which
requires its employees to be physically fit
and well fed in order to perform the
strenuous tasks at hand. Thus, by ensuring
that the workers are adequately and well fed,
the employer is actually investing on its
business. Thus, the subsidized meals and
free lodging provided by Our Haus are
actually supplements.
As to the second requisite, the belated
presentation of the Kasunduans purportedly
to prove authority from respondents were at
best self-serving and deserve scant
consideration.
As to the third and last requisite, the
valuation of a facility must be supported by
relevant documents such as receipts and
company records for it to be considered as
fair and reasonable. In the case at bench, the
only valuations relied upon by the labor
arbiter in his decision were figures furnished
by the private respondent's own accountant,
without corroborative evidence. Without any
corroborative evidence, it cannot be said that
Our Haus complied with this third requisite.
Page | lxxiv
In view of the foregoing, having failed to
satisfactorily meet the requisites of a benefit
to be considered a facility, Our Haus
provided the meals and lodging to
respondents as supplements and not as
facilities. Verily, the value of such benefits
may not be deducted from the employees’
wages.
WHEREFORE, petition is hereby
DENIED.
____________________________________
8. Milan et al v NLRC, GR No 202961,
Feb 4, 2015
Facts
Petitioners Millan et. al. are respondent
Solid Mills, Inc.’s employees. They and
their families were allowed to occupy SMI
Village, a property owned by Solid Mills.
The petitioners were then informed that
Solid Mills would cease its operations due to
serious business losses.
Later, Solid Mills sent to petitioners
individual notices to vacate SMI Village.
They were required to sign a memorandum
of agreement with release and quitclaim
before their vacation and sick leave benefits,
13th month pay, and separation pay would
be released. Employees who signed the
memorandum of agreement were considered
to have agreed to vacate SMI Village, and to
the demolition of the constructed houses
inside as condition for the release of their
termination benefits and separation pay.
Petitioners refused to sign the documents
and demanded to be paid their benefits and
separation pay.
Petitioners filed complaints before the Labor
Arbiter for alleged non-payment of
separation pay, accrued sick and vacation
leaves, and 13th month pay. They argued
that their accrued benefits and separation
pay should not be withheld because their
payment is based on company policy and
practice. On the other hand, Solid Mills
argued that petitioners’ complaint was
premature because they had not vacated its
property.
The Labor Arbiter ruled in favor of
petitioners. It ruled that petitioners’
possession should not be construed as
petitioners’ “accountabilities” that must be
cleared first before the release of benefits.
Their possession “is not by virtue of any
employer-employee relationship.” It is a
civil issue, which is outside the jurisdiction
of the Labor Arbiter.
Solid Mills appealed to the National Labor
Relations Commission. The National Labor
Relations Commission modified the ruling
of the Labor Arbiter.
Petitioners, thus, filed a petition for
certiorari before the Court of Appeals. The
Court of Appeals ruled that Solid Mills’ act
of allowing its employees to make
temporary dwellings in its property was a
liberality on its part and may be revoked any
time at its discretion.
Issue
Whether or not the National Labor Relations
Commission (NLRC) may preliminarily
Page | lxxv
determine an issue related to rights or claims
arising from an employer-employee
relationship
Held
Yes. The National Labor Relations
Commission has jurisdiction to determine,
preliminarily, the parties’ rights over a
property, when it is necessary to determine
an issue related to rights or claims arising
from an employer-employee relationship.
ART. 217. JURISDICTION OF
LABOR ARBITERS AND THE
COMMISSION. – (1) Except as otherwise
provided under this Code, the Labor
Arbiters shall have original and exclusive
jurisdiction to hear and decide within thirty
(30) calendar days after the submission of
the case by the parties for decision without
extension, even in the absence of
stenographic notes, the following cases
involving workers, whether agricultural or
non-agricultural:
Unfair labor practice cases;
Termination disputes;
If accompanied with a claim for
reinstatement, those cases that workers may
ile involving wages, rates of pay, hours of
work and other terms and conditions of
employment;
Claims for actual, moral, exemplary and
other forms of damages arising from the
employer-employee relations;
Cases arising from any violation of Article
264 of this Code, including questions
involving the legality of strikes and
lockouts; and
Except claims for Employees
Compensation, Social Security, Medicare
and maternity benefits, all other claims,
arising from employer-employee relations
including those of persons in domestic or
household service, involving an amount
exceeding five thousand pesos (P5,000.00),
regardless of whether accompanied with a
claim for reinstatement. (emphasis
supplied)
Petitioners’ claim that they have the right to
the immediate release of their benefits as
employees separated from respondent Solid
Mills is a question arising from the
employer-employee relationship between
the parties.
Claims arising from an employer-employee
relationship are not limited to claims by an
employee. Employers may also have claims
against the employee, which arise from the
same relationship. As a general rule,
therefore, a claim only needs to be
sufficiently connected to the labor issue
raised and must arise from an employer-
employee relationship for the labor tribunals
to have jurisdiction.
In this case, respondent Solid Mills claims
that its properties are in petitioners’
possession by virtue of their status as its
employees. Respondent Solid Mills allowed
petitioners to use its property as an act of
liberality. Put in other words, it would not
have allowed petitioners to use its property
had they not been its employees. The return
of its properties in petitioners’ possession by
virtue of their status as employees is an issue
that must be resolved to determine whether
Page | lxxvi
benefits can be released immediately. The
issue raised by the employer is, therefore,
connected to petitioners’ claim for benefits
and is sufficiently intertwined with the
parties’ employer-employee relationship.
Thus, it is properly within the labor
tribunals’ jurisdiction.
____________________________________
9. Toyota Pasig Inc v De Peralta, GR No
213488, Nov 7, 2016
Facts
Petitioner Peralta filed a complaint for
illegal dismissal, illegal deduction, unpaid
commission, annual profit sharing, damages,
and attorney's fees against Toyota Pasig.
Toyota initially hired Peralta as a cashier
and eventually, she was promoted to the
position of Insurance Sales Executive (ISE)
where she received various distinctions from
petitioner, including "Best Insurance Sales
Executive" for the years 2007 and 2011. Her
husband, Romulo Peralta, who was the
President of the Toyota Shaw-Pasig
Workers Union — Automotive Industry
Workers Alliance(TSPWU-AIWA),
organized a collective bargaining unit
through a certification election.
Respondent argued that Toyota suddenly
dismissed from service the officials/directors
of TSPWU-AIWA, including her husband
and started harassing her for her husband's
active involvement in TSPWU-AIWA,
which resulted to the issuance of a Notice to
Explain which accused her of "having
committed various acts" relative to the
processing of 3 units of "outside
transactions" and claiming commissions,
instead of considering the m as
"newbusinessaccounts" under the
dealership's marketing department where
preventively suspended. She received a
Notice of Termination, which prompted her
to file the instant complaint, where she also
prayed for the payment of her earned
substantial commissions, tax rebates, and
other benefits dating back from July 2011 to
January 2012, amounting to P617,248.08.
Petitioner argued that respondent was
dismissed from service for just cause and
with due process. They explained that
respondent was charged and proven to have
committed acts of dishonesty and
falsification by claiming commissions for
new business accounts which should have
been duly credited to the dealership's
marketing department. They further averred
that respondent's claims for commissions,
tax rebates, and other benefits were
unfounded and without documentation and
validation.
Issue
Whether or not the CA erred in awarding
Peralta the unpaid commissions, tax rebate
for achieved monthly targets, salary
deductions, salary for the month of January
2012, and success share/profit sharing
should be awarded
Held
Section 97(f) of the Labor Code reads:
"Wage"paid to any employees hall mean the
remuneration of earnings, however
designated, capable of being expressed in
terms of money, whether fixed or
ascertained on a time, task, piece, or
commission basis, or other method of
Page | lxxvii
calculating the same, which is payable by an an ISE. Clearly, such claims fall within the
employer to an employee under a written or ambit of the general term"commissions"
unwritten contract of employment for work which in turn, fall within the definition of
done or to be done, or for services rendered wages.
or to be rendered and includes the fair and
reasonable value, as determined by the
Toyota simply dismissed Peralta’s claims
Secretary of Labor and Employment, of
for being purely self-serving and unfounded,
board, lodging, or other facilities
without even presenting anything as proof
customarily furnished by the employer to the
showing that Peralta was already paid of
employee. "Fair and reasonable value" shall
such benefits or that she was not entitled
not include any profit to the employer,or to
thereto. Even during the LA proceedings,
any person affiliated with the employer. The
Toyota was even given the opportunity to
provision explicitly includes commissions as
rebut Peralta’s claims but opted not to do so.
part of wages. In Iran v. NLRC: While
The failure of Toyota to submit the
commissions are incentives or forms of
necessary documents that are in their
encouragement to inspire employees to put a
possession gives
little more industry on the jobs particularly
risetothepresumptionthatthepresentationther
assigned to them, still these commissions are
eofisprejudicialtoitscause. Conclusion:
direct remunerations for services rendered.
Indubitably, Toyota is bound to pay the
The nature of the work of a salesman and
monetary benefits claimed by Peralta since
the reason for such type of remuneration for
Peralta already earned these monetary
services rendered demonstrate clearly that
benefits, she must promptly receive the
commissions are part of a salesman's wage
same, notwithstanding the fact that she was
or salary.
legally terminated from employment.

Heirs of Ridad v. Gregorio Araneta

University Foundations tates that “once the
employee has set out with particularity in his
complaint and other documents the labor
standard benefits he is entitled to, and which
he alleged that the employer failed to pay
him, it becomes the employer's burden to
prove that it has paid these money claims.
One who pleads payment has the burden of
proving it, and even where the employees
must allege non-payment, the general rule
isthatthe burdenrestsonthe employer to
prove payment, rather than on the
employees to proven on-payment.”
Peralta’s monetary claims, such as
commissions, tax rebates for achieved
monthly targets, and success share/profit
sharing, are given to her as incentives or
forms of encouragement in order for her to
put extra effort in performing her duties as
____________________________________
10. Soriano et al v Secretary of Finance,
GR Nos 184450, 184508, 184538, 185234,
Jan 24, 2017, En Banc
Facts
On 19 May 2008, the Senate filed its Senate
Committee Report No. 53 on Senate Bill
No. (S.B.) 2293. On 21 May 2008, former
President Gloria M. Arroyo certified the
passage of the bill as urgent through a letter
addressed to then Senate President Manuel
Villar. On the same day, the bill was passed
on second reading IN the Senate and, on 27
May 2008, on third reading. The following
day, 28 May 2008, the Senate sent S.B. 2293

Page | lxxviii
to the House of Representatives for the
latter's concurrence.
On 17 June 2008, R.A. 9504 entitled "An
Act Amending Sections 22, 24, 34, 35, 51,
and 79 of Republic Act No. 8424, as
Amended, Otherwise Known as the National
Internal Revenue Code of 1997," was
approved and signed into law by President
Arroyo
The following are the salient features of the
new law:It increased the basic personal
exemption from P20,000 for a single
individual, P25,000 for the head of the
family, and P32,000 for a married individual
to P50,000 for each individual.It increased
the additional exemption for each dependent
not exceeding four from P8,000 to
P25,000.It raised the Optional Standard
Deduction (OSD) for individual taxpayers
from 10% of gross income to 40% of the
gross receipts or gross sales.It introduced the
OSD to corporate taxpayers at no more than
40% of their gross income.It granted MWEs
exemption from payment of income tax on
their minimum wage, holiday pay, overtime
pay, night shift differential pay and hazard
pay.[1]
Accordingly, R.A. 9504 was published in
the Manila Bulletin and Malaya on 21 June
2008. On 6 July 2008, the end of the 15-day
period, the law took effect.
Petitioners Jaime N. Soriano et al. primarily
assail Section 3 of RR 10-2008 providing
for the prorated application of the personal
and additional exemptions for taxable year
2008 to begin only effective 6 July 2008 for
being contrary to Section 4 of Republic Act
No. 9504.Petitioners argue that the prorated
application of the personal and additional
exemptions under RR 10-2008 is not "the
legislative intendment in this jurisdiction."
They stress that Congress has always
maintained a policy of "full taxable year
treatment" as regards the application of tax
exemption laws. They allege further that
R.A. 9504 did not provide for a prorated
application of the new set of personal and
additional exemptions.
Then Senator Manuel Roxas, as principal
author of R.A. 9504, also argues for a full
taxable year treatment of the income tax
benefits of the new law. He relies on what
he says is clear legislative intent In his
"Explanatory Note of Senate Bill No. 103,"
he stresses "the very spirit of enacting the
subject tax exemption law
Petitioner Trade Union Congress of the
Philippine contends that the provisions of
R.A. 9504 provide for the application of the
tax exemption for the full calendar year
2008. It also espouses the interpretation that
R.A. 9504 provides for the unqualified tax
exemption of the income of MWEs
regardless of the other benefits they receive.
In conclusion, it says that RR 10-2008,
which is only an implementing rule, amends
the original intent of R.A. 9504, which is the
substantive law, and is thus null and void.
Page | lxxix
Petitioners Senator Francis Joseph Escudero,
the Tax Management Association of the
Philippines, Inc., and Ernesto Ebro allege
that R.A. 9504 unconditionally grants
MWEs exemption from income tax on their
taxable income, as wel1 as increased
personal and additional exemptions for other
individual taxpayers, for the whole year
2008. They note that the assailed RR 10-
2008 restricts the start of the exemptions to
6 July 2008 and provides that those MWEs
who received "other benefits" in excess of
P30,000 are not exempt from income
taxation. Petitioners believe this RR is a
"patent nullity" and therefore voi
The Office of the Solicitor General (OSG)
filed a Consolidated Comment[16] and took
the position that the application of R.A.
9504 was intended to be prospective, and
not retroactive. This was supposedly the
general rule under the rules of statutory
construction: law will only be applied
retroactively if it clearly provides for
retroactivity, which is not provided in this
instance
The OSG further argues that the legislative
intent of non-retroactivity was effectively
confirmed by the "Conforme" of Senator
Escudero, Chairperson of the Senate
Committee on Ways and Means, on the draft
revenue regulation that became RR 10-2008.
Issue
Whether Sections 1 and 3 of RR 10-2008 are
consistent with the law in declaring that an
MWE who receives other benefits in excess
of the statutory limit of P30,000 is no longer
entitled to the exemption provided by R.A.
9504, is consistent with the law.
Held
Sections 1 and 3 of RR 10-2008 add a
requirement not found in the law by
effectively declaring that an MWE who
receives other benefits in excess of the
statutory limit of P30,000 is no longer
entitled to the exemption provided by R.A.
9504.
"The amount of 'de minimis' benefits
conforming to the ceiling herein prescribed
shall not be considered in determining the
P30,000.00 ceiling of 'other benefits'
excluded from gross income under Section
32(b)(7)(e) of the Code. Provided that, the
excess of the 'de minimis' benefits over their
respective ceilings prescribed by these
regulations shall be considered as part of
'other benefits' and the employee receiving it
will be subject to tax only on the excess over
the P30,000.00 ceiling. Provided, further,
that MWEs rece1vmg 'other benefits'
exceeding the P30,000.00 limit shall be
taxable on the excess benefits, as well as on
his salaries, wages and allowances, just like
an employee receiving compensation
income beyond the SMW."
(B) Exemptions from Withholding Tax on
Compensation. - The following income
payments are exempted from the
Page | lxxx
requirements of withholding tax on exempt form income tax, and consequently,
compensation: from withholding tax.

xxxx MWEs receiving other income, such as

income from the conduct of trade, business,
or practice of profession, except income
(13) Compensation income of MWEs who
subject to final tax, in addition to
work in the private sector and being paid the
compensation income are not exempted
Statutory Minimum Wage (SMW), as fixed
from income tax on their entire income
by Regional Tripartite Wage and
earned during the taxable year. This rule,
Productivity Board (RTWPB)/National
notwithstanding, the [statutory minimum
Wages and Productivity Commission
wage], [h]oliday pay, overtime pay, night
(NWPC), applicable to the place where
shift differential pay and hazard pay shall
he/she is assigned.
still be exempt from withholding tax.

The aforesaid income shall likewise be

exempted from income tax.

For purposes of these regulations,

"Statutory Minimum Wage" (SMW) shall
hazard pay shall mean xxx.
refer to the rate fixed by the Regional
Tripartite Wage and Productivity Board
(RTWPB), as defined by the Bureau of
Labor and Employment Statistics (BLES) of
the Department of Labor and Employment
In case of hazardous employment,
(DOLE). The RTWPB of each region shall
xxx
determine the wage rates in the different
regions based on established criteria and
shall be the basis of exemption from income
tax for this purpose.
The NWPC shall officially submit a
Holiday pay, overtime pay, night shift Matrix of Wage Order by region xxx
differential pay and hazard pay earned by
the aforementioned MWE shall likewise be
covered by the above exemption. Provided,
however, that an employee who
receives/earns additional compensation such Any reduction or diminution of wages for
as commissions, honoraria, fringe benefits, purposes of exemption from income tax
benefits in excess of the allowable statutory shall constitute misrepresentation and
amount of P30,000.00, taxable allowances therefore, shall result to the automatic
and other taxable income other than the disallowance of expense, i.e. compensation
SMW, holiday pay, overtime pay, hazard and benefits account, on the part of the
pay and night shift differential pay shall not employer. The offenders may be criminally
enjoy the privilege of being a MWE and, prosecuted under existing laws.
therefore, his/her entire earnings are not

Page | lxxxi
Nowhere in the above provisions of R.A.
9504 would one find the qualifications
prescribed by the assailed provisions of RR
10-2008. The provisions of the law are clear
and precise; they leave no room for
interpretation - they do not provide or
require any other qualification as to who are
MWEs.
To be exempt, one must be an MWE, a term
that is clearly defined. Section 22(HH) says
he/she must be one who is paid the statutory
minimum wage if he/she works in the
private sector, or not more than the statutory
minimum wage in the non-agricultural
sector where he/she is assigned, if he/she is
a government employee. Thus, one is either
an MWE or he/she is not. Simply put, MWE
is the status acquired upon passing the
litmus test - whether one receives wages not
exceeding the prescribed minimum wage.
While the Labor Code's definition of "wage"
appears to encompass any payments of any
designation that an employer pays his or her
employees, the concept of minimum wage is
distinct.63 "Minimum wage" is wage
mandated; one that employers may not
freely choose on their own to designate in
any which way.
In Article 99, minimum wage rates are to be
prescribed by the Regional Tripartite Wages
and Productivity Boards. In Articles 102 to
105, specific instructions are given in
relation to the payment of wages. They must
be paid in legal tender at least once every
two weeks, or twice a month, at intervals not
exceeding 16 days, directly to the worker,
except in case of force majeure or death of
the worker.
These are the wages for which a minimum is
prescribed. Thus, the minimum wage
exempted by R.A. 9504 is that which is
referred to in the Labor Code. It is distinct
and different from other payments including
allowances, honoraria, commissions,
allowances or benefits that an employer may
pay or provide an employee.
Likewise, the other compensation incomes
an MWE receives that are also exempted by
R.A. 9504 are all mandated by law and are
based on this minimum wage.
Additional compensation in the form of
overtime pay is mandated for work beyond
the normal hours based on the employee's
regular wage.64
Those working between ten o'clock in the
evening and six o'clock in the morning are
required to be paid a night shift differential
based on their regular wage.65
Holiday/premium pay is mandated whether
one works on regular holidays or on one's
scheduled rest days and special holidays. In
all of these cases, additional compensation is
mandated, and computed based on the
employee's regular wage.66
R.A. 9504 is explicit as to the coverage of
the exemption: the wages that are not in
excess of the minimum wage as determined
by the wage boards, including the
corresponding holiday, overtime, night
differential and hazard pays.
In other words, the law exempts from
income taxation the most basic
compensation an employee receives - the
Page | lxxxii
amount afforded to the lowest paid
employees by the mandate of law. In a way,
the legislature grants to these lowest paid
employees additional income by no longer
demanding from them a contribution for the
operations of government. This is the
essence of R.A. 9504 as a social legislation.
The government, by way of the tax
exemption, affords increased purchasing
power to this sector of the working class.
____________________________________
11. CCBPI vs. Iloilo Coca-Cola Plant
Employees Union, GR No. 195297,
December 5, 2018
Facts: The conflict between Petitioner
Coca-Cola Bottlers Philippines, Inc.
(CCBPI) and respondent Iloilo Coca-Cola
Plant Employees Labor Union (ICCPELU)
arose due to the CCBPI’s policy involving
Saturday work. In the said policy, several of
CCBPl’s employees were required to report
for work on certain Saturdays to perform a
host of activities, usually involving
maintenance of the facilities. This
prerogative was supposedly consistent with
the pertinent provisions7 in the Collective
Bargaining Agreement (CBA) between
CCBPI and its employees, which stated that
management had the sole option to schedule.
work on Saturdays on the basis of
operational necessity.
CCBPI later on informed the ICCPELU that,
starting July 2, 2005, Saturday work would
no longer be scheduled, with CCBPI citing
operational necessity as the reason for the
decision. Specifically, the discontinuance
was done with the purpose of saving on
operating expenses and compensating for
the anticipated decreased revenues. As
Saturday work involved maintenance-related
activities, CCBPI would then only schedule
the day’s work as the need arose for these
particular undertakings, particularly on some
Saturdays from September to December
2005. The parties met with CCBPI’s
Manufacturing Manager setting forth the
official proposal to stop the work schedule
during Saturdays. This proposal was
opposed and rejected by the officers and
members of the ICCPELU who were present
at the meeting. Despite this opposition,
CCBPI pushed through with the non-
scheduling of work on the following
Saturday.
As a result of the foregoing, the ICCPELU
submitted to CCBPI its written grievance,
stating therein that CCBPI’ s act of
disallowing its employees to report during
Saturday is a violation of the CBA
provisions, specifically Section 1, Article 10
thereof. Along with the submission of the
written grievance, the ICCPELU also
requested a meeting with CCBPI to discuss
the issue. CCBPI response to the request,
however, was to merely send a letter
reiterating to the ICCPELU that under the
set of facts, management has the option to
schedule work on Saturday on the basis of
operational necessity. Further letters on the
part of the ICCPELU were responded to in
the same way by CCBPI.
ICCPELU thus brought its grievances to the
office of the NCMB and submitted the case
for voluntary arbitration. The panel
comprised of three (3) voluntary arbitrators
(the Panel of Arbitrators), was charged with
resolving two issues: First, whether or not
members of the ICCPELU were entitled to
receive their basic pay during Saturdays
under the CBA even if they would not report
Page | lxxxiii
for work, and second, whether or not CCBPI
could be compelled by the ICCPELU to
provide work to its members during
Saturdays under the CBA.
After the presentation of evidence and the
subsequent deliberations, the Panel of
Arbitrators ruled in favor of CCBPI. The
PVA held that that the Complainant’s Union
members are nary entitled to receive their
Basic Pay during Saturdays under the CBA
if they are not reporting for work, under
Section I Article 10, and Sections 1(c) and
3(c) Article II of the CBA. On the second
issue, it held that CCBPI cannot be
compelled by the Complainant Union to
provide works to its members during
Saturdays under the CBA, for lack of legal
and factual basis.
ICCPELU’s Motion for Reconsideration to
the Panel of Arbitrators’ ruling was denied
for lack of merit. Unwilling to accept the
findings of the Panel of Arbitrators, the
ICCPELU elevated its case to the CA via a
Petition for Review under Rule 43 of the
Rules of Court. After a review of the same,
the CA subsequently rendered a Decision
granting the ICCPELU’s Petition for
Review and reversing the decision of the
Panel of Arbitrators.
CCBPI’s Motion for Reconsideration was
denied by the CA. Hence, the petition before
the SC.
Issues: Whether or not grant of qualified
Saturday work pertains to monetary benefit
in the contemplation of non-diminution of
benefits rule.
Whether or not the removal of the qualified
Saturday work violates the non-diminution
of benefits rule under Art. 100 of the Labor
Code.
Whether or not the withdrawal of qualifiedly
given Saturday work is a valid exercise of
management prerogative.
Ruling: The SC found merit in the petition.
Application: The SC held that it is not
Saturday work per se which constitutes a
benefit to the company’s employees. Rather,
the benefit involved in this case is the
premium which the company pays its
employees above and beyond the minimum
requirements set by law. The CBA between
CCBPI and the ICCPELU guarantees the
employees that they will be paid their
regular wage plus an additional 50% thereof
for the first eight (8) hours of work
performed on Saturdays. Therefore, the
benefit, if ever there is one, is the premium
pay given by reason of Saturday work, and
not the grant of Saturday work itself.
In Royal Workers Union vs. Coca-Cola
Bottlers Philippines, Inc. -Cebu Plant, the
Court had the occasion to rule that the term
“benefits” mentioned in the non-diminution
rule refers to monetary benefits or privileges
given to the employee with monetary
equivalents. Stated otherwise, the employee
benefits contemplated by Article 100 are
those which are capable of being measured
in terms of money. Thus, it can be readily
concluded from past jurisprudential
pronouncements that these privileges
constituted money in themselves or were
convertible into monetary equivalents.
In order for there to be proscribed
diminution of benefits that prejudiced the
affected employees, CCBPI should have
unilaterally withdrawn the 50% premium
pay without abolishing Saturday work.
These are not the facts of the case at bar.
CCBPI withdrew the Saturday work itself,
pursuant, as already held, to its management
Page | lxxxiv
prerogative. In fact, this management
prerogative highlights the fact that the
scheduling of the Saturday work was
actually made subject to a condition, i.e., the
prerogative to provide the company’s
employees with Saturday work based on the
existence of operational necessity. As
compared to the factual milieu in the case of
Eastern Telecommunications Philippines,
Inc. vs. Eastern Telecoms Employees Union,
the CBA between CCBPI and’ the
ICCPELU has no analogous provision
which grants that the 50% premium pay
would have to be paid regardless of the
occurrence of Saturday work. Thus, the non-
payment of the same would not constitute a
violation of the diminution of benefits rule.
Also, even assuming arguendo that the
Saturday work involved in this case falls
within the definition of a “benefit” protected
by law, the fact that it was made subject to a
condition (i.e., the existence of operational
necessity) negates the application of Article
100 pursuant to the established doctrine that
when the grant of a benefit is made subject
to a condition and such condition prevails,
the rule on non-diminution finds no
application. Otherwise stated, if Saturday
work and its corresponding premium pay
were granted to CCBPI’s employees without
qualification, then the company’s policy of
permitting its employees to suffer work on
Saturdays could have perhaps ripened into
company practice protected by the non-
diminution rule.
Lastly, the SC held that since the affected
employees are daily-paid employees, they
should be given their wages and
corresponding premiums for Saturday work
only if they are permitted to suffer work.
Invoking the time-honored rule of “a fair
day’s work ‘for a fair day’s pay,” the CCBPI
argues that the CA’s ruling that such
unworked Saturdays should be compensated
is contrary to law and the evidence on
record. The age-old rule governing the
relation between labor and capital, or
management and employee, of a “fair day’s,
wage for a fair day’s labor” remains the
basic factor in determining employees’
wages. If there is no work performed by the
employee, there can be no wage. In cases
where the employee’s failure to work was
occasioned neither by his abandonment nor
by termination, the burden of economic loss
is not rightfully shifted to the employer;
each party must bear his own loss.
In other words, where the employee is
willing and able to work and is not illegally
prevented from doing so, no wage is due to
him. To hold otherwise would be to grant to
the employee that which he did not earn at
the prejudice of the employer. In the case at
bar, CCBPI’s employees were not prevented
from working on Saturdays. The company
was simply exercising its option not to
schedule work pursuant to the CBA
provision, which gave it the prerogative to
do so. It therefore follows that the principle
of “no work, no pay” finds application in the
instant case.
____________________________________
12. Pablico et al., vs. Cerro/Master Pab
Resto Bar, GR No. 227200, June 10, 2019
Facts: Respondent Numeriano Cerro, Jr.
(Cerro) works as a bartender in Master's Pab
Resto Bar (MPRB). At the former's
suggestion, the petitioner purchased and
took over the management of MPRB from
Page | lxxxv
its original owner, the Feliciano family, on Sometime in September 2011, due to several
November 18, 2008.  infractions that caused MPRB losses, the
On the same day, the petitioner took over, he petitioner transferred Cerro to another
promoted Cerro as Officer-in-Charge with a establishment.  On October 18, 2011,
daily wage of P200.00, and gave the latter respondents Caliguiran, Panganiban, Pauig,
the authority to hire additional employees.  Lim, Napitan, Caronan, and Baguno
Pursuant to which, herein respondents were received text messages, which they
employed to work at MPRB, viz.: interpreted to mean that they have been
terminated from work on account of their
DAIL close association to Cerro. 
DATE OF
POSITI Y Acting on this, on October 24, 2011, the
NAME EMPLOY
ON WAG respondents then filed a Complaint  for
MENT
E illegal dismissal, underpayment of salaries
Michael November Disk Php20 and benefits, damages and attorney's fees
Caliguir 18, 2008 Jockey 0.00 before the National Labor Relations
an Commission (NLRC). On March 30, 2012,
(Caliguir Labor Arbiter (LA) Jaime M. Reyno
an) rendered his Decision, dismissing the
Efren November Cook Php20 complaint for lack of merit.
Pangani 18, 2008 0.00 In his Decision, the LA dismissed the
ban respondents' claim of illegal dismissal.
(Pangani Insofar as Cerro, the LA held that his
ban) suspension is a valid exercise by the
Gloria March 26, Accoun Php20 employer of disciplinary authority pursuant
Napitan 2008 tant 0.00 to the former's infractions. Anent the other
(Napitan respondents on the other hand, the LA held
) that they failed to discharge the burden of
Reynalie January 23, Barmai Php20
proving that they have been terminated.
Lim 2011 d 0.00
Finally, on account of the respondents'
(Lim)
money claims, the LA found the payrolls
Manny March 2, Utility Php13
presented by the petitioner as sufficient
Baguno 2011 3.33
proof of payment.  HTE
(Baguno
The respondents appealed to the NLRC. On
)
November 21, 2012, the NLRC promulgated
Genius November Waiter Php15
its Decision, partially granting the appeal.
Pauig 18, 2008 7.66
The Decision of the [LA] dated March 30,
(Pauig)
2012 is affirmed with modification. The
Richard March 2, Assista Php16
Decision of the [LA] is sustained insofar as
Caronan 2011 nt 6.66
(1) the legality of complainant Cerro's
(Carona Cook
suspension, (2) the dismissal of
n)
complainants' claim of illegal dismissal and
Page | lxxxvi
(3) dismissal of complainants' claim for
moral and exemplary damages are
concerned. However, regarding
complainants' monetary claims, the
Commission finds that they are entitled to
the following, namely: (1) wage differentials
for 3 years counted backwards from October
2011; and (2) 13th month pay for a period of
3 years counted backwards from October
2011. Moreover, as a consequence of the
finding that complainants were not
dismissed from employment, complainants
are directed to return to work and
respondents are directed to reinstate
complainants to their former positions,
without backwages. Considering, however,
the apparent strained relations between the
parties brought about by the filing of this
complaint, respondents are directed to grant
separation pay, in lieu of reinstatement, to
each of complainants, reckoned from date of
his/her employment up to the finality of this
Decision.
Unsatisfied with the decision of the NLRC,
the respondents filed a partial motion for
reconsideration, which the NLRC denied in
its Resolution dated May 20, 2013.
The petitioner elevated the case to the
CA via a petition for certiorari under Rule
65 of the Rules of Court. The CA ruled that
the petition is dismissed for lack of merit,
there being no grave abuse of discretion
amounting to lack or excess of jurisdiction
committed by the NLRC. On motion for
reconsideration, the CA issued an Amended
decision, partially granting the petition. The
Decision dated October 27, 2015 is
MODIFIED in that the NLRC's Decision
dated November 21, 2012 in NLRC NCR
CASE NO. 10-16169-11/NLRC LAC NO.
05-001595-12 is affirmed except for the
award of Separation Pay which is
hereby deleted.
Issue: 1. The NLRC committed a reversible
error when it ruled that the petitioner is not
exempt from the minimum wage law as well
is it granted the claim of the employees for
wage differential without due regard to the
evidence presented by the petitioner anent
the amount of salary being paid to his
employees; and 2. The NLRC committed
grave abuse of discretion amounting to lack
or excess of jurisdiction in arbitrarily
computing the alleged liability of the
petitioner. 
Ruling: The petition is not meritorious.
Application: As the Court sees it, the
petitioner merely reiterates the same points
he has raised in his petition before the CA.
The petitioner argues that he is exempted
from the application of the "Minimum Wage
Law" as he is engaged in the service
business that employs less than ten (10)
employees. He asserts that the mere fact that
his business has not been granted exemption
by the Department of Labor and
Employment (DOLE) does not disqualify
him from availing the benefits of the said
law, as a layman like him cannot be
expected to be knowledgeable of this
requirement. Also, the petitioner faults the
NLRC in not considering the "Pinagsamang
Sinumpaang Salaysay" issued by the Guest
Relations Officers/Waitresses working at
MPRB as proof that the same individuals are
not its employees. 
Cerro admitted having appropriated the
funds of the MPRB without the knowledge
and consent of its owner, for sure, this act
justifies the exercise of management
Page | lxxxvii
prerogative to place him under preventive
suspension particularly considering his
position. Being an Officer-in-Charge of
MPRB, Cerro is responsible for the
company's over-all operations and, as such
in a position, cause damage to the property
of the employer.
Similarly, the Court affirms that the rest of
the respondents have not been terminated. It
is a basic principle in illegal dismissal cases
that the employees must first establish by
competent evidence the fact of their
termination from employment. In this
regard, mere allegation does not suffice,
evidence must be substantial and the fact of
dismissal must be clear, positive and
convincing. In the case at bar, respondents
Caliguiran, Panganiban, Pauig, Lim,
Napitan, Caronan, and Baguno failed to
discharge this burden. The only evidence
they presented are text messages supposedly
informing them that they have been
terminated. However, as opined by the
tribunals below, nowhere from the language
thereof can it be remotely inferred that they
are being terminated. It was also not shown
that the respondents tried reporting for work,
but were prevented to do so. Jurisprudence
settled that the claim of illegal dismissal
cannot be sustained in the absence of any
showing of an overt or positive act proving
that the employees have been dismissed, as
the employees' claim in that eventuality
would be "self-serving, conjectural and of
no probative value."  In the same vein, the
rule that the employer bears the burden of
proof in illegal dismissal cases finds no
application in this case as the petitioner
denies having dismissed the respondents,
and the latter failed to prove the fact of
termination.
The petitioner argues that the respondents
are not entitled to wage differentials as he is
engaged in the service business employing
less than ten (10) employees. It is a basic
principle in procedure that the burden is
upon the person who asserts the truth of the
matter that he has alleged.  The Court
emphasized in C. Planas Commercial v.
NLRC (Second Division), that in order to be
exempted under Republic Act (R.A.) No.
6727 or the Wage Rationalization Act, two
elements must concur — first, it must be
shown that the establishment is regularly
employing not more than ten (10) workers,
and second, that the establishment had
applied for and was granted exemption by
the appropriate Regional Board in
accordance with the applicable rules and
regulations issued by the Commission.  The
conclusion proceeds from the unequivocal
language of the law itself: 
Section 4. (c) Exempted from the provisions
of this Act are :
Retail/service establishments regularly
employing not more than ten (10) workers
may be exempted from the applicability of
this Act upon application with and as
determined by the appropriate Regional
Board in accordance with the applicable
rules and regulations issued by the
Commission. Whenever an application for
exemption has been duly filed with the
appropriate Regional Board, action on any
complaint for alleged non-compliance with
this Act shall be deferred pending resolution
of the application for exemption by the
appropriate Regional Board.
In the event that applications for exemptions
are not granted, employees shall receive the
appropriate compensation due them as
provided for by this Act plus interest of one
Page | lxxxviii
per cent (1%) per month retroactive to the
effectivity of this Act.  any document, because the same is contrary
Herein, the petitioner himself admitted that
he did not apply for such exemption, thus, it
is clear that he cannot claim benefits under
the law. The petitioner cannot shield himself
from complying with the law by the lone
fact that he is just a layman and cannot be
expected to know of the law's requirements.
Under our legal system, ignorance of the law
excuses no one from compliance therewith.  findings of the labor tribunals. Well-settled
Furthermore, the policy of the Labor Code,
under which R.A. 6727 is premised, is to
include all establishments, except a few
specific classes, under the coverage of the
law.  As the petitioner failed to apply for an
exemption, and it is undisputed that the
respondents are MPRB's employees and are
paid less than the prescribed minimum
wage, the petitioner's liability for wage
differential cannot be denied.
Although inconsequential, with the
petitioner's liability already established, it is
still useful to state that the first element is
also wanting in the case at bar. Herein, the
LA, the NLRC, and the CA all found that
the petitioner is employing more than ten
(10) employees in his establishment. The
petitioner counters the foregoing conclusion,
raising in evidence the affidavit issued
collectively by its guest relations
officers/waitresses. Employment status is
not determined by contract or document.
Neither is an employee's avowal of his or
her employment status — as regular, casual,
contractual, seasonal — conclusive upon the
Court. To be sure, employment status is
determined by the four-fold test, and the
attendant circumstances of each case, as
supported by any competent and relevant
evidence.  The status of employment cannot
be dictated by the stipulation of contract or
to public policy and heavily impressed with
public interest. The law relating to labor and
employment is an area where the parties are
not at liberty to insulate themselves and their
relationships from the impact of labor laws
and regulations by means of contract or
waiver. 
Still, the Court finds no reason to disturb the
is the rule that factual findings of labor
officials, who are deemed to have acquired
expertise in matters within their jurisdiction,
are generally accorded not only respect but
even finality and bind this Court when
supported by substantial evidence, as in the
case at bar. The mere existence of these
guest relations officers/waitresses employed
under the same terms and conditions as the
respondents is sufficient to disqualify
petitioner and MPRB from the exemption
under R.A. No. 6727. Devoid of any
unfairness or arbitrariness in the labor
tribunals' decision-making process, the
Court is left with no recourse but to affirm
the findings made by them. 
Since there is a clear violation of R.A. No.
6727, the petitioner is also liable to pay
interest on the appropriate compensation
due, not only by the express provision of the
law but because the failure to pay constitutes
a loan or forbearance of money, at the rate
of one percent (1%) per month or twelve
percent (12%) per annum.The Court must
clarify that in keeping with the reason
behind the law in imposing the same
interest, and in light of the Court's ruling
in Nacar v. Gallery Frames, et al., the
imposition of interest must be reconciled
with Bangko Sentral ng Pilipinas Monetary
Page | lxxxix
Board Resolution No. 796 dated May 16,
2013, which effectively amended the rate of
interest.  Accordingly, the amount of wage
differentials which the petitioner owed to the
respondents shall earn interest at the rate of
twelve percent (12%) per annum from the
time payment thereof has accrued or their
respective dates of employment until the
date they last reported for work or July 1,
2013, whichever is earlier. Thereafter, it
having been concluded that the respondents
have not been illegally dismissed and as
such entitled to reinstatement, provided that
they have rendered services within the
period, the interest shall be six percent
(6%) per annum until their full satisfaction.  insufficient in this regard to support his
Simple enough, the case presents no
controversy on this aspect as it appears that
the respondents ceased to report to work
prior to July 1, 2013 per Report of the
Computation Division of the NLRC.
Fittingly, the foregoing dates should serve as
basis not only of the amount of wage
differential but of the proper interest due.
Having ruled out illegal dismissal, no wages
are due for the period they have not reported
to work.  same were in his possession. The non-
Finally, the petitioner raises as the final error
on this appeal the award of the monetary
benefits in favor of the respondents. The
petitioner posits that the NLRC and the CA
erred in not relying on his documentary
evidence. He claims that had the payrolls
been considered, they would be sufficient to
prove that the respondents have been paid of
the benefits they now claim. The fact that
the allegation of forgery has been dismissed
by the Office of the City Prosecutor of
Quezon City should render the same
sufficient for the purpose of this appeal.
The petitioner's arguments are not
persuasive. The dismissal of the allegation
of forgery only means, at most, that the
signatures therein are genuine. In fact, the
Resolution issued by the Assistant City
Prosecutor provides that the basis of
dismissal is not the absolute certainty that
the signatures in the payroll belong to the
respondents; rather, it is because of the
failure by the respondents to adduce
evidence to establish the manner in which
the petitioner committed the alleged forgery.
The dismissal notwithstanding, the fact
remains that the documents presented by the
petitioner are plain photocopies and
allegation of payment. While photocopied
documents are generally admitted and given
probative value in administrative
proceedings, allegations of forgery and
fabrication prompt the petitioner to present
the original documents for inspection.
Notably, the petitioner did not present the
originals nor even attempted to explain why
he cannot present the same, when these
should have been easily accounted for as the
presentation of the original without any
explanation, that the photocopied documents
do not present a complete list of MPRB's
employees, the absence of certification as to
their authenticity, and the allegation of
forgery by the respondents raise legitimate
doubts on the authenticity of the payrolls
which renders the same devoid of any
rational probative value. 
In the same vein, jurisprudence also
recognizes the doctrine of strained relations
as an exception to the general rule of
reinstatement. In which instance, separation
pay is accepted as an alternative when
Page | xc
reinstatement is no longer desirable or
viable. The doctrine, however, does not
automatically apply nor can be inferred
whenever a case for illegal dismissal is filed.
Strained relations between the parties cannot
be based on impression alone. It must be
proven as a fact and supported by substantial
evidence. There being no allegation, much
more evidence to prove that reinstatement is
impossible because of the strained relations
of the parties, the NLRC's order for
reinstatement is proper.

Page | xci
Topic 5: Wage Enforcement and
Recovery
1. Tiger Construction and Development
Corp v Abay et al, [GR No 164141, Feb
26, 2010]
Facts
On the basis of a complaint filed by
respondents Reynaldo Abay and fifty-nine
(59) others before the Regional Office of the
Department of Labor and Employment
(DOLE), an inspection was conducted by
DOLE officials at the premises of petitioner
TCDC. Several labor standard violations
were noted. The case was then set for
summary hearing.
Before the hearing could take place, the
Director of Regional Office No. V, Ma.
Glenda A. Manalo (Director Manalo), issued
an Order referring the case to the National
Labor Relations Commission (NLRC) Sub-
Arbitration Branch V, Naga City. Before the
NLRC could take any action, DOLE
Secretary Patricia A. Sto. Tomas (Secretary
Sto. Tomas), in an apparent reversal of
Director Manalo's endorsement, issued
another inspection authority on August 2,
2002 in the same case. DOLE officials
issued a Notice of Inspection Results to
petitioner directing it to rectify the violations
within five day from notice.
Director Manalo issued an Order directing
TCDC to pay P2,123,235.90 to its
employees. Upon appeal by petitioner,
Director Manalo again endorsed the case to
the NLRC Regional Arbitration Branch V
(Legaspi City). On January 27, 2003, the
NLRC returned the entire records of the case
to Director Manalo on the ground that the
NLRC does not have jurisdiction over the
complaint. A writ of execution was
forthwith issued. TCDC filed a belated
appeal with the DOLE Secretary. Petitioner
reiterated its argument that Director
Manalo's actions concerning the case are
null and void for having been issued without
jurisdiction. Secretary Sto. Tomas dismissed
the appeal. CA likewise dismissed the
appeal. Thus this instant petition.
Issue
Whether petitioner can still assail the
January 29, 2003 Order of Director Manalo
allegedly on the ground of lack of
jurisdiction, after said Order has attained
finality and is already in the execution stage.
Held
NO. Director Manalo acted within her
jurisdiction. Verily, petitioner may not
belatedly file an appeal on the ground of
lack of jurisdiction.
Under Article 128 (b) of the Labor Code,
as amended by Republic Act (RA) No.
7730,[ 15] the DOLE Secretary and her
representatives, the regional directors, have
jurisdiction over labor standards violations
based on findings made in the course of
inspection of an employer's premises. The
said jurisdiction is not affected by the
amount of claim involved, as RA 7730 had
effectively removed the jurisdictional
limitations found in Articles 129 and 217 of
the Labor Code insofar as inspection cases,
pursuant to the visitorial and enforcement
Page | xcii
powers of the DOLE Secretary, are
concerned.
Director Manalo's initial endorsement of the
case to the NLRC did not serve as a
dismissal of the case, which prevented her
from subsequently assuming jurisdiction
over the same. The said endorsement was
evidently not meant as a final disposition of
the case; it was a mere referral to another
agency, the NLRC, on the mistaken belief
that jurisdiction was lodged with the latter.
Thus, the error committed by Director
Manalo did not divest her of jurisdiction
over the case.
____________________________________
2. People’s Broadcasting (Bombo Radyo
Phils) v Sec of DOLE et al, GR No
179652, Mar 6, 2012, Resolution on the
Main Decision of May 8, 2009
Facts
Private respondent Jandeleon Juezan filed a
complaint against petitioner with the
Department of Labor and Employment
(DOLE) Regional Office No. VII, Cebu
City, for illegal deduction, nonpayment of
service incentive leave, 13th month pay,
premium pay for holiday and rest day and
illegal diminution of benefits, delayed
payment of wages and non-coverage of SSS,
PAG-IBIG and Philhealth.
The DOLE Regional Director found that
private respondent was an employee of
petitioner, and was entitled to his money
claims. In dismissing petitioner’s appeal, the
CA declared that the DOLE Secretary had
jurisdiction over the matter, as the
jurisdictional limitation imposed by Article
129 of the Labor Code on the power of the
DOLE Secretary under Art. 128(b) of the
Code had been repealed by Republic Act
No. (RA) 7730.
The Court reversed the CA in its May 8,
2009 Decision, declaring that while DOLE
may make a determination of existence of
employer-employee relationship, this
function could not be co-extensive with the
visitorial and enforcement power provided
in Art. 128(b) of the Labor Code, as
amended by RA 7730. The NLRC was held
to be the primary agency in determining the
existence of employer-employee
relationship. From this declaration, the
Public Attorney’s Office and DOLE sought
for clarification.
Issue
Whether or not DOLE make a determination
of existence of an employer-employee
relationship, and if so, to what extent.
Held
YES. There is a need to revisit the May
2009 Decision in so far as delineating the
jurisdiction between DOLE and NLRC as to
the existence of an employer-employee
relationship.
No limitation in the law was placed upon the
power of the DOLE to determine the
existence of an employer-employee
relationship. The DOLE must have the
Page | xciii
power to determine whether or not an
employer-employee relationship exists, and
from there to decide whether or not to issue
compliance orders in accordance with Art.
128(b) of the Labor Code, as amended by
RA 7730. If the DOLE makes a finding that
there is an existing employer-employee
relationship, it takes cognizance of the
matter, to the exclusion of the NLRC.
Verily, the following guideline is set:
1) If a complaint is brought before the
DOLE to give effect to the labor
standards provisions of the Labor
Code or other labor legislation, and
there is a finding by the DOLE that
there is an existing employer-
employee relationship, the DOLE
exercises jurisdiction to the
exclusion of the NLRC;
2) If the DOLE finds that there is no
employer-employee relationship, the
jurisdiction is properly with the
NLRC.
3) If a complaint is filed with the
DOLE, and it is accompanied by a
claim for reinstatement, the
jurisdiction is properly with the
Labor Arbiter, under Art. 217(3) of
the Labor Code.
4) If a complaint is filed with the
NLRC, and there is still an existing
employer-employee relationship, the
jurisdiction is properly with the
DOLE.
5) The findings of the DOLE may still
be questioned through a petition for
certiorari under Rule 65 of the Rules
of Court.
WHEREFORE, the Decision of this Court
in G.R. No. 179652 is hereby AFFIRMED,
with the MODIFICATION that in the
exercise of the DOLE’s visitorial and
enforcement power, the Labor Secretary or
the latter’s authorized representative shall
have the power to determine the existence of
an employer-employee relationship, to the
exclusion of the NLRC.
____________________________________
3. Superior Packaging Corp v Balagsay et
al, GR No 178909, October 10, 2012
Facts
Petitioner engaged the services of Lancer to
provide reliever services to its business,
which involves the manufacture and sale of
commercial and industrial corrugated boxes.
Pursuant to a complaint filed by the
respondents against the petitioner, the
Department of Labor and Employment
(DOLE) conducted an inspection of the
petitioner’s premises and found several
violations. An Order was issued on finding
in favor of the respondents.
Petitioner and its President, Luz, filed a
motion for reconsideration on the ground
that respondents are not its employees but of
Lancer and that they pay Lancer in lump
sum for the services rendered. With their
appeal dismissed by the DOLE Secretary,
they sought relief with the CA. The CA
affirmed said Order with a modification
absolving Luz from any personal liability.
Thus, this petition was lodged with the SC.
Issue
Whether or not petitioner Superior
Packaging Corporation may be held
Page | xciv
solidarily liable with Lancer Staffing &
Services Network, Inc. (Lancer) for
respondents’ unpaid money claims.
Held
YES. Lancer was not an independent
contractor but was engaged in “labor-only
contracting”; hence, the petitioner was
considered an indirect employer of
respondents and liable to the latter for their
unpaid money claims.
The applicable regulation was DOLE
Department Order No. 10, Series of 1997
which defined labor-only contracting as:
Sec. 9. Labor-only contracting. – (a)
Any person who undertakes to
supply workers to an employer shall
be deemed to be engaged in labor-
only contracting where such person:
(1) Does not have substantial
capital or investment in the
form of tools, equipment,
machineries, work premises
and other materials; and
(2) The workers recruited and
placed by such persons are
performing activities which
are directly related to the
principal business or
operations of the employer in
which workers are habitually
employed.
Labor-only contracting is prohibited and
the person acting as contractor shall be
considered merely as an agent or
intermediary of the employer who shall be
responsible to the workers in the same
manner and extent as if the latter were
directly employed by him.
A finding that a contractor is a “labor-only”
contractor is equivalent to declaring that
there is an employer-employee relationship
between the principal and the employees of
the supposed contractor, and the “labor-
only” contractor is considered as a mere
agent of the principal, the real employer.
The petitioner therefore, being the principal
employer and Lancer, being the labor-only
contractor, are solidarily liable for
respondents’ unpaid money claims.
WHEREFORE, the petition is DENIED.
____________________________________
4. Department of Labor & Employment
vs. Kentex Manufacturing Corp., GR No.
253781, July 8, 2019
Facts
On May 13, 2015, a fire broke out in the
factory located in Valenzuela City owned
by Kentex. The fire claimed 72
lives and injured a number of workers. As
part of its standard procedures,
personnel of the DOLE Caloocan, Malabon,
Navotas and Valenzuela (DOLE-
CAMANAVA) Field Office went
to Kentex's premises. DOLE-NCR also
assessed Kentex's compliance with the
occupational health and safety standards. In
the course of the investigation, it was
discovered that Kentex had contracted with
CJC Manpower Services (CJC) for the
deployment of workers. The DOLE-NCR
directed Kentex and CJC to attend the
mandatory conference set on May
Page | xcv
18 and 20, 2015 at the DOLE-NCR Office
in Malate, Manila. Notably, Kentex, its
Chairman and Chief Executive Officer
Beato Ang, and the corporation's Chief
Finance Officer Ong, were made parties to
this case before the DOLE-NCR.
DOLE-RO III conducted its own Joint
Assessment of CJC. The DOLE-RO III
discovered that CJC, which deployed
workers to Kentex, was an unregistered
private recruitment and placement agency. It
noted that CJC was non-compliant with the
occupational health and safety standards as
well as with labor standards, such as
underpayment of wages and nonpayment of  In a June 26, 2015 Order, the DOLE-NCR
statutory benefits.  As a result of these
findings, the DOLE-RO III issued a
Compliance Order which effectively
declared CJC as a labor-only contractor
with Kentex as its principal.  Meanwhile,
during the mandatory conference set by
the DOLE-NCR, CJC's representatives
admitted that there was no service contract
between CJC and Kentex; that CJC had
deployed 99 workers at the Kentex factory
on the day of the unfortunate incident; that
there were no employment contracts
between CJC and the workers; that a CJC
representative was sent once a week
to Kentex only to check on the workers'
daily time records; that Kentex remitted to
CJC the wage of Php230.00/day for
each of the deployed workers from which
amount CJC deducted administrative
costs and other statutory contributions,
leaving each worker a mere
wage of Php202.50 a day.
Kentex and its corporate officers, alleged
that CJC's workers were originally engaged
by Panday
Management and Labor Consultancy which
CJC later absorbed; and that the workers'
wages ranged from Php250.00 to
Php350.00/day on top of CJC's wage of,
more or less, Php202/day. They contended
that while the
corporate/business and employment records
had all been gutted by
fire, Kentex nevertheless complied with
the labor standards particularly on the
minimum wage requirement and with the
occupational health and safety standards, as
evidenced by a Certificate of Compliance
(COC) signed by the DOLE-NCR Regional
Director Alex Avila.
rejected the aforementioned
arguments of Kentex, declaring
that Kentex could not invoke the COC
because this only attested to the
findings of the compliance officer at the
time of the assessment/inspection, even
as Kentex was duty-bound to observe
continuing compliance with
the labor standards as well as the
occupational health and safety standards.
Like the June 8, 2015 Compliance
Order of the DOLE-RO III, the DOLE-NCR
also found that CJC was a mere labor-only
contractor considering that it was
unregistered with the DOLE Regional
Office where it operated.  The DOLE-NCR
likewise found that the workers were
underpaid, and computed the monetary
claims due them.
It concluded, Kentex Manufacturing
Corporation and/or Beato C. Ang and/or
Ong King Guan is/are ordered to pay within
ten (10) days from receipt hereof, Louie
Andaya and 56 other similarly situated
employees an aggregate amount of One
Million Four Hundred Forty Thousand Six
Page | xcvi
Hundred Forty-One Pesos and Thirty-Nine
Centavos (P1,440,641,39). Failure to pay
said workers within ten (10) days from
receipt hereof shall cause the
imposition of the penalty of double
indemnity pursuant to Republic Act No.
8188 otherwise known as 'An Act Increasing
the Penalty and Imposing Double Indemnity
for Violation of the Prescribed Increase or
Adjustment in the Wage Rates.
On July 2015, only Ong moved for
reconsideration of the foregoing
order.  However, in a letter dated July 7,
2015, DOLE-NCR Regional Director Avila
explained that Ong's motion for
reconsideration was not the proper remedy.
Instead, an appeal to the DOLE Secretary
should have been made within 10 days from
receipt of the Order pursuant to Section 1,
Rule 11 of Department Order No. 131,
Series of 2013. Moreover, since Ong
received the June 26, 2015 Order on the
same day, he had only until July 6, 2015
within which to appeal to
the DOLE Secretary. However, Ong never
did; thus, the Compliance Order had become
final. After this, Kentex and Ong filed with
the CA a Rule 43 Petition assailing the (1)
June 8, 2015 Compliance Order; (2) the June
26, 2015 Order; and (3) the July 7, 2015
letter of the DOLE-NCR Regional Director.
Among the errors Kentex and Ong assigned
was the DOLE-NCR's finding that Ong was
solidarily liable with Kentex for the
monetary awards due the workers.  Reconsideration but the CA denied the
Although the CA ruled on the merits of the
case and upheld the assailed
Orders and letter of the DOLE-NCR
Regional Director,  it observed at the outset
that Kentex and Ong resorted to the wrong
remedy in filing a Rule 43 Petition, when
the proper remedy should have been a Rule
65 certiorari petition from the
decisions/resolutions of the DOLE Secretary
. In fact, nothing from the assailed
documents indicative of acts of grave
abuse of discretion amounting to lack or
excess of jurisdiction on the
part of the DOLE Secretary was set forth or
amply demonstrated. And given the fact that
time had irretrievably lapsed without any
appeal being availed of by Kentex and Ong
as prescribed by the procedural rules
on labor laws, the CA ruled that the assailed
orders had become final and executory. As a
company officer, he could not be personally
held liable for the debts of Kentex without a
showing of bad faith or wrongdoing on his
part for the corporation's unlawful act.  The
CA opined that nothing from the DOLE-
NCR's June 26, 2015 Order discussed any
act of Ong that showed his involvement in
the wrongdoing of Kentex. Thus, the
dispositive portion of the CA judgment
stating that the Order, dated June 26, 2015,
is affirmed with the modification that
petitioner Ong King Guan is held not liable
for the monetary awards specified in the
Order. The Order, dated June 8, 2015 of
the DOLE-Regional Office No. III, San
Fernando City, Pampanga, and the
Order/Letter, dated July 7, 2015, of DOLE-
NCR Regional Director Alex V. Avila, are
affirmed.
Petitioner filed a Motion for Partial
motion in its Resolution.  Hence, this
Petition.
Ruling: The petition is granted.
Page | xcvii
Application: Both the DOLE-NCR and the
CA correctly ruled that the June 26, 2015
Order had already become
final and executory in view of the
failure ofrespondents Kentex and Ong to
appeal therefrom to the Secretary of Labor.
Notice ought to be taken of the fact
that, at the time the DOLE-NCR rendered its
ruling, Department Order No. 131-13
Series of 2013 was the applicable
rule of procedure. The pertinent provision
states:
Rule 11, Section 1. Appeal. — The
Compliance Order may be appealed to the
Office of the
Secretary of Labor and Employment by
filing a Memorandum of Appeal, furnishing
the other party with a copy of the same,
within ten (10) days from receipt thereof. No
further motion for extension oftime shall be
entertained.
A mere notice of appeal shall not stop the
running of the period within which to file an
appeal.
Here, instead of filing an appeal with
the DOLE Secretary, Ong moved for a
reconsideration of the subject Order;
needless to say, this did not halt or stop the
running of the period to elevate the matter to
the DOLE Secretary. Indeed, the DOLE-
NCR took no action at all on Ong's motion
for reconsideration; in fact, it categorically
informed Ong that his resort to the
filing of a motion for reconsideration was
procedurally infirm. The June 26, 2015
Order having become final, it could no
longer be altered or modified by discharging
or releasing Ong from his accountability.
Anent respondents' allegation regarding
the DOLE Secretary's partiality, this Court
agrees with the CA, that —
[Kentex and Ong King Guan's] contention
that the Secretary has already prejudged
their liability in her pronouncements before
the media, such that an appeal to her would
be an exercise in futility, is untenable. We
have the rules. And, as heretofore stated,
failure to conform to the rules regarding
appeal will render the judgment
final and executory. True, litigation is not a
game of technicalities. It is equally true,
however, that every case must be presented
in accordance with the prescribed procedure
to ensure an orderly and speedy
administration of justice. The failure,
therefore, of petitioners to comply with the
settled procedural rules justifies the
dismissal of the present petition. 
Neither was there merit in respondents'
claim that they had been denied or
deprived of due process. The facts clearly
disclose that they had substantially
participated in the proceedings before
the DOLE-NCR from the mandatory
conference up to the filing of a position
paper where their side was sufficiently
heard. Thus, it is self-evident that the CA
committed serious error when it ordered the
discharge or release of Ong from the
obligations of Kentex. The reason is
elemental in its simplicity: contrary to
settled, unrelenting jurisprudence, it
unconsciously and egregiously sought to
alter and modify, as indeed it
altered and modified, an already
final and executory verdict. We have already
declared in Mocorro, Jr. v. Ramirez  that:
x x x A definitive final judgment, however
erroneous, is no longer subject to change or
revision.
A decision that has acquired finality
becomes immutable and unalterable. This
Page | xcviii
quality of immutability precludes the
modification of a final judgment, even if the
modification is meant to correct erroneous
conclusions of fact and law. And this
postulate holds true whether the
modification is made by the court that
rendered it or by the highest court in the
land. The orderly administration of justice
requires that, at the risk of occasional errors,
the judgments/resolutions of a court must
reach a point of finality set by the law. The
noble purpose is to write finis to dispute
once and for all. This is a fundamental
principle in our justice system, without
which there would be no end to litigations.
Utmost respect and adherence to this
principle must always be maintained by
those who exercise the
power of adjudication. Any act, which
violates such principle, must immediately be
struck down. Indeed, the
principle of conclusiveness of prior
adjudications is not confined in its operation
to the judgments of what are ordinarily
known as courts, but extends to all bodies
upon which judicial powers had been
conferred.
The only exceptions to the rule on the
immutability of final judgments are (1) the
correction of clerical errors, (2) the so-
called nunc pro tunc entries which cause no
prejudice to any party, and (3) void
judgments. x x x 
In the absence of any showing that the CA's
modification or alteration of the subject
Order falls within the exceptions to the rule
on the immutability offinal judgments,
the DOLE-NCR's June 26, 2015 Order must
be upheld and respected.

Page | xcix
Topic 6: Wage Protection
Provisions & Prohibitions
Regarding Wages
1. SHS Perforated Materials, Inc. et al.,
vs. Diaz, GR No. 185814, Oct. 13, 2010
Facts
Petitioner SHS Perforated Materials, Inc.
(SHS) is a start-up corporation organized
and existing under the laws of the Republic
of the Philippines and registered with the
Philippine Economic Zone Authority.
Petitioner Winfried Hartmannshenn
(Hartmannshenn), a German national, is its
president, in which capacity he determines
the administration and direction of the day-
to-day business affairs of SHS. Petitioner
Hinrich Johann Schumacher (Schumacher),
also a German national, is the treasurer and
one of the board directors. As such, he is
authorized to pay all bills, payrolls, and
other just debts of SHS of whatever nature
upon maturity. Schumacher is also the
Executive Vice-President of the European
Chamber of Commerce of the Philippines
(ECCP) which is a separate entity from
SHS. Both entities have an arrangement
where ECCP handles the payroll
requirements of SHS to simplify business
operations and minimize operational
expenses. Thus, the wages of SHS
employees are paid out by ECCP, through
its Accounting Services Department headed
by Juliet Taguiang (Taguiang).
Manuel F. Diaz (respondent) was hired by
petitioner SHS as Manager for Business
Development on probationary status
Respondent was also instructed by
Hartmannshenn to report to the SHS office
and plant at least two (2) days every work
week to observe technical processes
involved in the manufacturing of perforated
materials, and to learn about the products of
the company, which respondent was hired to
market and sell.
During respondents employment,
Hartmannshenn was often abroad and,
because of business exigencies, his
instructions to respondent were either sent
by electronic mail or relayed through
telephone or mobile phone. When he would
be in the Philippines, he and the respondent
held meetings. As to respondents work,
there was no close supervision by him.
During meetings with the respondent,
Hartmannshenn expressed his dissatisfaction
over respondents poor performance.
On November 29, 2005, Hartmannshenn
instructed Taguiang not to release
respondents salary. Later that afternoon,
respondent called and inquired about his
salary. The next day, on November 30,
2005, respondent served on SHS a demand
letter and a resignation letter.
Hartmannshenn then accepted respondents
resignation and informed him that his salary
would be released upon explanation of his
failure to report to work, and proof that he
did, in fact, work for the period in question.
He demanded that respondent surrender all
company property and information in his
possession. Respondent agreed to these
"exit" conditions through electronic mail.
Instead of complying with the said
conditions, however, respondent sent
another electronic mail message to
Hartmannshenn and Schumacher on
December 1, 2005, appealing for the release
of his salary.
To settle the issue amicably, petitioners
counsel advised respondents counsel by
telephone that a check had been prepared in
the amount of P50,000.00, and was ready for
pick-up on December 5, 2005. On the same
Page | c
date, a copy of the formal reply letter
relating to the prepared payment was sent to
the respondents counsel by facsimile
transmission. Despite being informed of
this, respondent never picked up the check.
Respondent countered that his counsel
received petitioners formal reply letter only
on December 20, 2005, stating that his
salary would be released subsequent to the
turn-over of all materials owned by the
company in his possession. Respondent
claimed that the only thing in his possession
was a sample panels folder which he had
already returned and which was duly
received by Taguiang on November 30,
2005.
On December 9, 2005, respondent filed a
Complaint against the petitioners for illegal
dismissal; non- payment of salaries/wages
and 13th month pay with prayer for
reinstatement and full backwages;
exemplary damages, and attorneys fees,
costs of suit, and legal interest.
Issue
Whether or not the temporary withholding
of respondent’s salary/wages by petitioners
was a valid exercise of management
prerogative.
Held
Withholding respondent’s salary was not a
valid exercise of management prerogative.
Management prerogative refers “to the right
of an employer to regulate all aspects of
employment, such as the freedom to
prescribe work assignments, working
methods, processes to be followed,
regulation regarding transfer of employees,
supervision of their work, lay- off and
discipline, and dismissal and recall of
work.” Although management prerogative
refers to “the right to regulate all aspects of
employment,” it cannot be understood to
include the right to temporarily withhold
salary/wages without the consent of the
employee.
Any withholding of an employee’s wages by
an employer may only be allowed in the
form of wage deductions under the
circumstances provided in Article 113 of the
Labor Code, as set forth below:
ART. 113. Wage Deduction. – No employer,
in his own behalf or in behalf of any person,
shall make any deduction from the wages of
his employees, except:
A. In cases where the worker is insured
with his consent by the employer,
and the deduction is to recompense
the employer for the amount paid by
him as premium on the insurance;
B. For union dues, in cases where the
right of the worker or his union to
check-off has been recognized by the
employer or authorized in writing by
the individual worker concerned; and
C. In cases where the employer is
authorized by law or regulations
issued by the Secretary of Labor.
There is constructive dismissal if an act of
clear discrimination, insensibility, or disdain
by an employer becomes so unbearable on
the part of the employee that it would
foreclose any choice by him except to
forego his continued employment. It exists
where there is cessation of work because
continued employment is rendered
impossible, unreasonable or unlikely, as an
offer involving a demotion in rank and a
diminution in pay.
In this case, the withholding of respondent’s
salary does not fall under any of the
circumstances provided under Article 113.
Neither was it established with certainty that
respondent did not work from November 16
Page | ci
to November 30, 2005. Hence, the Court
agrees with the LA and the CA that the
unlawful withholding of respondent’s salary
amounts to constructive dismissal.
____________________________________
2. Nina Jewelry Manufacturing of Metal
Arts Inc. vs. Montecillo, G.R. No. 188169,
November 28, 2011
Facts
In 1996 and 1994, respondents Madeline
Montecillo (Madeline) and Liza Trinidad
(Liza) were first employed as goldsmiths by
the petitioner Niña Jewelry Manufacturing
of Metal Arts, Inc. (Niña Jewelry).
Madeline's weekly rate was P1,500.00 while
Liza's was P2,500.00.
Incidents of theft involving goldsmiths
caused Niña Jewelry to require the said
employees to post cash bonds or deposits in
varying amounts but in no case exceeding
15% of their salaries per week. Purpose of
which is to answer for any loss or damage
by reason of the goldsmith’s fault or
negligence in handling the gold.
Niña Jewelry claims that the they were
given the option to sign authorizations in
lieu of the deposits allowing allowing the
company to deduct their salaries amounts
not exceeding 15% of their take home pay
should it be found that they lost the gold
entrusted to them.
However, respondents claimed that Niña
Jewelry left them with no option but to post
the deposits. They alleged that they were
constructively dismissed because their
employments were made dependent on their
readiness to post the required deposits.
Further claimed that they were made to sign
blank trust receipts.
On the other hand, Niña Jewelry averred the
respondents no longer reported for work and
signified their defiance against the new
policy which at that point had not even been
implemented yet.
On September 7, 2004, the respondents filed
against Niña Jewelry complaints for illegal
dismissal and for the award of separation
pay.
LA: dismissed the respondents' complaints
but ordered Niña Jewelry to pay the
respondent’s their 13th month pay for the
year 2014. In dismissing the complaints,
LA ratiocinated that; their claims that they
were made to sign blank trust receipts is
self-serving and that they were not
dismissed for respondents’ were only
informed to put up the cash bond before they
could be allowed to return back to work.
NLRC: affirmed LA’s decision but deleted
the 13th month pay for respondents had
unpaid loans with the petitioner.
CA: Reversed. NLRC was wrong in holding
that there was abandonment of work if the
employee fails to make the required deposit
for he will not be given gold to work on.
Issue
Whether or not the requirement of posting
cash bond or have the same deducted from
the worker’s salaries is proper
Held
No. petitioners had failed to prove that their
imposition of the new policy upon the
goldsmiths falls under the exceptions
Page | cii
specified in articles 113 and 114 of the
Labor Code.
While the petitioners are not absolutely
precluded from imposing the new policy,
they can only do so upon compliance with
the requirements of the law. In other words,
the petitioners should first establish that the
making of deductions from the salaries is
authorized by law, or regulations issued by
the Secretary of Labor. Further, the posting
of cash bonds should be proven as a
recognized practice in the jewelry
manufacturing business, or alternatively, the
petitioners should seek for the determination
by the Secretary of Labor through the
issuance of appropriate rules and regulations
that the policy the former seeks to
implement is necessary or desirable in the
conduct of business. The petitioners failed in
this respect. It bears stressing that without
proofs that requiring deposits and effecting
deductions are recognized practices, or
without securing the Secretary of Labor's
determination of the necessity or desirability
of the same, the imposition of new policies
relative to deductions and deposits can be
made subject to abuse by the employers.
This is not what the law intends.
____________________________________
3. Locsin II vs. Mekeni Food Corp., GR
No. 192105, December 9, 2013
Facts
The respondent offered the position of
Regional Sales Manager to the petitioner
contained in an Offer Sheet which contained
a car plan, under which one-half of the cost
of the vehicle is to be paid by the company
and the other half to be deducted from
petitioner’s salary.
The petitioner resigned two years later. By
then, a total of P112,500.00 had been
deducted from his monthly salary and
applied as part of the employee’s share in
the car plan.
The petitioner made personal and written
follow-ups regarding his unpaid salaries,
commissions, benefits, and offer to purchase
his service vehicle.
The respondent replied that the company car
plan benefit applied only to employees who
have been in the company for five years; for
this reason, the balance that petitioner
should pay on his service vehicle stood at
P116,380.00 if he opts to purchase the same.
The petitioner filed a complaint for the
recovery of monetary claims consisting of
unpaid salaries, commissions, sick/vacation
leave benefits, and recovery of monthly
salary deductions which are earmarked for
his cost-sharing in the car plan.
The Labor Arbiter rendered a decision
ordering the respondent to turn-over the
subject vehicle upon payment of the
petitioner of the sum of P100,435.84.
The National Labor Relations Commission
reversed and set aside the decision of the
Labor Arbiter ordering the respondent to pay
the unpaid dues owing the petitioner further
contending that the deduction paid by the
petitioner from the company car plan should
be returned to him otherwise it would result
to unjust enrichment considering the vehicle
remained in possession of the company.
The Court of Appeals upon a special civil
action for certiorari initiated by the
respondent reversed and set aside the
decision of the NLRC holding that as per
Page | ciii
agreement in company car plan should the
remaining installments not be paid by the
employee the company would retain
possession over the vehicle. The monthly
payments the petitioner made were to be
treated as rentals for the use of his service
vehicle for the duration of his employment.
And thus, the amounts already paid by him
should not be returned to him. The Court of
Appeals affirmed the decision of the NLRC
regarding the other matters involving unpaid
benefits.
Issue
Whether or not the petitioner is entitled to a
refund of all amounts applied to the cost of
the service vehicle under the car plan.
Held
The Supreme Court granted the petition in
part holding that there was nothing in the
terms and conditions of the car plan that
indicated that the unpaid installment plans
would not be reimbursed to the petitioner
upon his failure to fully pay for the same.
Thus, it is the appellate court’s patent error
to presume that such should be treated as
rentals and not subsequently returned to the
petitioner. The forfeiture of the installments
already paid was not indicated in the terms
and conditions neither is it for the sole
benefit of the petitioner considering the
same was a necessity for the continued
operations of the company. The petitioner
would’ve been unable to cover the vast tract
of area assigned to him lacking the
necessary vehicle at his disposal, therefore,
the same had redounded fully to the benefit
of the company. In accordance with Article
22 of the Civil Code there is unjust
enrichment when a person has benefit
without justification at the expense of
another. In this case that would definitely
occur should the installments paid be
forfeited in favor of the respondent,
however, the petitioner cannot recover the
amount paid on the part of the company.
____________________________________
4. TH Shopfitters Corp., et al., vs. T&H
Shopfitters Corp., Union, GR No. 191714,
Feb 26, 2014
Facts
T&H Shopfitters Corporation/ Gin Queen
Corporation workers union filed their
Complaint for ULP by way of union busting,
and Illegal Lockout, with moral and
exemplary damages and attorney’s fees,
against T&H Shopfitters and Gin Queen,
before the Labor Arbiter. Respondents
treated T&H Shopfitters and Gin Queen as a
single entity and their sole employer. In their
desire to improve their working conditions,
respondents and other employees of
petitioners held their first formal meeting to
discuss the formation of a union. The
following day 17 employees were barred
from entering petitioners’ factory premises
located in Castillejos, Zambales, and
ordered to transfer to T&H Shopfitters’
warehouse at Subic Bay Freeport Zone
purportedly because of its expansion.
Afterwards, the said 17 employees were
repeatedly ordered to go on forced leave due
to the unavailability of work.
DOLE eventually issued a certificate of
registration in favor of the THGQ Union.
Respondents contended that the affected
employees were not given regular work
assignments, while subcontractors were
Page | civ
continuously hired to perform their basis. It was of the impression that the
functions. With the assistance of the employees, who opposed its economic
National Conciliation and Mediation Board, measures, were merely motivated by spite in
the parties came to an agreement. Petitioners filing the complaint for ULP against it. In
agreed to give priority to regular employees addition, Gin Queen explained that its
in the distribution of work assignments. transfer from Castillejos, Zambales to
Respondents averred, however, that Cabangan, Zambales was a result of the
petitioners never complied with its expiration of its lease agreement with Myra
commitment but instead hired contractual D. Lumibao (Myra), its lessor. Since the
workers. Cabangan site was bare and still required
construction, Gin Queen offered work, to
employees who opted to stay, on rotation as
When a certification election was finally
well.
scheduled, the president of Gin Queen
through a memorandum announced that it
was relocating its office and workers in LA ruled against the union. The decision
Cabangan, Zambales. The area in Cabangan was appealed to the NLRC which reversed
was a talahiban and the union officers and the decision of the LA and also ruled against
members were made to work as grass cutters the MR.
according to the respondents. When the
workers did not report for work, the officers
“Furthermore, it is noteworthy that, based on
were made to explain and the other
their Articles of Incorporation, T & H
employees were meted out with suspension.
Corporation and Gin Queen Corporation are
A day before the election, the petitioners
engaged in the same line of business. It
sponsored a field trip where the union
should also be noted that respondents did
officers and members were not included.
not controvert the allegations to the effect
Allegedly, a sales officer campaigned
that Myra D. Lumibao, the supposed lessor
against the union. Due to the heavy pressure
of respondent corporations, is the wife of
exerted by petitioners, the votes for "no
respondent Stennis Huang, and that Gin
union" prevailed. Respondents averred that
Queen Corporation has been renamed
the following week after the certification
‘MDL’, but still carries on the same business
elections were held, petitioners retrenched
in the same premises using the same
THG-GQ Union officers and members
machines and facilities. These
assigned at the Zambales plant. Respondents
circumstances, together with the supposed
claimed that the work weeks of those
assignment of respondent Stennis Huang’s
employees in the SBFZ plant were
interest in Gin Queen Corporation to a third
drastically reduced to only three (3) days in
party are badges of fraud that justify the
a month.
piercing of the veil of corporate fiction. x x
x
In its defense, Gin Queen, claiming that it is
a corporation separate and distinct from
Thus, based on the foregoing, respondents T
T&H Shopfitters, stressed that respondents
& H Shopfitters Corporation, Gin Queen
were all employees. Gin Queen claimed that
Corporation (now known as ‘MDL’) and
due to the decrease in orders from its
Stennis Huang, as well as the presidents of
customers, they had to resort to cost cutting
the respondent corporations as of November
measures to avoid anticipated financial
2003 and the date of execution of this
losses. Thus, it assigned work on a rotational

Page | cv
decision may be held liable for unfair labor
practice and the corresponding award of
moral and exemplary damages.”
CA affirmed the NLRC decision. (THE
DECISIONS MAY BE READ FROM THE
ORIGINAL CASE)
Issue
W/N ULP acts were committed by
petitioners against respondents in the case at
bench
Held
YES. (BASICALLY THE SC AFFIRMS
THE NLRC RULING ON THE PIERCING
PART. The rest of the decision is labor
related na.) In support of their position,
petitioners stress that T&H Shopfitters and
Gin Queen are corporations separate and
distinct from each other. Consequently,
T&H Shopfitters and Stinnes Huang, an
officer of T&H Shopfitters, cannot be held
liable for ULP for the reason that there is no
employer-employee relationship between
the former and respondents. Further, Gin
Queen avers that its decision to implement
an enforced rotation of work assignments for
respondents was a management prerogative
permitted by law, justified by the decrease in
the orders it received from its customers. It
explains that its failure to present concrete
proof of its decreasing orders was due to the
impossibility of proving a negative
assertion. It also asserts that the transfer
from Castillejos to Cabangan was made in
good faith and solely because of the
expiration of its lease contract in Castillejos.
The court disagrees and affirms the NLRC
ruling on this issue.
The questioned acts of petitioners, namely:
1) sponsoring a field trip to Zambales for its
employees, to the exclusion of union
members, before the scheduled certification
election; 2) the active campaign by the sales
officer of petitioners against the union
prevailing as a bargaining agent during the
field trip; 3) escorting its employees after
the field trip to the polling center; 4) the
continuous hiring of subcontractors
performing respondents’ functions; 5)
assigning union members to the Cabangan
site to work as grass cutters; and 6) the
enforcement of work on a rotational basis
for union members, all reek of interference
on the part of petitioners.
Indubitably, the various acts of petitioners,
taken together, reasonably support an
inference that, indeed, such were all
orchestrated to restrict respondents’ free
exercise of their right to self-organization.
The Court is of the considered view that
petitioners’ undisputed actions prior and
immediately before the scheduled
certification election, while seemingly
innocuous, unduly meddled in the affairs of
its employees in selecting their exclusive
bargaining representative.
More importantly, petitioners' bare denial of
some of the complained acts and
unacceptable explanations, a mere
afterhought at best, cannot prevail over
respondents' detailed narration of the events
that transpired. At this juncture, it bears to
emphasize that in labor cases, the quantum
of proof necessary is substantial evidence,18
or that amount of relevant evidence as a
Page | cvi
reasonable mind might accept as adequate to
support a conclusion, even if other minds,
equally reasonable, might conceivably opine
otherwise.
____________________________________
5. Wesleyan University-Phils., vs.
Wesleyan University-Phils., Faculty &
Staff Asso., GR No. 181806, March 12,
2014
Facts
Petitioner Wesleyan University-Philippines
is a non-stock, non-profit educational
institution duly organized and existing under
the laws of the Philippines. Respondent
Wesleyan University-Philippines Faculty
and Staff Association, on the other hand, is a
duly registered labor organization acting as
the sole and exclusive bargaining agent of
all rank-and-file faculty and staff employees
of petitioner. In 2003, the parties signed a 5-
year CBA effective June 1, 2003 until May
31, 2008.
On August 16, 2005, petitioner, through its
President, Atty. Maglaya issued a
Memorandum providing guidelines on the
implementation of vacation and sick leave
credits as well as vacation leave
commutation. On August 25, 2005,
respondent's President, De Lara wrote a
letter to Atty. Maglaya informing him that
respondent is not amenable to the unilateral
changes made by petitioner.
On February 8, 2006, a Labor Management
Committee (LMC) Meeting was held during
which petitioner advised respondent to file a
grievance complaint on the implementation
of the vacation and sick leave policy. In the
same meeting, petitioner announced its plan
of implementing a one-retirement policy,
which was unacceptable to respondent.
The parties referred the matter to a
Voluntary Arbitrator who rendered a
decision declaring the one-retirement policy
and the Memorandum dated August 16,
2005 as contrary to law. On appeal, the CA
affirmed the decision of the Voluntary
Arbitrator supported by substantial
evidence. Hence this petition.
Issue
Whether the petitioner's unilateral acts
violated the rule on non-diminution of
benefits.
Held
Yes, there is a violation on non-diminution
of Benefits.
The Non-Diminution Rule found in Article
100 of the Labor Code explicitly prohibits
employers from eliminating or reducing the
benefits received by their employees. This
rule, however, applies only if the benefit is
based on an express policy, a written
contract, or has ripened into a practice. To
be considered a practice, it must be
consistently and deliberately made by the
employer over a long period of time.
An exception to the rule is when "the
practice is due to error in the construction or
application of a doubtful or difficult
Page | cvii
question of law." The error, however, must
be corrected immediately after its discovery;
otherwise, the rule on Non-Diminution of
Benefits would still apply.
____________________________________
6. Bluer Than Blue Joint Ventures Co.,
vs. Esteban, GR No. 192582, April 7,
2014, citing 2011 Nina Jewelry
Manufacturing of Metal Arts Inc. vs.
Montecillo
Facts
The respondent was employed as a sales
clerk and assigned at the petitioner’s
boutique. Her primary tasks were attending
to all customer needs, ensuring efficient
inventory, coordinating orders from clients,
cashiering and reporting to the accounting
department. The petitioner learned that some
of their employees had access to their POS
system with the use of a universal password
given to them by a certain Elmer Flores,
who in turn learned of the password from
the respondent. The petitioner then
conducted an investigation and asked the
petitioner to explain why she should not be
disciplinarily dealt with.
During the investigation the respondent was
placed under preventive suspension. After
investigation the petitioner terminated the
respondent on the grounds of loss of trust or
confidence. This respondent was given her
final wage and benefits less the inventory
variance incurred by the store. This urged
the respondent to file a complaint for illegal
dismissal, illegal suspension, holiday pay,
rest day and separation pay.
The labor arbiter ruled in her favor awarding
her backwages. The petitioner appealed the
decision in the NLRC and the decision was
reversed. However, upon the respondent’s
petition for certiorari in the court of appeals
the decision was reinstated. Hence, this
petition.
Issue
Whether the negative sales variance could
be validly deducted from the respondent’s
wage.
Held
No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that
no employer, in his own behalf or in behalf
of any person, shall make any deduction
from the wages of his employees, except in
cases where the employer is authorized by
law or regulations issued by the Secretary of
Labor and Employment, among others. The
Omnibus Rules Implementing the Labor
Code, meanwhile, provides:
SECTION 14. Deduction for loss or
damage. — Where the employer is engaged
in a trade, occupation or business where the
practice of making deductions or requiring
deposits is recognized to answer for the
reimbursement of loss or damage to tools,
materials, or equipment supplied by the
employer to the employee, the employer
may make wage deductions or require the
employees to make deposits from which
deductions shall be made, subject to the
following conditions:
Page | cviii
1. That the employee concerned is clearly
shown to be responsible for the loss or
damage;
2. That the employee is given reasonable
opportunity to show cause why deduction
should not be made;
3. That the amount of such deduction is fair
and reasonable and shall not exceed the
actual loss or damage; and
4. That the deduction from the wages of the
employee does not exceed 20 percent of the
employee's wages in a week.
In this case, the petitioner failed to
sufficiently establish that Esteban was
responsible for the negative variance it had
in its sales for the year 2005 to 2006 and that
Esteban was given the opportunity to show
cause the deduction from her last salary
should not be made.
Furthermore, the court ruled, in Nina
Jewelry Marketing of Metal Arts, Inc. v.
Montecillo, that:
The petitioners should first establish that the
making of deductions from the salaries is
authorized by law, or regulations issued by
the Secretary of Labor. Further, the posting
of cash bonds should be proven as a
recognized practice in the jewelry
manufacturing business, or alternatively, the
petitioners should seek for the determination
by the Secretary of Labor through the
issuance of appropriate rules and regulations
that the policy the former seeks to
implement is necessary or desirable in the
conduct of business. The petitioners failed in
this respect. It bears stressing that without
proofs that requiring deposits and effecting
deductions are recognized practices, or
without securing the Secretary of Labor's
determination of the necessity or desirability
of the same, the imposition of new policies
relative to deductions and deposits can be
made subject to abuse by the employers.
This is not what the law intends.
____________________________________
7. Netlink Computer Inc. vs. Delmo, GR
No. 160827, June 18, 2014
In the absence of a written agreement
between the employer and the employee that
sales commissions shall be paid in a foreign
currency, the latter has the right to be paid in
such foreign currency once the same has
become an established practice of the
former. The rate of exchange at the time of
payment, not the rate of exchange at the
time of the sales, controls.
Facts
Netlink hired Delmo as account manager
tasked to canvass and source clients and
convince them to purchase the products and
services of Netlink. Delmo worked in the
field most of the time. He and his fellow
account managers were not required to
accomplish time cards to record their
personal presence in the office of Netlink.
He was able to generate sales worth
P35,000,000.00, more or less, from which
he earned commissions amounting to
P993,558.89 and US$7,588.30. He then
requested payment of his commissions, but
Netlink refused and only gave him partial
cash advances chargeable to hisc
Page | cix
ommissions. Later on, Netlink began to
nitpick and fault find, like stressing his
supposed absences and tardiness. In order to
force him to resign, Netlink issued several
memoranda detailing his supposed
infractions of the company’s attendance
policy. Despite the memoranda, Delmo
continued to generate huge sales for Netlink.
On November 28, 1996, Delmo was shocked
when he was refused entry into the company
premises by the security guard pursuant to a
memorandum to that effect. His personal
belongings were still inside the company
premises and he sought their return to him.
This incident prompted Delmo to filea
complaint for illegal dismissal. In its answer
to Delmo’s complaint, Netlink countered
that there were guidelines regarding
company working time and its utilization
and how the employees’ time would be
recorded. Allegedly, all personnel were
required to use the bundy clock to punch in
and out in the morning, and in and out in the
afternoon. Excepted from the rules were the
company officers, and the authorized
personnel in the field project assignments.
Netlink claimed that it would be losing on
the business transactions closed byDelmo
due to the high costs of equipment, and in
fact his biggest client had not yet paid.
Netlink pointed out that Delmo had become
very lax in his obligations, with the other
account managers eventually having
outperformed him. Netlink asserted that
warning, reprimand, and suspension
memoranda were given to employees who
violated company rules and regulations, but
such actions were considered as a necessary
management tool to instill discipline.
LA: Delmo was illegally and unjustly
dismissed. Respondents were ordered to
reinstate complainant to hisformer position
without loss of seniority rights with full
backwages and other benefits. The
reinstatementaspect is immediately
executory even pending appeal. In case
reinstatement is no longer
feasible,complainant shall be paid separation
pay of one-month pay for every year of
service.
NLRC: Modified the decision of the LA by
setting aside the backwages and
reinstatement decreed by the Labor Arbiter
due to the existence of valid and just causes
for the termination of Delmo’s employment.
CA: Upholds NLRC’s ruling with
modifications with the awarding of
commission and 13th month pay to the
respondent. Whole commission was not
awarded since commission is made to
depend on the future and uncertain event. As
regard to 13th month pay, petitioner was not
made to pay because employment was
terminated based on valid and just cause
although he was not given due process.
Issues
(1) WON the payment of the commissions
should be in US dollars.
(2) WON the award of attorney’s fees was
warranted.
Held
Page | cx
1. YES. As a general rule, all obligations
shall be paid in Philippine currency.
However, the contracting parties may
stipulate that foreign currencies may be used
for settling obligations. This is pursuant to
Republic Act No. 8183 which provides as
follows:
“Section 1. All monetary obligations shall
be settled in the Philippine currency which
is legal tender in the Philippines. However,
the parties may agree that the obligation or
transaction shall be settled in any other
currency at the time of payment.”
There was no written contract between
Netlink and Delmo stipulating that the
latter’s commissions would be paid in US
dollars.
The absence of the contractual stipulation
notwithstanding, Netlink was still liable to
pay Delmo in US dollars because the
practice of paying its sales agents in US
dollars for their US dollar-denominated
sales had become a company policy. This
was impliedly admitted by Netlink when it
did not refute the allegation that the
commissions earned by Delmo and its other
sales agents had been paid in US dollars.
Instead of denying the allegation, Netlink
only sought a declaration that the US dollar
commissions be paid using the exchange
rate at the time of sale. The principle of non-
diminution of benefits, which has been
incorporated in Article 100 of the Labor
Code, forbade Netlink from unilaterally
reducing, diminishing, discontinuing or
eliminating the practice. Verily, the phrase
"supplements, or other employee benefits"
in Article 100 is construed to mean the
compensation and privileges received by an
employee aside from regular salaries or
wages. With the payment of US dollar
commissions having ripened into a company
practice, there is no way that the
commissions due to Delmo were to be paid
in US dollars or their equivalent in
Philippine currency determined at the time
of the sales. To rule otherwise would be to
cause an unjust diminution of the
commissions due and owing to Delmo.
2. YES. The award of attorney's fees must,
likewise, be upheld in line of (sic) the
decision of the Supreme Court in the case of
Consolidated Rural Bank (Cagayan Valley),
Inc. vs. National Labor Relations
Commission, 301 SCRA 223, 235, where it
was held that "in actions for recovery of
wages or where an employee was forced to
litigate and thus incur expenses to protect
her rights and interests, even if not so
claimed, an award of attorney's fees
equivalent to ten percent (10%) of the total
award is legally and morally justifiable.
There is no doubt that in the present case,
the private respondent has incurred expenses
for the protection and enforcement of his
right to his commissions.
____________________________________
8. PLDT vs. Estranero, GR No. 192518,
October 15, 2014
Facts
PLDT employed Henry Estranero as an
Auto-Mechanic/Electrician Helper with a
Page | cxi
monthly salary of P15,000.00. PLDT
adopted a company-wide Manpower
Reduction Program (MRP) to reduce its
work force. The company offered an
attractive redundancy pay consisting of
100% of their basic monthly salary for every
year of service, in addition to their
retirement benefits, if entitled and for those
who were not qualified to the said benefits,
they were offered separation or redundancy
package of 200% of their basic monthly
salary for every year of service. Estranero’s
position was declared as redundant.
Estranero availed the program. The
company computed his
redundancy/separation benefits which
amounted to P267,028.37. However, PLDT
deducted from the said amount the
outstanding liabilities of Estranero from
various loans he obtained from different
entities such as the Home Development
Mutual Fund, PLDT Employees Credit
Cooperative, Inc., PLDT Service
Cooperative, Inc., Social Security System
(SSS) and the Manggagawa ng
Komunikasyon sa Pilipinas which amounted
to P267,028.37 also. As a result, Estranero
will receive nothing from the program. This
prompted Estranero to retract. However, he
was no longer allowed to report for work.
Estranero filed a complaint for illegal
dismissal with reinstatement against PLDT
before the NLRC. The LA sustained the
validity of PLDT's redundancy program but
ruled that the office lacks jurisdiction to pass
upon the issue of PLDT's act in deducting
the total outstanding loans which Estranero
obtained from different entities. The
National Labor Relations Commission
(NLRC) and, then, the Court of Appeals
affirmed the LA decision.
Issue
Can PLDT validly deduct Estranero’s
outstanding loan obligation from his
redundancy pay?
Held
No. Any withholding of an employee's
wages by an employer may only be allowed
in the form of wage deductions under the
circumstances provided in Article 113 of the
Labor Code, as well as the Omnibus Rules
implementing it. Further, Article 116of the
Labor Code clearly provides that it is
unlawful for any person, directly or
indirectly, to withhold any amount from the
wages of a worker without the worker's
consent.
In this case, the deductions made to
Estanero's redundancy pay do not fall under
any of the circumstances provided under
Article 113, nor was it established with
certainty that the he has consented to the
said deductions or that PLDT had authority
to make such deductions. The matter would
have been different if the deductions refer to
Estranero's contributions for his being a
member of SSS, HDMF, or withholding
taxes on income, because if such was the
case, the contributions are deductions
already sanctioned by existing laws. Here, it
is evidently emphasized that the subject
deductions pertain to hiss outstanding loans
from various entities.
Furthermore, PLDT may not offset the
outstanding loans of Estranero against the
latter's monetary benefits. Accordingly, set-
off or legal compensation cannot take place
between PLDT and Estranero because they
Page | cxii
are not mutually creditor and debtor of each
other.
____________________________________
9. Milan et al vs. NLRC, GR No. 202961,
Feb. 4, 2015
Facts
Petitioners, as employees of Solid Mills Inc.,
together with their families were allowed by
Solid Mills to occupy SMI village which is
owned by Solid Mills for the reason that
according to Solid Mills it was out of
liberality and for the convenience of the
employees subject to the condition that they
would vacate the premises anytime the
Company deems fit.
The employees were informed that the Solid
Mills will cease operation due to serious
business losses. A memorandum of
agreement was executed wherein Solid Mills
will pay for the separation pay less
accountabilities, accrued sick leaves
benefits, vacation leave benefits and 13th
month pay to the dismissed employees.
Later, Solid Mills sent to petitioners
individual notices to vacate SMI Village.
Petitioners were required to sign a
memorandum of agreement as a condition
for their benefits be released to them. In the
said Memorandum, it was also stated that
they will leave the premises and that the
house built therein will be demolished.
Petitioners refused to vacate the premises
and demanded for the payment of their
benefits. Thus, they filed complaints before
the Labor Arbiter for the alleged non-
payment of separation pay, accrued sick and
vacation leaves, and 13th month pay. They
contends that their accrued benefits and
separation pay should not be withheld
because such was given based on a company
policy. And that the payment of 13th month
pay is in accordance with PD 851.
Moreover, their possession of Solid Mills
property is not an accountability that is
subject to clearance procedures and that they
had already turned over to Solid Mills their
uniforms and equipment when Solid Mills
ceased operations.
On the other hand, Solid Mills argued that
petitioners’ complaint was premature
because they had not vacated its property.
The Labor Arbiter ruled in favor of the
petitioners, contending that Solid Mills
illegally withheld petitioners’ benefits and
separation pay since such benefits are vested
by law and contract. And that petitioners’
possession of the premises should not be
considered as “accountabilities” that must be
cleared first before such benefits will be
released. Their possession “is not by virtue
of any employer-employee relationship.” It
is a civil issue, which is outside the
jurisdiction of the Labor Arbiter. On appeal,
NLRC partially affirmed LA’s decision. It
ruled that although they are entitled to such
benefit, Solid Mills was justified to withhold
them because of the petitioners’ refusal to
vacate the premises. CA then denied the
petitioners’ motion for reconsideration.
Issue
WON Solid Mills is justified in withholding
the petitioners’ accrued benefits and
separation pay due to the latter’s refusal to
vacate the premises owned by Solid Mills.
Page | cxiii

Held
Yes. Solid Mills is justified in withholding
the accrued benefits and separation pay to
the petitioners because of their refusal to
vacate the premises of the company which is
considered as a liability or debt on their part
that is due to Solid Mills.
1. The National Labor Relations
Commission may preliminarily
determine issues related to rights
arising from an employer-
employee relationship.
The National Labor Relations Commission
has jurisdiction to determine, preliminarily,
the parties’ rights over a property, when it is
necessary to determine an issue related to
rights or claims arising from an employer-
employee relationship in accordance with
Article 217 of the Labor Code. In this case,
Petitioners’ claim that they have the right to
the immediate release of their benefits as
employees separated from respondent Solid
Mills is a question arising from the
employer-employee relationship between
the parties.
As a general rule, a claim only needs to be
sufficiently connected to the labor issue
raised and must arise from an employer-
employee relationship for the labor tribunals
to have jurisdiction. In the case at bar, Solid
Mills claims that its properties are in
petitioners’ possession by virtue of their
status as its employees. And the issue raised
by the employer is connected to petitioners’
claim for benefits and is sufficiently
intertwined with the parties’ employer-
employee relationship. Hence, the Labor
Arbiter has jurisdiction.
2. Institution of clearance procedures
has legal bases
Requiring clearance before the release of
last payments to the employee is a standard
procedure among employers, whether public
or private. In order to ensure that the
properties of the employer are returned
before the employee’s departure with the
company.
As a general rule, employers are prohibited
from withholding wages from employees in
accordance with Article 116 of the Labor
Code. Moreover, it also prohibits the
elimination or diminution of benefits as
stated in Article 100 of the Labor Code.
However, as an exception, the Labor Code
under Article 113 (c) allows the deduction
of wages “in cases where the employer is
authorized by law or regulations issued by
the Secretary of Labor and Employment.”
Under Article 1706 of the Civil Code, the
employer is authorized to withhold the
employee’s wage for the debt due to the
employer.
In this case, the premises which the
petitioners refused to vacate is an
accountability. The return of the property’s
possession became an obligation or liability
on the part of the employees when the
employer-employee relationship ceased.
Thus, respondent Solid Mills has the right to
withhold petitioners’ wages and benefits
because of the existing debt or liability.
____________________________________
10. Galang et al., vs. Boie Takeda
Chemicals Inc. et al., GR No. 183934, July
20, 2016
Facts
Page | cxiv
Respondent pharmaceutical company Boie
Takeda Chemicals, Inc. (BTCI) hired
petitioners Ernesto Galang and Ma. Olga
Jasmin Chan in August 28, 1975 and July
20, 1983, respectively. Through the years,
petitioners rose from the ranks and were
promoted to Regional Sales Managers in
2000. Petitioners held these positions until
their separation from BTCI on May 1, 2004.
In February 2003, the new General
Manager, Kazuhiko Nomura (Nomura),
asked petitioners to apply for the position of
National Sales Director. Simultaneously,
Nomura also asked Edwin Villanueva
(Villanueva) and Mimi Escarte, both Group
Product Managers in the marketing
department, to apply for the position of
Marketing Director. All four employees
submitted themselves to interviews with the
management. In the end, Nomura hired an
outsider from Novartis Company as
Marketing Director, while the position of
National Sales Director remained vacant.
Later, however, petitioners were informed
that BTCI promoted Villanueva as National
Sales Director effective May 1, 2004. BTCI
explained that the appointment was pursuant
to its management prerogative, and that it
arrived at such decision only "after careful
assessment of the situation, the needs of the
position and the qualifications of the
respective candidates." The promotion of
Villanueva as the National Sales Director
caused ill-feelings on petitioners' part.
After Villanueva's promotion, petitioners
claimed that Nomura threatened to dismiss
them from office if they failed to perform
well under the newly appointed National
Sales Director. This prompted petitioners to
inquire if they could avail of early
retirement package due to health reasons.
Specifically, they requested Nomura if they
could avail of the early retirement package
of 150% plus 120% of monthly salary for
every year of service tax free, and full
ownership of service vehicle tax free. They
claimed that this is the same retirement
package given to previous retirees namely.
However, Nomura claims that this
retirement package does not exist.
On April 28, 2004, petitioners intimated
their intention to retire in a joint written
letter of resignation dated April 28, 2002 to
Nomura, effective on April 30, 2004.
Thereafter, petitioners received their
retirement package and other monetary pay
from BTCI.
Upon petitioners' retirement, the positions of
Regional Sales Manager were abolished, and
a new position of Operations Manager was
created. On October 20, 2004, petitioners
filed the complaint for constructive
dismissal and money claims before the
NLRC Regional Arbitration Branch.
In a Decision dated May 16, 2005, the Labor
Arbiter ruled that petitioners were
constructively dismissed. The Labor Arbiter
explained that petitioners were forced to
retire because Villanueva's appointment
constituted an abuse of exercise of
management prerogative; and that
subsequent events, such as the abolition of
the positions of Regional Sales Managers
and the creation of the position of the
Operations Manager show that petitioners'
easing out from service were orchestrated.
Upon appeal, the NLRC ruled that
petitioners failed to prove that they were
constructively dismissed. The Court of
Appeals affirmed the NLRC.
Issue
Page | cxv
 (1) Whether petitioners were
constructively dismissed from
service;
(2) Whether petitioners are entitled to a
higher retirement package.
Held
(1) No. Petitioners voluntarily retired
from the service, thus were not
constructively dismissed. Constructive
dismissal has often been defined as a
"dismissal in disguise" or "an act
amounting to dismissal but made to
appear as if it were not." It exists where
there is cessation of work because
continued employment is rendered
impossible, unreasonable or unlikely, as
an offer involving a demotion in rank
and a diminution in pay. In this case,
petitioners were neither demoted nor did
they receive a diminution in pay and
benefits. Petitioners also failed to show
that employment is rendered impossible,
unreasonable or unlikely.
(2) No. Petitioners were not
discriminated against in terms of their
retirement package. The entitlement of
employees to retirement benefits must
specifically be granted under existing
laws, a collective bargaining agreement
or employment contract, or an
established employer policy. Based on
both parties' evidence, petitioners are not
covered by any agreement. There is also
no dispute that petitioners received more
than what is mandated by Article 287 of
the Labor Code. However, they claim
that they have been discriminated,
because BTCI has given better
retirement packages to its other retired
employees.
In Vergara v. Coca-Cola Bottlers
Philippines, Inc., we explained that the
burden of proof that the benefit has ripened
into company practice, i.e., giving of the
benefit is done over a long period of time,
and that it has been made consistently and
deliberately, rests with the employee.
However, petitioners in this case have not
sufficiently proven the said company
practice.
____________________________________
11. Coca- Cola Bottlers Phils Inc., vs.
CCBPI Sta Rosa Plant Employees Union,
GR No. 197494, March 25, 2019
Facts
The petitioner CCBPI is engaged in the
business of manufacturing, distributing, and
marketing beverage products while the
respondent Union is a recognized labor
union organized and registered with the
Department of Labor and Employment and
the sole representative of all regular daily
paid employees and monthly paid non-
commission earning employees within
petitioner’s Sta. Rosa, Laguna plant. A
dispute arose when CCBPI implemented a
policy limiting the total amount of loan
which its employees may obtain from the
company and other sources such as the SSS,
PAG-IBIG, and employees’ cooperative to
50% of their respective monthly pay. The
respondent Union interpreted this as a
violation in the Collective Bargaining
Agreement, which states that petitioner
Page | cxvi
CCBPI shall process all SSS loans of its
employees, in spite of any outstanding
company loan of said employees, subject to
SSS rules and regulations.
After conciliation efforts failed, the Union
submitted the matter before the Voluntary
Arbitrator. CCBPI argued that the policy
was in compliance with the Labor Code,
considering that it ensures that the
employees’ wages are directly paid to them
and not to third party creditors. The
Voluntary Arbitrator ruled in favor of the
Union, maintaining that Section 2, Article
14 of the CBA is clear when it provided that
CCBPI shall process all SSS loans, subject
only to SSS rules and regulations. As there
was no modification of said stipulation,
CCBPI was ordered to implement said
provision without restriction.
CCBPI appealed to the CA via Rule 43 of
the Rules of Court, insisting it did not
violate the CBA in enforcing the policy as
the limitation was aimed to protect and
promote the welfare of the employees and
prevent them from becoming saddled with
indebtedness. The CA however, affirmed the
Voluntary Arbitrator’s decision, ruling that
the policy was indeed a violation to the CBA
in the absence of any SSS regulation
supporting the same.
Issue: Whether petitioner’s company policy
which limits the availment of loans
depending on the average take home pay of
its employees violates a provision in the
CBA.
Ruling: The petition is denied.
Application: It is a familiar and
fundamental doctrine in labor law, that the
CBA is the law between the parties and they
are obliged to comply with its provisions. As
in all contracts, the parties in a CBA may
establish such stipulations, clauses, terms
and conditions as they may deem convenient
provided these are not contrary to law,
morals, good customs, public order, or
public policy. Thus, where the CBA is clear
and unambiguous, it becomes the law
between the partied and compliance
therewith is mandated by the express policy
of the law.
The company policy puts a cap relative to
the loan availment by the employees
depending on the employees’ monthly basic
net pay. In other words, petitioner shall
disapprove the loan application of an
employee whose net take home pay falls
below 50% of his average monthly basic
pay. A plain reading of the CBA provision
provides for the commitment of the
petitioner to process SSS salary loans, in
particular, of its employees. The only
limitation is the application of SSS rules and
regulations pertaining to the same.
Undoubtedly, the company policy is not an
SSS rule or regulation. Hence, it is
important to discuss whether said company
policy is sanctioned under SSS rules and
regulations.
It appears that the qualification of a
member-borrower is dependent on the
amount of loan to be taken, updated
payment of his contributions and other
loans, and age, which should be below 65
years. On the other hand, the responsibility
of an employer is limited to the collection
and remittance of the employee's
amortization to SSS as it causes the
deduction of said amortizations from the
employee's salary. Based on said terms and
conditions, it does not appear that the
employer has the prerogative to impose
other conditions which does not involve its
Page | cxvii
duty to collect and remit amortizations. The to dispose of his wages. He shall not in any
50% net take home pay requirement, in manner force, compel, or oblige his
effect, further adds a condition for an employees to purchase merchandise,
employee to obtain an SSS salary loan, on commodities or other property from any
top of the requirements issued by the SSS. other person, or otherwise make use of any
Hence, when petitioner requires that the store or services of such employer or any
employee should have at least 50% net take other person.
home pay before it processes a loan
application, the same violates the CBA
provision when a qualified employee
chooses to apply for an SSS loan.
With the implementation of the company
policy, an employee, who is qualified to
avail an SSS salary loan and chooses to
dispose of his salary through payment of
monthly amortizations, may not be able to
do so should such amortizations be over the
50% cap. In carrying out the 50% cap
policy, petitioner effectively limits its
employees on the utilization of their salaries
when it is apparent that as long as the
employee is qualified to avail the same,
he/she may apply for an SSS loan.
Conclusion: With these, we rule that the
company policy violated the provision of the
CBA as it imposes a restriction with respect
to the right of the employees under the CBA
to avail SSS salary loans. While petitioner's
cause for putting a limitation on the
availment of loans, i.e., to promote the
welfare of the employees and their families
by securing that the salary of the concerned
employee shall be taken home to his family,
is sympathetic, we cannot subscribe to the
same for being in contravention with the
prohibition on interfering with the disposal
of wages under Article 112 of the Labor
Code:
Art. 112. Non-interference in disposal of
wages. No employer shall limit or otherwise
interfere with the freedom of any employee
Page | cxviii
Topic 7: Payment of Wages
1. Congson vs. NLRC, 243 SCRA 260
[1995]
Facts
Congson is the registered owner of Southern
Fishing Industry. Private respondents were
hired on various dates by petitioners as
regular piece-rate workers. They were
uniformly paid for P1.00 per tuna weighing
30-80 kg per movement. They worked for 7
days a week. Sometime later, Congson
notified his workers of his proposal to
reduce the rate-per-tuna movement due to
the scarcity of tuna. Private respondents
resisted the proposal. When they reported
for work the next day, they were informed
that they had been replaced by a new set of
workers. Their request for dialogue was also
unheeded.
Private respondents then filed a case against
petitioner for underpayment of wages and
non-payment of overtime pay, 13th month
pay, holiday pay, rest day pay, and five-day
service incentive leave pay and constructive
dismissal. With respect to their monetary
claims, private respondents charged
petitioner with violation of the minimum
wage law alleging that with petitioner’s rates
and the scarcity of tuna catches, private
respondents’ average monthly earnings each
did not exceed P1,000.00.
The Labor Arbiter ruled for the employees.
Southern Fishing Industry and Mr. Congson
is directed to pay jointly and severally the
employees’ respective separation way and
monetary claims for salary differentials. The
claims for overtime pay, holiday pay and
rest day are dismissed for lack of factual
basis. Petitioners are also guilty for
constructive dismissal. On the salary
differentials, Congson failed to adduce any
evidence or document showing that under
their peculiar arrangements, complainants
were receiving compensation at par or above
the then existing minimum wage.
On appeal, respondent NLRC found
petitioner guilty of illegal dismissal. It
therefore affirmed the labor arbiter’s
findings and monetary awards. It likewise
denied petitioner’s motion for
reconsideration as well as the supplemental
motion for reconsideration. Petitioner takes
issue with the manner the Labor Arbiter
computed private respondents’ wage
differentials. They argued that complainants
actually received the amount of P2.00.
(P1.00 for the movement and that there are 2
movements from the fishing boat to the cold
storage hence, complainants are actually
receiving P2.00 per piece of tuna; for every
tuna delivered, private respondents were
able to extract at least 3 kilos of intestine
and liver, minimum price of which ranges
from P15.00-P20.00). Petitioner contends
that notwithstanding the fact that private
respondents’ actual cash wage fell below the
minimum wage fixed by law, respondent
NLRC should have considered as forming a
substantial part of private respondents’ total
wages the cash value of the tuna liver and
intestines private respondents were entitled
to retrieve.
Page | cxix
Issue
Whether or not there is grave abuse of
discretion on the part of NLRC in upholding
Labor Arbiter’s award of salary differentials.
Held
No. There is no grave abuse of discretion on
the part of NLRC in upholding Labor
Arbiter’s award of salary differentials.
Petitioner’s practice of paying the private
respondents the minimum wage by means of
legal tender combined with tuna liver and
intestines runs counter to the above cited
provision of the labor code. The fact that
said method of paying the minimum wage
was not only agreed upon by both parties in
the employment agreement but even
expressly requested by private respondents
does not shield petitioner. Article 102 of the
Labor Code is clear. Wages shall be paid
only by means of legal tender. The only
instance when an employer is permitted to
pay wages in forms other than legal tender,
that is, by checks or money order, is when
the circumstances prescribed in the 2nd
paragraph of Article 102 are present.
____________________________________
2. North Davao Mining vs. NLRC, 254
SCRA 721 [1996]
Facts
Petitioner, North Davao Mining Corporation
(North Davao) was incorporated in 1974 as
a 100% privately-owned company. Later,
the Philippine National Bank (PNB) became
part owner thereof as a result of a
conversion into equity of a portion of loans
obtained by North Davao from said bank.
On June 30, 1986, PNB transferred all its
loans to and equity in North Davao in favor
of the national government which, by virtue
of Proclamation No. 50 later turned them
over to petitioner Asset Privatization Trust
(APT). As of December 31, 1990 the
national government held 81.8% of the
common stock and 100% of the preferred
stock of said company.
On May 31, 1992, petitioner North Davao
completely ceased operations due to serious
business reverses. From 1988 until its
closure in 1992, North Davao suffered net
losses averaging three billion pesos
(P3,000,000,000.00) per year, for each of
the five years prior to its closure.
When it ceased operations, its remaining
employees were separated and given the
equivalent of 12.5 days' pay for every year
of service, computed on their basic monthly
pay, in addition to the commutation to cash
of their unused vacation and sick leaves.
However, it appears that, during the life of
the petitioner corporation, from the
beginning of its operations in 1981 until its
closure in 1992, it had been giving
separation pay equivalent to thirty (30) days'
pay for every year of service.
Moreover, inasmuch as the region where
North Davao operated was plagued by
insurgency and other peace and order
problems, the employees had to collect their
salaries at a bank in Tagum, Davao Del
Norte, some 58 kilometers from their
workplace and about 2 1/2 hours' travel time
by public transportation; this arrangement
lasted from 1981 up to 1990.
Respondent Wilfredo Guillema is one
among several employees of North Davao
Page | cxx
who were separated by reason of the
company's closure, and one of the 272
complainants who filed cases before the
labor arbiter, praying for: (1) additional
separation pay of 17.5 days for every year of
service; (2) back wages equivalent to two
days a month; (3) transportation allowance;
(4) hazard pay; (5) housing allowance; (6)
food allowance; (7) post-employment
medical clearance; and (8) future medical
allowance, all of which amounted to
P58,022,878.31 as computed by private
respondent.
Respondent Labor Arbiter rendered a
decision ordering petitioner North Davao to
pay the complainants the following:
"(a) Additional separation pay of
17.5 days for every year of service;
(b) Backwages equivalent to two
(2) days a month times the number
of years of service but not to
exceed three (3) years;
(c) Transportation allowance at
P80 a month times the number of
years of service but not to exceed
three (3) years."
Respondent NLRC affirmed the decision in
toto.
Hence, this petition filed by North Davao
Mining Corporation.
Issues
1. Whether or not an employer whose
business operations ceased due to serious
business losses or financial reverses is
obliged to pay separation pay to its
employees separated by reason of such
closure.
2. Whether or not time spent in collecting
wages in a place other than the place of
employment is compensable
notwithstanding that the same is done during
official time.
3. Whether or not private respondents are
entitled to transportation expenses in the
absence of evidence that these expenses
were incurred.
Held
1) NO, petitioner company is not
obliged to pay separation pay to its
employees separated by reason of
serious business losses or financial
reverses.
Art. 283 of the Labor Code governs the
grant of separation benefits "in case of
closures or cessation of operation" of
business establishments "NOT due to
serious business losses or financial reverses .
. .". Where, however, the closure was due to
business losses — as in the instant case, in
which the aggregate losses amounted to over
P20 billion — the Labor Code does not
impose any obligation upon the employer to
pay separation benefits.
Respondents tenaciously insist on the award
of separation pay, anchoring their claim
solely on petitioner North Davao's long-
standing policy of giving separation pay
benefits equivalent to 30-days' pay, which
policy had been in force in the years prior to
its closure. Respondents contend that, by
denying the same separation benefits to
private respondents and the others similarly
situated, petitioners discriminated against
them.
In the instant case, the company's practice of
giving one month's pay for every year of
service could no longer be continued
precisely because the company could not
Page | cxxi
afford it anymore. It was forced to close
down on account of accumulated losses of
over P20 billion. The fact that less
separation benefits were granted when the
company finally met its business death
cannot be characterized as discrimination.
Such action was dictated not by a
discriminatory management option but by its
complete inability to continue its business
life due to accumulated losses.
The grant of a lesser amount of separation
pay to private respondent was done, not by
reason of discrimination, but rather, out of
sheer financial bankruptcy — a fact that is
not controlled by management prerogatives.
The total cessation of operation due to mind-
boggling losses was a supervening fact that
prevented the company from continuing to
grant the more generous amount of
separation pay. The fact that North Davao at
the point of its forced closure voluntarily
paid any separation benefits at all —
although not required by law — and 12.5-
days' worth at that, should have elicited
admiration instead of condemnation. But to
require it to continue being generous when it
is no longer in a position to do so would
certainly be unduly oppressive, unfair and
most revolting to the conscience.
2) YES, time spent in collecting wages
in a place other than the place of
employment is compensable and
private respondents are entitled to
transportation expenses.
Anent the award of back wages and
transportation allowance, the issues raised
are factual, the determination of which is
best left to the respondent NLRC. It is well
settled that the SC is bound by the findings
of fact of the NLRC, so long as said findings
are supported by substantial evidence.
It is undisputed that because of security
reasons, from the time of its operations,
petitioner NDMC maintained its policy of
paying its workers at a bank in Tagum,
Davao del Norte, which usually took the
workers about two and a half (2 1/2) hours
of travel from the place of work and such
travel time is not official.
Records also show that on February 12,
1992, when an inspection was conducted by
the Department of Labor and Employment at
the premises of petitioner NDMC at
Amacan, Maco, Davao del Norte, it was
found out that petitioners had violated labor
standards law, one of which is the place of
payment of wages.
Section 4, Rule VIII, Book III of the
Omnibus Rules Implementing the Labor
Code provides that
(a) As a general rule, the place of
payment shall be at or near the place
of undertaking. Payment in a place
other than the workplace shall be
permissible only under the following
circumstances:
(1) When payment cannot be
effected at or near the place of work
by reason of the deterioration of
peace and order conditions, or by
reason of actual or impending
emergencies caused by fire, flood,
epidemic or other calamity rendering
payment thereat impossible;
(2) When the employer provides free
transportation to the employees back
and forth; and
(3) Under any analogous
circumstances; provided that the time
spent by the employees in collecting
their wages shall be considered as
compensable hours worked.
Page | cxxii
Thus, public respondent Labor Arbiter
Antonio M. Villanueva correctly held that:
'From the evidence on record, we
find that the hours spend by
complainants in collecting salaries at
a bank in Tagum, Davao del Norte
shall be considered compensable
hours worked. Considering further
the distance between Amacan, Maco
to Tagum which is 2 1/2 hours by
travel and the risks in commuting all
the time in collecting complainants'
salaries, would justify the granting of
backwages equivalent to two (2)
days in a month as prayed for.
'Corollary to the above findings, and
for equitable reasons, we likewise
hold respondents liable for the
transportation expenses incurred by
complainants at P40.00 round trip
fare during pay days.'
Wherefore, judgment is hereby rendered
MODIFYING the assailed Resolution by
SETTING ASIDE and deleting the award
for "additional separation pay of 17.5 days
for every year of service," and AFFIRMING
it in all other aspects.
____________________________________
3. House of Sara Lee vs. Rey, G.R. No.
149013, Aug. 31, 2006
Facts
Petitioner is a business of direct selling of a
variety of product lines for men and women
including cosmetics, apparels, perfumes and
other novelty items. Petitioner engaged the
services of the respondent as the Credit
Administration Supervisors (CAS) who is
tasked to strictly monitor each of deadlines
and to supervise credit collection of
payments and outstanding accounts of the
dealers and customers. Problem arose when
it was discovered that respondent had been
extending credit terms beyond the periods
allowed by company policy. Subsequently,
on the basis of voluntary admission of the
respondent and the findings of the auditor’s
report, the respondent was formally
dismissed for breach of trust and confidence.
The respondent filed a complaint for illegal
dismissal, backwages and damages before
the Labor Arbiter. LA favored the
respondent on the ground that petitioner
failed to established that it was the
respondent who manipulated the credit
terms since other employees have also
access. In addition, the respondent was not
also informed of the possible sanctions for
the said acts. The LA ordered the payment
of the backwages, the 13th month pay, and
separation pay.
The petitioner appealed to the NLRC which
dismissed the complaint, affirming the LA’s
decision. NLRC held that since petitioner
allowed respondent to manage the branch in
CDO for three months after the branch
manager resigned, such negated the loss of
trust and confidence claimed by the
petitioner. The petitioner appealed to the CA
which once again dismissed the case; hence
this petition.
Issues
1) Whether or not the dismissal of the
respondent was valid.
Page | cxxiii
 2) Whether or not respondent is entitled 2) The award of the 13th month pay
to 13th month pay, 14th and 15th must be deleted since respondent is
month pay, monthly salary increase not a rank-and-file employee. The
of 10% per year for two years based Supreme Court held that NLRC and
on her latest salary rate, and CA correctly refused the 14th and
separation pay 15th month pay since the respondent
must prove that such are due to her
as a matter of right. The monthly
salary increase of 10% per year
for two years based on her latest
Held salary rate should not be granted
1) The dismissal is valid. The Supreme unless she can prove she has a vested
Court held that law and right to the same. Lastly, separation
jurisprudence has long recognized pay must be deleted since such is
the right of employers to dismiss allowed only in instances where the
employees by reason of loss of trust employee is validly dismissed for
and confidence. The Court causes other than serious misconduct
differentiated the treatment of or those reflecting her moral
managerial employees from that character. Since the respondent was
rank-and-file personnel in the dismissed because of her lack of
applying the doctrine of loss and integrity as a CAS, then she does not
trust confidence. In the case of deserve a separation pay.
managerial employees, proof beyond
reasonable doubt is not required. It is
already enough that there is some
basis for the loss of confidence such
that the employer has reasonable
ground to believe that the employee
is responsible for the misconduct or
the employee’s participation renders
him unworthy of trust and
confidence.
This requirement is present in this
case. The Supreme Court held that
respondent is indeed guilty of the
repeated acts of the fraudulent
scheme. As a CAS she was aware of
the consequences of her acts to the
company. Although, the respondent
pending the final outcome of the
investigation became the branch
manager, the employer may proceed
to dismissed her after the due
investigation. Taking her back is
oppressive and unjust on the
petitioner.

Page | cxxiv
Topic 8: Conditions of Employment
1. San Juan De Dios Hospital vs. NLRC,
282 SCRA 316 [1997]
Facts
Petitioners, the rank-and-file employee-
union officers and members of San Juan De
Dios Hospital Employees Association, sent a
written request for the expeditious
implementation and payment by respondent,
San Juan de Dios Hospital, of the "40-
Hours/5-Day workweek" with compensable
weekly two days off as provided for by
Republic Act 5901 as clarified for
enforcement by the Secretary of Labor's
Policy Instructions No. 54 dated April 12,
1988. Petitioners’ position is that “hospital
employees” are entitled to a “full weekly
salary with paid two (2) days off if they
have completed the 40-hour/5 day
workweek. Respondent hospital failed to
give a favorable response; thus, petitioners
filed a complaint regarding their "claims for
statutory benefits under the above-cited law
and policy issuance."
The Labor Arbiter, however, dismissed the
complaint. Petitioners appealed before
public respondent National Labor Relations
Commission (NLRC), which affirmed the
Labor Arbiter's decision. Hence, this
petition, ascribing grave abuse of discretion
on the part of NLRC in concluding that
Policy Instructions No. 54 "proceeds from a
wrong interpretation of RA 5901 " and
Article 83 of the Labor Code.
Issue
Whether Policy Instructions No. 54 issued
by then Labor Secretary Franklin M. Drilon
is valid or not.
Held
Policy Instructions No. 54 is invalid.
Republic Act 5901 was repealed with the
passage of the Labor Code. Even
assuming that such was not the case,
Policy Instructions No. 54 still
erroneously applied Republic Act 5901
and, the very rules and regulations
promulgated by the Bureau of Labor
Standards which implement Republic Act
5901
There is nothing in the law (Article 83 of the
Labor Code) that supports then Secretary of
Labor's assertion that "personnel in subject
hospitals and clinics are entitled to a full
weekly wage for seven (7) days if they have
completed the 40-hour/5-day workweek in
any given workweek". What Article 83 of
the Labor Code merely provides are: (1) the
regular office hour of eight hours a day, five
days per week for health personnel, and (2)
where the exigencies of service require that
health personnel work for six days or forty-
eight hours then such health personnel shall
be entitled to an additional compensation of
at least thirty percent of their regular wage
for work on the sixth day. Needless to say,
the Secretary of Labor exceeded his
authority by including two days off with pay
Page | cxxv
in contravention of the clear mandate of the
statute.
A perusal of Republic Act No. 5901 reveals
nothing therein that gives two days off with
pay for health personnel who complete a 40-
hour work or 5-day workweek. The
Explanatory Note of House Bill No. 16630
(later passed into law as Republic Act No.
5901 ) explicitly states that the bill's sole
purpose is to shorten the working hours of
health personnel and not to dole out a two
days off with pay.
Therefore, Policy Instructions No. 54 being
inconsistent with and repugnant to the
provision of Article 83 of the Labor Code,
as well as to Republic Act No. 5901 ,should
be, as it is hereby, declared void.
____________________________________
2. Sime Darby vs. NLRC, 289 SCRA 86
[1998]
Facts
Sime Darby Pilipinas, Inc., petitioner, is
engaged in the manufacture of automotive
tires, tubes and other rubber products. Sime
Darby Salaried Employees Association
(ALU-TUCP), private respondent, is an
association of monthly salaried employees
of petitioner at its Marikina factory. Prior to
the present controversy, all company factory
workers in Marikina including members of
private respondent union worked from 7:45
a.m. to 3:45 p.m. with a 30-minute paid "on
call" lunch break.
On 14 August 1992 petitioner issued a
memorandum to all factory-based
employees advising all its monthly salaried
employees in its Marikina Tire Plant, except
those in the Warehouse and Quality
Assurance Department working on shifts, a
change in work schedule effective 14
September 1992.
The new prescribed schedule will be 7:45
A.M.-4:45 P.M. (Monday to Friday) and
7:45 A.M.-11:45 A.M. (Saturday) and lunch
break will be between: 12:00 NN — 1:00
P.M. Their Coffee Break time was shortened
to 10 minutes only and the company
discontinued the 30-minute paid "on call"
lunch break.
Since private respondent felt affected
adversely by the change in the work
schedule and discontinuance of the 30-
minute paid "on call" lunch break, it filed on
behalf of its members a complaint with the
Labor Arbiter for unfair labor practice,
discrimination and evasion of liability.
However, the Labor Arbiter dismissed the
complaint. Private respondent appealed to
respondent National Labor Relations
Commission (NLRC) which sustained the
Labor Arbiter and dismissed the appeal.
However, upon motion for reconsideration
by private respondent, the NLRC, this time
with two (2) new commissioners replacing
those who earlier retired, reversed its earlier
decision of 20 April 1994 as well as the
decision of the Labor Arbiter.
Issue
Whether or not the act of management in
revising the work schedule of its employees
and discarding their paid lunch break is
constitutive of unfair labor practice.
Page | cxxvi
Held Private respondent was employed as flight
surgeon at petitioner company Philippine
Air Lines (PAL). On February 17, 1994, at
No because it is clearly a management
around 7:00 in the evening, private
prerogative to fix the work schedules of
respondent left the clinic to have his dinner
company employees. Under the old
at his residence, which was about a five
schedule, the employees are compensated
minute-drive away. A few minutes later, the
during their 30-minute lunch break, but in
clinic received an emergency call. The nurse
essence it is still working time since the
on duty called private respondent at home to
workers could be called upon to work.
inform him of the emergency. When private
Whereas in the new schedule, the employees
respondent reached the clinic around 7:50 in
are given a longer break of 1 hour, though
the evening, the nurse on duty had already
uncompensated, it is uninterrupted as
left with the patient. The patient died the
workers on their break are no longer “on
following day.
call”. The change in schedule would
improve company productivity as well as
enhance the comfort of workers who could As a result, the Chief Flight Surgeon
enjoy an uninterrupted break. Now, since the required private respondent to explain why
employees are no longer required to work no disciplinary sanction should be taken
during this one-hour lunch break, there is no against him. The management charged
more need for them to be compensated for private respondent with abandonment of
this period. We agree with the Labor Arbiter post while on duty. In his answer, private
that the new work schedule fully complies respondent denied the charge. After
with the daily work period of eight (8) hours evaluating the charge, as well as the answer
without violating the Labor Code. Besides, of private respondent, petitioner company
the new schedule applies to all employees in decided to suspend private respondent for
the factory similarly situated whether they three months. Management averred that
are union members or not. private respondent was required to stay in
company premises for the entire eight-hour
work period. By spending his meal period at
The Supreme Court also reiterated the policy
home, he effectively abandoned his post.
that while social justice and the protection of
Private respondent filed a complaint for
the working class is ensured by the
illegal suspension against petitioner. The
Constitution, the same fundamental law also
Labor Arbiter found the suspension to be
protects the right of the management to
illegal. This was affirmed by the NLRC.
regulate all aspects of employment as well
as to retain the prerogative of changing work
schedules according to the exigencies of the
enterprise. So long as this prerogative is
exercised in good faith, the Court will
uphold such exercise.
____________________________________
Issue
3. Phil. Airlines vs. NLRC, 302 SCRA 582
[1999]
Whether or not an employee is required to
stay in the company premises for the entire
Facts

Page | cxxvii
eight-hour work period including meal
period.
Held
No. The employee may spend his meal
period anywhere aside from within the
company premises.
Petitioner argues that being a full-time
employee, private respondent is obliged to
stay in the company premises for not less
than eight (8) hours. Hence, he may not
leave the company premises during such
time, even to take his meals. The eight-hour
work period does not include the meal
break. Nowhere in the law may it be inferred
that employees must take their meals within
the company premises. Employees are not
prohibited from going out of the premises as
long as they return to their posts on time.
Private respondent's act, therefore, of going
home to take his dinner does not constitute
abandonment. Thus, the suspension was
illegal.
WHEREFORE, petition as to declaring the
LA and NLRC decision on the illegality of
suspension void is hereby DENIED.
____________________________________
4. Linton Commercial Co., Inc., vs.
Hellera et al., G.R. No. 163147, October
10, 2007
Facts
Linton Commercial Co., Inc. issued a
memorandum addressed to its employees
informing them of the company's decision to
suspend its operations due to the currency
crisis that affected its business operations.
The company's operation was to resume on
6 January 1998. Linton issued another
memorandum informing them that it would
implement a new compressed workweek of
three (3) days on a rotation basis. In other
words, each worker would be working on a
rotation basis for three working days only
instead for six days a week. Aggrieved,
sixty-eight (68) workers (workers) filed a
Complaint for illegal reduction of workdays
with the Arbitration Branch of the NLRC.
The Labor Arbiter rendered a Decision
finding petitioners guilty of illegal reduction
of work hours and directing them to pay
each of the workers their three (3)
days/week's worth of work compensation.
Petitioners appealed to the National Labor
Relations Commission (NLRC). In a
Resolution, the NLRC reversed the decision
of the Labor Arbiter. The workers then filed
before the Court of Appeals which reversed
the decision of the NLRC. The appellate
court found Linton to have failed to adopt a
more sensible means of cutting the costs of
its operations in less drastic measures not
grossly unfavorable to labor. Hence, Linton
failed to establish enough factual basis to
justify the necessity of a reduced workweek.
Issue
Whether or not there was an illegal
reduction of work when Linton implemented
a compressed workweek by reducing from
six to three the number of working days with
the employees working on a rotation basis.
Held
Page | cxxviii
Yes. There was an illegal reduction of work
when Linton implemented a compressed
workweek by reducing from six to three the
number of working days with the employees
working on a rotation basis.
The Bureau of Working Conditions of the
DOL released a bulletin providing for in
determining when an employer can validly
reduce the regular number of working days.
The said bulletin states that a reduction of
the number of regular working days is valid
where the arrangement is resorted to by the
employer to prevent serious losses due to
causes beyond his control, such as when
there is a substantial slump in the demand
for his goods or services or when there is
lack of raw materials.
Although the bulletin stands more as a set of
directory guidelines than a binding set of
implementing rules, it has one main
consideration, consistent with the ruling in
Philippine Graphic Arts Inc., in determining
the validity of reduction of working hours
— that the company was suffering from
losses.
A close examination of petitioners' financial
reports for 1997-1998 shows that, while the
company suffered a loss of P3,645,422.00 in
1997, it retained a considerable amount of
earnings and operating income. Clearly then,
while Linton suffered from losses for that
year, there remained enough earnings to
sufficiently sustain its operations. A year of
financial losses would not warrant the
immolation of the welfare of the employees,
which in this case was done through a
reduced workweek that resulted in an
unsettling diminution of the periodic pay for
a protracted period. Permitting reduction of
work and pay at the slightest indication of
losses would be contrary to the State's policy
to afford protection to labor and provide full
employment.
To date, no definite guidelines have yet been
set to determine whether the alleged losses
are sufficient to justify the reduction of work
hours. If the standards set in determining the
justifiability of financial losses under Article
283 (i.e., retrenchment) or Article 286 (i.e.,
suspension of work) of the Labor Code were
to be considered, petitioners would end up
failing to meet the standards.
On the one hand, Article 286 applies only
when there is a bona fide suspension of the
employer's operation of a business or
undertaking for a period not exceeding six
(6) months. Records show that Linton
continued its business operations during the
effectivity of the compressed workweek,
which spanned more than the maximum
period.
On the other hand, for retrenchment to be
justified, any claim of actual or potential
business losses must satisfy the following
standards: (1) the losses incurred are
substantial and not de minimis; (2) the losses
are actual or reasonably imminent; (3) the
retrenchment is reasonably necessary and is
likely to be effective in preventing the
expected losses; and (4) the alleged losses, if
already incurred, or the expected imminent
losses sought to be forestalled, are proven by
sufficient and convincing evidence. Linton
failed to comply with these standards.
All taken into account, the compressed
workweek arrangement was unjustified and
illegal. Thus, petitioners committed illegal
reduction of work hours.
Page | cxxix
____________________________________
5. Bisig Manggagawa sa Tryco vs. NLRC,
G.R. No. 151309, Oct. 15, 2008
Facts
Petitioners Joselito Lariño, Vivencio Barte,
Saturnino Egera and Simplicio Aya-ay are
regular employees of Tryco Pharma
Corporation which is a manufacturer of
veterinary medicine. They are members of
Bisig Manggagawa sa Tryco (BMT), the
exclusive bargaining representative of the
rank-and-file employees.
Tryco and the petitioners signed
separate Memoranda of Agreement (MOA),
providing for a compressed workweek
schedule to be implemented in the company.
The MOA was entered into pursuant to
Department of Labor and Employment
Department Order (D.O.) No. 21, Series of
1990,Guidelines on the Implementation of
Compressed Workweek.
Meantime, Tryco received the Letter
from the Bureau of Animal Industry of the
Department of Agriculture reminding it that
its production should be conducted in San
Rafael, Bulacan.
Accordingly, Tryco issued a
Memorandum 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. Tryco
also directed petitioners Egera, Lariño and
Barte to report to the company's plant site in
Bulacan.
BMT opposed the transfer of its
members to San Rafael, Bulacan,
contending that it constitutes unfair labor
practice. The petitioners filed their separate
complaints for illegal dismissal,
underpayment of wages, nonpayment of
overtime pay and service incentive leave,
and refusal to bargain against Tryco and its
President, Wilfredo C. Rivera. They prayed
for the company to pay them their salaries,
service incentive leave, and overtime pay,
and to implement Wage Order No. 4.
The Labor Arbiter denied the money
claims, ratiocinating that the overtime pay is
not due because of the compressed
workweek agreement between the union and
management. Aggrieved the petitioners
appealed to the NLRC which denied the
petitioners' motion for reconsideration for
lack of merit. Left with no recourse,
petitioners filed a petition for certiorari with
the CA. The CA dismissed the petition for
certiorari and ruled that the transfer order
was a management prerogative not
amounting to a constructive dismissal or an
unfair labor practice. The CA further
sustained the enforceability of the MOA,
particularly the waiver of overtime pay in
light of this Court's rulings upholding a
waiver of benefits in exchange of other
valuable privileges.
Issue
Whether or not the Memorandum of
Agreement which provides for a compressed
workweek schedule is enforceable as it is
contrary to law
Page | cxxx
Held
Yes. the Memorandum of Agreement which
provides for a compressed workweek
schedule is enforceable as it is contrary to
law The MOA is enforceable and binding
against the petitioners. Where it is shown
that the person making the waiver did so
voluntarily, with full understanding of what
he was doing, and the consideration for the
quitclaim is credible and reasonable, the
transaction must be recognized as a valid
and binding undertaking.
D.O. No. 21 sanctions the waiver of
overtime pay in consideration of the benefits
that the employees will derive from the
adoption of a compressed workweek
scheme. Under this scheme, the generally
observed workweek of six (6) days is
shortened to five (5) days but prolonging the
working hours from Monday to Friday
without the employer being obliged for pay
overtime premium compensation for work
performed in excess of eight (8) hours on
weekdays, in exchange for the benefits
above cited that will accrue to the
employees.
Notably, the MOA complied with the
following conditions set by the DOLE,
under D.O. No. 21, to protect the interest of
the employees in the implementation
compressed workweek scheme.
Considering that the MOA clearly states that
the employee waives the payment of
overtime pay in exchange of a five-day
workweek, there is no room for
interpretation and its terms should be
implemented as they are written.
____________________________________
6. Dasco et al., vs. Philtranco Service
Enterprise, GR No. 211141, June 29, 2016
Facts
Petitioners are DRIVERS of respondent who
drive buses 2-3 days per round trip.
However, they were only paid 404.00 pesos
per round trip without overtime pay and
below minimum wage. This prompted
petitioner to file a complaint against
respondent to claim for their overtime pay.
Respondent contended that petitioners are
not entitled for overtime pay since they were
bus drivers and thus can be considered field
personnel.
Issue
WON Petitioners are entiled for overtime
pay being bus drivers.
Held
Yes. Petitioners are entitled for overtime pay
notwithstanding that they are bus driver who
perform work outside of the office or
workplace of their employer. They are not
considered as field personnel since they
were under control of the employer in which
they are tasked to be at a specific place in a
specific time. They were also monitored by
checkers and dispatchers. Further their
Page | cxxxi
actual work could be determined with
reasonable certainty. Thus they should be
considered as regular employees and
therefore entitled for Overtime Pay and
Service Incentive Leave.
____________________________________
7. HSY Marketing Ltd., Villatique, GR
No. 219569, August 17, 2016
Facts
HSY Marketing Ltd. hired respondent
Virgilio Villastique as a field driver for
Fabulous Jeans & Shirt & General
Merchandise (Fabulous Jeans), tasked to
deliver ready-to-wear items and/or general
merchandise for a daily compensation of
P370.00. Respondent figured in an accident
when the service vehicle he was driving
bumped a pedestrian. Fabulous Jeans
shouldered the hospitalization and medical
expenses of the pedestrian and asked
Villastique to reimburse, but to no avail.
Respondent was allegedly required to sign a
resignation letter, which he refused to do. A
couple of days later, he tried to collect his
salary for that week but was told that it was
withheld because of his refusal to resign.
Convinced that he was already terminated,
he lost no time in filing a complaint for
illegal dismissal with money claims against
petitioner. HSY Marketing Ltd. contended
that respondent had committed several
violations in the course of his employment,
and had been found by his superior and
fellow employees to be a negligent and
reckless driver, which resulted in the
vehicular mishap.
The Labor Arbiter dismissed the complaint
for illegal dismissal, finding no evidence
that the respondent was illegally dismissed.
The National Labor Relations Commission
(NLRC) and, subsequently, the CA affirmed
the decision of the Labor Arbiter.
Issue
Whether or not respondent Villastique is a
regular employee who is entitled to a service
incentive leave pay
Held
Yes. Respondent Villastique is a regular
employee who is entitled to a service
incentive leave pay.
Respondent is not a field personnel as
defined above because of the nature of his
job as a company driver. Expectedly,
respondent is directed to deliver the goods at
a specified time and place and he is not
given the discretion to solicit, select, and
contact prospective clients. It has been held
that The Court has already held that
company drivers who are under the control
and supervision of management officers —
like respondent herein — are regular
employees entitled to benefits including
service incentive leave pay.
"Service incentive leave is a right which
accrues to every employee who has served
'within 12 months, whether continuous or
broken reckoned from the date the employee
started working, including authorized
absences and paid regular holidays unless
Page | cxxxii
the working days in the establishment as a
matter of practice or policy, or that provided
in the employment contracts, is less than 12
months, in which case said period shall be
considered as one [(1)] year.' It is also
commutable to its money equivalent if not
used or exhausted at the end of the year. In
other words, an employee who has served
for one (1) year is entitled to it. He may use
it as leave days or he may collect its
monetary value."
Petitioner, as the employer of respondent,
and having complete control over the
records of the company, could have easily
rebutted the said monetary claim against it
by presenting the vouchers or payrolls
showing payment of the same. However,
since petitioner opted not to lift a finger in
providing the required documentary
evidence, the ineluctable conclusion that
may be derived therefrom is that it never
paid said benefit and must, perforce, be
ordered to settle its obligation to respondent.
____________________________________
8. A. Nate Casket Maker et al., vs.
Arango, et al., GR No. 192282, October 5,
2016
Facts
Petitioners Armando and Anely Nate are the
owners/proprietors of A. NateCasket Maker.
They employed respondents on various
dates as carpenters, mascilladors and
painters in their casket-making business
from 1998 until their alleged termination on
March 2007.
Petitioners alleged in that respondents are
pakyaw workers who are paid per job order.
On February 3, 2007, they met with
respondents in order to present a proposed
employment agreement which would change
the existing pakyaw system to "contractual
basis" and would provide for vacation leave
and sick leave pay and other benefits given
to regular employees.
On the other hand, respondents alleged that
they worked from Monday to Saturday,
from 7:00 a.m. to 10:00 p.m., with no
overtime pay and any monetary benefits. On
March 15, 2007, they were called by
petitioners and were made to sign a Contract
of Employment with the
following terms and conditions: (1) they
shall be working on contractual basis for a
period of five months; (2) renewal of
employment contract after such period shall
be on a case-to-case basis or subject to
respondents' efficiency and performance; (3)
petitioners shall reserve the right to
terminate their employment should their
performance fall below expectations or if the
conditions under which they were employed
no longer exist; (4) their wages shall be on a
piece-rate basis; (5) in the performance of
their tasks, they shall be obliged to strictly
follow their work schedules; (6) they shall
not be eligible to avail of sick leave or
vacation leave, nor receive 13th month pay
and/or bonuses, or any other benefits given
to a regular employee. Respondents further
alleged that when they refused to sign the
contract, petitioners told them to go home
because their employment has been
terminated.
On February 8, 2007, respondents filed a
Complaint for illegal dismissal and non-
payment of separation pay against
petitioners.
LA: dismissed the complaint for lack of
merit. It ruled that petitioners did not
terminate the services of respondents. On
Page | cxxxiii
the issue of underpayment, the LA held that
respondents were earning more than the
minimum wage per day; and as pakyaw
workers, though they are deemed regular
workers, they are not entitled to overtime
pay, holiday pay, service incentive leave pay
and 13th month pay citing the case of field
personnel and those paid on purely
commission basis.
NLRC: affirmed the Decision of the LA
CA: reversed and set aside the decision of
the NLRC
Issue
Whether respondents who are pakyaw
workers are considered regular workers and
thus entitled to the benefits provided for by
the Labor Code.
Held
Yes, while respondents' mode of
compensation was on a per-piece basis, the
status and nature of their employment was
that of regular employees.
Art. 280. Regular and Casual Employment.
— The provisions of written agreement to
the contrary notwithstanding and regardless
of the oral agreement of the parties, an
employment shall be deemed to be regular
where the employee has been engaged to
perform activities which are usually
necessary or desirable in the usual business
or trade of the employer, except where the
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at
the time of the engagement of the employee
or where the work or services to be
performed is seasonal in nature and the
employment is for the duration of the
season.
An employment shall be deemed to be
casual if it is not covered by the preceding
paragraph; Provided, That, any employee
who has rendered at least one year of
service, whether such service is continuous
or broken, shall be considered a regular
employee with respect to the activity in
which he is employed and his employment
shall continue while such activity exists.
A regular employment, whether it is one or
not, is aptly gauged from the concurrence, or
the non-concurrence, of the following
factors — (a) the manner of selection and
engagement of the putative employee; (b)
the mode of payment of wages; (c) the
presence or absence of the power of
dismissal; and (d) the presence or absence of
the power to control the conduct of the
putative employee or the power to control
the employee with respect to the means or
methods by which his work is to be
accomplished. The "control test" assumes
primacy in the overall consideration. Under
this test, an employment relation obtains
where work is performed or services are
rendered under the control and supervision
of the party contracting for the service, not
only as to the result of the work but also as
to the manner and details of the performance
desired.
There is no dispute that the tasks performed
by respondents as carpenters, painters, and
mascilladors were necessary and desirable in
the usual business of petitioners who are
engaged in the manufacture and selling of
caskets. We have to also consider the length
of time that respondents worked for
petitioners, commencing on various dates
from 1998 to 2007. In addition, the power of
Page | cxxxiv
control of petitioners over respondents is
clearly present in this case. Respondents
follow the steps in making a casket, as
instructed by the petitioners, like carpentry,
mascilla, rubbing and painting.

Page | cxxxv
Topic 9: Minimum Labor Standard
Benefits
1. San Miguel Corp., vs. CA, G.R. No.
146775, Jan. 30, 2002
Facts
The Department of Labor and Employment
(DOLE) after conducting a routine
inspection in the premises of the petitioner
and discovered that the petitioner had
neglected to pay the regular Muslim holiday
pay to its employees.
The petitioner contested the findings of the
inspection and a summary hearing was
conducted by the Department of Labor and
Employment.
The petitioner failed to submit proof that it
was paying regular Muslim holiday pay to
its employees. Hence, a compliance order
was issued directing the petitioner to pay
both it Muslim and non-Muslim employees
holiday pay within 30 days from the receipt
of the order.
The petitioner appealed the decision to the
Court of Appeals, however, the same
referred the case to the Supreme Court
pursuant to St. Martin Funeral Homes vs,
NLRC.
The petitioner contends that Article 3(3) of
PD 1083 only Muslims may avail of the
Muslim holiday pay.
Issue
Whether or not only Muslims may avail of
the Muslim holiday pay.
Held
The Supreme Court dismissed the petition
holding that both Muslim and non- Muslim
workers may avail of the Muslim holiday
pay pursuant to the 1999 Handbook on
Workers’ Statutory Benefits, approved by
the DOLE Secretary Bienvenido E.
Laguesma. If the court were to uphold the
contentions of the petitioner then it would
necessarily imply that Muslim workers
would not be entitled to Christian holiday
pay. Thus, in accordance with Article 94 of
the Labor Code which does not expressly
distinguish all those eligible for holiday pay
regardless of religious affiliation are entitled
to the same.
____________________________________
2. Tan vs. Lagrama, G.R. No. 151228,
August 15, 2002
Facts
Lagrama works for Tan as painter of
billboards and murals for the motion
pictures shown at the theaters managed by
Tan for more than 10 years. Lagrama was
dismissed for having urinated in his working
area. Lagrama filed a complaint for illegal
dismissal and non payment of benefits. Tan
asserted that Lagrama was an independent
contractor as he was paid in piece-work
basis
Issue
Page | cxxxvi
Whether or not Lagrama is an independent
contractor or an employee of Tan.
Held
Lagrama is an employee, not an independent
contractor.
Applying Four Fold Test
A. Power of Control - Evidence shows
that the Lagrama performed his work
as painter and under the supervision
and control of Tan.
a. Lagrama worked in a
designated work area inside
the theater of Tan for the use
of which petitioner
prescribed rules, which rules
included the observance of
cleanliness and hygiene and
prohibition against urinating
in the work area and any
other place other than rest
rooms and
b. Tan's control over Lagrama's
work extended not only the
use of work area but also the
result of Lagrama;s work and
the manner and means by
which the work was to be
accomplished
c. Lagrama is not an
independent contractor
because he did not enjoy
independence and freedom
from the control and
supervision of Tan and he
was subjected to Tan's
control over the means and
methods by which his work is
to be performed and
accomplished
B. Payment of Wages
a. Lagrama worked for Tan on a
fixed piece work basis is of
no moment. Payment by
result is a method of
compensation and does not
define the essence of the
relation.
b. That Lagrama was not
reported as an employee to
the SSS is not conclusive, on
the question whether he was
an employee, otherwise Tan
would be rewarded for his
failure or even neglect to
perform his obligation.
C. Power of Dismissal – by Tan stating
that he had the right to fire Lagrama,
Tan in effect acknowledged Lagrama
to be his employee
D. Power of Selection and Engagement
of Employees – Tan engaged the
services of Lagrama without the
intervention of third party
Compared to an employee, an independent
contractor is one who carries on a distinct
and independent business and undertakes to
perform the job, work, or service on its own
account and under its own responsibility
according to its own manner and method,
free from the control and direction of the
principal in all matters connected with the
performance of the work except as to the
results thereof. Hence, while an independent
contractor enjoys independence and freedom
from the control and supervision of his
principal, an employee is subject to the
employer’s power to control the means and
methods by which the employee’s work is to
be performed and accomplished.
Page | cxxxvii
____________________________________
3. Lambo vs. NLRC, 317 SCRA 420
Facts
Petitioners Avelino Lambo and Vicente
Belocura were employed as tailors by
private respondents J.C. Tailor Shop and/or
Johnny Co on September 10, 1985 and
March 3, 1985, respectively. They worked
from 8:00 a.m. to 7:00 p.m. daily, including
Sundays and holidays. As in the case of the
other 100 employees of private respondents,
petitioners were paid on a piece-work basis,
according to the style of suits they made.
Regardless of the number of pieces they
finished in a day, they were each given a
daily pay of at least P64.00.
On January 17, 1989, petitioners filed a
complaint against private respondents for
illegal dismissal and sought recovery of
overtime pay, holiday pay, premium pay on
holiday and rest day, service incentive leave
pay, separation pay, 13th month pay, and
attorney's fees.
After hearing, Labor Arbiter Jose G.
Gutierrez found private respondents guilty
of illegal dismissal and accordingly ordered
them to pay petitioners' claims. On appeal,
the NLRC reversed the decision of the
Labor Arbiter and found that petitioners had
not been dismissed from employment but
merely threatened with a closure of the
business if they insisted on their demand for
a "straight payment of their minimum
wage," after petitioners, on January 17,
1989, walked out of a meeting with private
respondents and other employees.
According to the NLRC, during that
meeting, the employees voted to maintain
the company policy of paying them
according to the volume of work finished at
the rate of P18.00 per dozen of tailored
clothing materials. Only petitioners
allegedly insisted that they be paid the
minimum wage and other benefits. NLRC
held petitioners guilty of abandonment of
work, dismissed their claims except for 13th
month pay. Hence this petition.
Issue
Whether or not Petitioners are entitled to
receive such benefits such as back wages,
Overtime pay, Holiday pay, 13th month pay,
and separation pay.
Held
Yes, Petitioners are entitled to such benefits.
Petitioners were employees of private
respondents although they were paid not on
the basis of time spent on the job but
according to the quantity and the quality of
work produced by them. There are two
categories of employees paid by results: (1)
those whose time and performance are
supervised by the employer. (Here, there is
an element of control and supervision over
the manner as to how the work is to be
performed. A piece-rate worker belongs to
Page | cxxxviii
this category especially if he performs his
work in the company premises.); and (2)
those whose time and performance are
unsupervised. (Here, the employer's control
is over the result of the work. Workers on
pakyao and takay basis belong to this
group.) Both classes of workers are paid per
unit accomplished. Piece-rate payment is
generally practiced in garment factories
where work is done in the company
premises, while payment on pakyao and
takay basis is commonly observed in the
agricultural industry, such as in sugar
plantations where the work is performed in
bulk or in volumes difficult to quantify.
Petitioners belong to the first category, i.e.,
supervised employees.
In determining the existence of an employer-
employee relationship, the following
elements must be considered: (1) the
selection and engagement of the employee;
(2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the
employee's conduct.
In this case, private respondents exercised
control over the work of petitioners. As
tailors, petitioners worked in the company's
premises from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. The mere
fact that they were paid on a piece-rate basis
does not negate their status as regular
employees of private respondents. The term
"wage" is broadly defined in Art. 97 of the
Labor Code as remuneration or earnings,
capable of being expressed in terms of
money whether fixed or ascertained on a
time, task, piece or commission basis.
Payment by the piece is just a method of
compensation and does not define the
essence of the relations. Nor does the fact
that petitioners are not covered by the SSS
affect the employer-employee relationship.
Indeed, the following factors show that
petitioners, although piece-rate workers,
were regular employees of private
respondents: (1) within the contemplation of
Art. 280 of the Labor Code, their work as
tailors was necessary or desirable in the
usual business of private respondents, which
is engaged in the tailoring business; (2)
petitioners worked for private respondents
throughout the year, their employment not
being dependent on a specific project or
season; and, (3) petitioners worked for
private respondents for more than one year.
As petitioners were illegally dismissed, they
are entitled to reinstatement with
backwages. Considering that petitioners
were dismissed from the service on January
17, 1989, i.e., prior to March 21, 1989, the
Labor Arbiter correctly applied the rule in
the Mercury Drug case, according to which
the recovery of backwages should be limited
to three years without qualifications or
deductions. Any award in excess of three
years is null and void as to the excess. The
Labor Arbiter correctly ordered private
respondents to give separation pay.
Considerable time has lapsed since
petitioners' dismissal, so that reinstatement
would now be impractical and hardly in the
best interest of the parties. In lieu of
reinstatement, separation pay should be
awarded to petitioners at the rate of one
month salary for every year of service, with
a fraction of at least six (6) months of
service being considered as one (1) year.
The awards for overtime pay, holiday pay
and 13th month pay are in accordance with
our finding that petitioners are regular
employees, although paid on a piece-rate
basis.
Page | cxxxix

The decision of the National Labor
Relations Commission is SET ASIDE and
another one is RENDERED ordering private
respondents to pay petitioners the total
amount of One Hundred Eighty-One
Thousand One Hundred Two Pesos and
40/100 (P181,102.40).
____________________________________
4. R&E Transport vs. Latag, G.R. No.
155214, Feb. 13, 2004
Facts
Pedro Latag (Latag) was a regular employee
of La Mallorca Taxi since 1961. When La
Mallorca ceased from business operations,
Latag transferred to petitioner R&E
Transport Inc where he was receiving an
average daily salary of five hundred peso
(500.00) as a taxi driver.
Latag got sick in 1995 and was forced to
apply for partial disability with the SSS,
which was granted. When he recovered, he
reported for work in 1998 but was no longer
allowed to continue on account of his old
age. Latag then asked the administrative
officer of R&E for his retirement pay but
was ignored. In 1999, Latag died.
Subsequently, his wife Avalina Latag
substituted him.
The Labor Arbiter rendered a decision in
favor of Latag. Based on the Labor Arbiter’s
findings, the 23 years of employment of
Pedro with La Mallorca Taxi must be added
to his 14 years with R&E Transport Inc., for
a total of 37 years. La Mallorca and R&E
are ordered to pay Avelina Latag the sum of
277,500 by way of retirement pay for her
deceased husband’s 37 years of service.
Thus, petitioners appealed to the NLRC.
Meanwhile, on January 2000, Avelina Latag
with her then counsel was invited to the
office of petitioners and was offered the sum
of 38,500 which she accepted. Avelina
Latag was also asked to sign an already
prepared quitclaim and release and a joint
motion to dismiss the case.
Based on the findings of the NLRC, Pedro
must only be credited only with his service
with R&E Transport Inc. because the
evidence shows that the La Mallorca and
R&E Transport Inc. are two different
entities.
According to the CA, the appeal before the
NLRC was not accompanied with a cash or
surety bond, thus the appeal was not
perfected. The CA held that the Labor
Arbiter’s decision awarding Latag P277,500
as retirement pay had already become final
and executory. Hence, the present petition.
Issue
Page | cxl
Did the CA act properly when it disregarded
the factual findings of the NLRC and
decided to affirm those of the Labor
Arbiter?
Held
Yes, the CA acted erroneously. The
Supreme Court supports the NLRC’s
findings.
Number of years of service
The labor arbiter's conclusion — that
Mallorca Taxi and R & E Transport, Inc.,
are one and the same entity — is negated by
the documentary evidence presented by
petitioners. Their evidence 22 sufficiently
shows the following facts: 1) R & E
Transport, Inc., was established only in
1978; 2) Honorio Enriquez, its president,
was not a stockholder of La Mallorca Taxi;
and 3) none of the stockholders of the latter
company hold stocks in the former.
Respondent has not shown by competent
evidence that one taxi company had stock
control and complete domination over the
other or vice versa. In fact, no evidence was
presented to show the alleged renaming of
"La Mallorca Taxi" to "R & E Transport,
Inc."
Thus, Pedro M. Latag should be credited
with 14 years of service with R & E
Transport, Inc.
Computation of Retirement Pay
As provided under Art. 287 of the Labor
Code, xxx xxx xxx "In the absence of a
retirement plan or agreement providing for
retirement benefits of employees in the
establishment, an employee upon reaching
the age of sixty (60) years or more, but not
beyond sixty-five (65) years which is hereby
declared the compulsory retirement age,
who has served at least five (5) years in said
establishment, may retire and shall be
entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every
year of service, a fraction of at least six (6)
months being considered as one whole year.
xx Unless the parties provide for broader
inclusions, the term one half-month salary
shall mean fifteen (15) days plus one-twelfth
(1/12) of the 13th month pay and the cash
equivalent of not more than five (5) days of
service incentive leaves.” The rules
implementing the New Retirement Law
similarly provide the above-mentioned
formula for computing the one-half month
salary.
Taxi drivers do not receive fixed wages, but
retain only those sums in excess of the
“boundary” or fee they pay to the owners or
operators of their vehicles. Since Pedro was
paid according to the "boundary" system, he
is not entitled to the 13th month and the
service incentive pay; hence, his retirement
pay should be computed on the sole basis of
his salary.
In this case, Pedro was earning an average
of five hundred pesos (P500) per day. Thus,
his retirement pay should be computed as
follows P500 x 15 days x 14 years of service
equals P105,000. Compared with this
amount, the P38,850 he received, which
Page | cxli
represented just over one third of what was
legally due him, was unconscionable. Thus,
the quitclaim is likewise invalid.
In sum, Avelina Latag should be paid
P105,000 as retirement pay for her deceased
husband’s 14 years of service with R&E
Transportation Inc.
Labor Code provides for holiday pay for
every regular holiday, the computation of
which is determined by a legal formula
which is not changed by the fact that there
are two holidays falling on one day, like on
April 9, 1998 when it was Araw ng
Kagitingan and at the same time was
Maundy Thursday.

In the assailed decision, the Court of

____________________________________
Appeals upheld the findings of the
5. Asian Transmission vs. CA, 425 SCRA
Voluntary Arbitrator.
478 [2004]

Facts

The Department of Labor and Employment

(DOLE), through Undersecretary
Cresenciano B. Trajano, issued an Issue
Explanatory Bulletin dated March 11, 1993
wherein it clarified, inter alia, that
Whether or not daily-paid employees are
employees are entitled to 200% of their
entitled to be paid for two regular holidays
basic wage on April 9, 1993, whether
which fall on the same day.
unworked, which[,] apart from being Good
Friday [and, therefore, a legal holiday], is
also Araw ng Kagitingan [which is also a Held
legal holiday].
The Court dismissed the petition and ruled
Said bulletin was reproduced on January 23, that petitioners should pay its employees
1998, when April 9, 1998 was both Maundy “200% and not just 100% of their regular
Thursday and Araw ng Kagitingan. daily wages for the unworked April 9, 1998
which covers two regular holidays, namely,
Araw ng Kagitingan and Maundy
Despite the explanatory bulletin, petitioner,
Thursday.”
Asian Transmission Corporation, opted to
pay its daily paid employees only 100% of
their basic pay on April 9, 1998. Respondent Holiday pay is a legislated benefit enacted
Bisig ng Asian Transmission Labor Union as part of the Constitutional imperative that
(BATLU) protested. the State shall afford protection to labor. Its
purpose is not merely "to prevent diminution
of the monthly income of the workers on
The Voluntary Arbitrator favored the Bisig
account of work interruptions. In other
ng Asian Transmission Labor Union
words, although the worker is forced to take
(BATLU), and held that Article 94 of the

Page | cxlii
a rest, he earns what he should earn, that is,
his holiday pay."
The provision is mandatory, regardless of
whether an employee is paid on a monthly
or daily basis. Unlike a bonus, which is a
management prerogative, holiday pay is a
statutory benefit demandable under the law.
____________________________________
6. Autobus Transport System vs.
Bautista, G.R. No. 156364, May 16, 2005
Facts
Respondent Antonio Bautista has been
employed by petitioner Auto Bus Transport
Systems, Inc., since May 1995, as driver-
conductor with travel routes Manila-
Tuguegarao via Baguio, Baguio-Tuguegarao
via Manila and Manila-Tabuk via Baguio.
Respondent was paid on commission basis,
seven percent (7%) of the total gross income
per travel, on a twice a month basis.
On January 2000, while respondent was
driving Autobus No. 114 along Sta. Fe,
Nueva Vizcaya, the bus he was driving
accidentally bumped the rear portion of
Autobus No. 124, as the latter vehicle
suddenly stopped at a sharp curve without
giving any warning. Respondent averred that
the accident happened because he was
compelled by the management to go back to
Roxas, Isabela, although he had not slept for
almost twenty-four (24) hours, as he had just
arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not
allowed to work until he fully paid the
amount of P75,551.50, representing thirty
percent (30%) of the cost of repair of the
damaged buses and that despite respondent's
pleas for reconsideration, the same was
ignored by management. After a month,
management sent him a letter of termination.
Thus, on 02 February 2000, respondent
instituted a Complaint for Illegal Dismissal
with Money Claims for nonpayment of 13th
month pay and service incentive leave pay
against Autobus.
On 29 September 2000, based on the
pleadings and supporting evidence presented
by the parties, Labor Arbiter decided that the
complaint be dismissed where the
respondent must pay to the complainant
Issue
Whether or not respondent is entitled to
service incentive leave.
Held
Yes. Under Article 95 of the Labor Code,
every employee who has rendered at least
one year or service shall be entitled to a
yearly service incentive leave of five days
with pay. In Section 1, Rule V, Book III of
the Implementing Rules and Regulations of
the Labor Code, the rule shall apply to all,
except… (d) Field personnel and other
employees whose performance is
unsupervised by the employer including
Page | cxliii
those who are engaged on task or contract
basis, purely commission basis, or those
who are paid in a fixed amount for
performing work irrespective of the time
consumed in the performance thereof.
Petitioner’s contention that Bautista is not
entitled to service incentive leave because he
is paid on a purely commission basis must
fail. The phrase following “Field personnel”
should not be construed as a separate
classification of employees but is merely an
amplification of the definition of field
personnel defined under the Labor Code.
Bautista neither falls under the category
field personnel. As defined, field personnel
are those whose performance of service is
unsupervised by the employer, the
workplace being away from the principal
place of business and whose hours and days
of work cannot be determined with
reasonable certainty. Bus companies have
ways of determining the hours worked by
their drivers and conductors with reasonable
certainty. The courts have taken judicial
notice of the following:
1. Along the routes traveled, there are
inspectors assigned at strategic
places who board the bus to inspect
the passengers, the punched tickets,
and the conductor’s reports;
2. There is a mandatory once-a week
car barn or shop day, where the bus
is regularly checked;
3. The drivers and conductors must be
at specified place and time, as they
observe prompt departure and
arrival;
4. At every depot, there is always a
dispatcher whose function is to see to
it that the bus and crew leaves and
arrives at the estimated proper time.
By these reasons, drivers and conductors are
therefore under constant supervision while
in the performance of their work. Therefore,
drivers and conductors cannot be considered
as field personnel.
____________________________________
7. San Miguel Corp., vs. Del Rosario, G.R.
No. 168194, Dec. 13, 2005
Facts
Del Rosario was employed by San Miguel
Corp. as key account specialist. Petitiner
informed respondent that her probationary
employment will be severed at the close of
the business hours of March 12, 2001. On
March 13, 2001, respondent was refused
entry to petitioner's premises. Thus,
respondent filed a complaint against
petitioner for illegal dismissal and
underpayment/non-payment of monetary
benefits. Respondent alleged that petitioner
feigned an excess of manpower for after she
was dismissed petitioner hired new recruits
and re-employed two of her batch mates.
On the other hand, petitioner claimed that
respondent was a probationary employee
whose services were terminated as a result
of the excess manpower that could no longer
be accommodated by the company.
The Labor Arbiter rendered a decision
declaring respondent a regular employee
because her employment exceeded six
months and holding that she was illegally
dismissed as there was no authorized cause
to terminate her employment. And that
petitioner's failure to rebut respondent's
claim that it hired additional employees after
Page | cxliv
she was dismissed belie the company's
alleged redundancy.
On appeal, NLRC modified LA’s decision
and held that respondent is a regular
employee whose termination from
employment was valid but ineffectual for
petitioner's failure to comply with the 30-
day notice to the employee and the
Department of Labor and Employment
(DOLE). Both parties separate petitions
before the CA.
In CA-G.R. SP No. 84081, the First
Division of the Court of Appeals granted the
respondent's petition and reinstated with
modification the Labor Arbiter’s decision. In
CA-G.R. SP No. 83725, the Third Division
of the Court of Appeals dismissed the
company's petition and affirmed the
NLRC’s decision. Hence this petition filed
by petitioner.
Issue
1. WON respondent is a regular
employee of petitioner
2. WON respondent was illegally
dismissed
3. if so, whether or not respondent is
entitled to any monetary benefits
2) Having ruled that respondent is a
Held
1) In termination cases, like the present
controversy, the burden of proving
the circumstances that would justify
the employee's dismissal rests with
the employer. The best proof that
petitioner should have presented to
prove the probationary status of
respondent is her employment
contract. However, none has been
presented. The two (2) Payroll
Authorities offered by petitioner
showing that respondent was hired as
a replacement, and later, as a
probationary employee do not
constitute substantial evidence.
And while it is true that by way of
exception, the period of
probationary employment may
exceed six months when the parties
so agree, such as when the same is
established by company policy, or
when it is required by the nature of
the work, none of these exceptional
circumstance were proven in the
present case. Hence, respondent
whose employment exceeded six
months is undoubtedly a regular
employee of petitioner. Moreover,
even assuming that the employment
of respondent is only temporary, and
that the reckoning period of her
probationary employment is
September 4, 2000, she should still
be declared a regular employee
because by the time she was
dismissed on March 12, 2001, her
alleged probationary employment
already exceeded six months.
regular employee, her termination
from employment must be for a just
or authorized cause, otherwise, her
dismissal would be illegal.
Petitioner tried to justify the
dismissal of respondent under the
authorized cause of redundancy, that
there are no more regular positions in
the company. Redundancy, for
purposes of the Labor Code, exists
Page | cxlv
 where the services of an employee
are in excess of what is reasonably
demanded by the actual requirements
of the enterprise. In this case, what
further militated against the alleged
redundancy advanced by petitioner is
their failure to refute respondent's
assertion that after her dismissal, it
hired new recruits and re-employed
two of her batch mates. Again,
petitioner has in its possession the
documents that would disprove the
fact of hiring new employees, but
instead of presenting evidence to
belie respondent's contentions, it
refrained from doing so and
conveniently passed the burden to
respondent. In sum, the Court finds
that petitioner was not able to
discharge the burden of proving that
the dismissal of respondent was
valid.
3) Considering that respondent was
illegally dismissed, she is entitled not
only to reinstatement but also to
payment of full backwages,
computed from the time her
compensation was actually withheld
from her on March 13, 2001, up to
her actual reinstatement. As a regular
employee of petitioner from the date
of her employment on April 17,
2000, she is likewise entitled to other
benefits such as service incentive
leave pay and 13th month pay
computed from such date also up to
her actual reinstatement. However,
she is not entitled to holiday pay
because the records reveal that she is
a monthly paid regular employee.
____________________________________
8. Penaranda vs. Baganga Plywood Corp.,
G.R. No. 159577, May 3, 2006
Facts
Sometime in June 1999, Petitioner Charlito
Peñaranda was hired as an employee of
Baganga Plywood Corporation (BPC) to
take charge of the operations and
maintenance of its steam plant boiler. In
May 2001, Peñaranda filed a Complaint for
illegal dismissal with money claims against
BPC and its general manager, Hudson Chua,
before the NLRC.
Petitioner alleges that his services were
terminated without the benefit of due
process and valid grounds in accordance
with law. Furthermore, he was not paid his
overtime pay, premium pay for working
during holidays/rest days, and night shift
differentials. Respondent claims that
complainant's separation from service was
done pursuant to Art. 283 of the Labor
Code. The respondent was on temporary
closure due to repair and general
maintenance and it applied for clearance
with the Department of Labor and
Employment, Regional Office No. XI to
shut down and to dismiss employees. And
due to the insistence of herein complainant
he was paid his separation benefits.
Consequently, when respondent partially
reopened in January 2001, Peñaranda failed
to reapply. Hence, he was, not terminated
from employment much less illegally. He
opted to severe employment when he
insisted payment of his separation benefits.
Furthermore, being a managerial employee
he is not entitled to overtime pay and if ever
he rendered services beyond the normal
hours of work, there was no office order/or
authorization for him to do so.
The labor arbiter ruled that there was no
illegal dismissal and that petitioner's
Page | cxlvi
Complaint was premature because he was
still employed by BPC. Nevertheless, the
labor arbiter found petitioner entitled to
overtime pay, premium pay for working on
rest days. Respondents filed an appeal to the
NLRC, which deleted the award of overtime
pay and premium pay for working on rest
days. According to the Commission,
petitioner was not entitled to these awards
because he was a managerial employee. The
Court of Appeals denied petitioner’s appeal.
Issue
Whether or not petitioner is entitled to
overtime pay, premium pay for working
during holidays/rest days, and night shift
differentials.
Held
No. Article 82 of the Labor Code exempts
managerial employees from the coverage of
labor standards. Labor standards provide the
working conditions of employees, including
entitlement to overtime pay and premium
pay for working on rest days. Under this
provision, managerial employees are "those
whose primary duty consists of the
management of the establishment in which
they are employed or of a department or
subdivision."
The Court disagrees with the NLRC's
finding that petitioner was a managerial
employee. However, petitioner was a
member of the managerial staff, which also
takes him out of the coverage of labor
standards. Like managerial employees,
officers and member of the managerial staff
are not entitled to the provisions of law on
labor standards.
____________________________________
9. Leyte IV Electric Cooperative Inc vs.
LEYECO IV Employees Union-ALU,
G.R. No. 1577745, October 19, 2007,
citing Wellington Investment vs. Trajano,
245 SCRA 561 [1995], and Odango vs.
NLRC, G.R. No. 147420, June 10, 2004
Facts
In 1998, Leyte IV Electric Cooperative, Inc
(petitioner) and Leyeco IV Employees
Union-ALU (respondent) entered into a
Collective Bargaining Agreement (CBA)
covering petitioner rank-and-file employees,
for a period of five years. In 2000,
respondent through its Regional Vice
President sent a letter to petitioner
demanding holiday pay for all employees as
provided for in the CBA. Petitioner through
its legal counsel sent a letter-reply to Casilan
explain that after perusing all available pay
slips, it found that it had paid all employees
all the holiday pays enumerated in the CBA.
After exhausting the procedures of the
grievance machinery, the parties agreed to
submit the issues of the interpretation and
implementation of the CBA on the payment
of holiday pay, for arbitration of the
National Conciliation and Mediation Board
(NCMB). In 2001, Voluntary Arbitrator in a
Resolution favored the respondent. It held
the petitioner liable for payment of unpaid
holidays. Petitioner miserably failed to show
that it complied with the CBA mandate that
holiday pay be “reflected during any payroll
period of occurrence” since the payroll slips
did not reflect any payment of the paid
Page | cxlvii
holidays. Voluntary Arbitrator also denied
petitioner’s motion for reconsideration.
Petitioner then filed a petition for certiorari
in the CA. CA dismissed outright the
petitioner’s petition for certiorari for
adopting a wrong mode of appeal. The
proper remedy should have been petition for
review under Rule 43 of the 1997 Rules of
Civil Procedure. It likewise denied the
petitioner’s motion for reconsideration.
They now raised the issue to the Supreme
Court.
Issue
Whether or not certiorari is the right remedy
in assailing the decision of the Voluntary
Arbitrator.
Held
Yes. Certiorari is the right remedy. It
qualifies the exception where an
extraordinary remedy of certiorari is
resorted to that is, when the broader interests
of justice so requires.
A voluntary arbitrator whether acting solely
or in a panel enjoys in law the status of a
quasi-judicial agency; hence, his decisions
and awards are appealable to the CA. This is
so because the awards of voluntary
arbitrators become final and executory upon
the lapse of the period to appeal; and since
their awards determine the rights of parties,
their decisions have the same effect as
judgements of a court. Therefore, the proper
remedy from an award of a voluntary
arbitrator is a petition for review to the CA.
The proper remedy is therefore a petition
under Rule 43 of the 1997 Rules of Civil
Procedure. The general therefore is that the
proper remedy from decisions of voluntary
arbitrators is a petition for review under
Rule 43 of the Rules of Court. A special
civil action for certiorari under Rule 65 of
the Rules of Court is the proper remedy for
one who complains that the tribunal, board
or officer exercising judicial or quasi-
judicial functions acted in total disregard of
evidence material to or decisive of the
controversy. In addition, while the settled
rule is that an independent action for
certiorari may be availed of only when there
is no appeal or any plain, speedy, and
adequate remedy in the ordinary course of
law and certiorari is not a substitute for the
lapsed remedy of appeal, there are a few
significant exceptions when the
extraordinary remedy of certiorari may be
resorted to despite the availability of an
appeal, namely: (a) when public welfare and
the advancement of public policy dictate;
(b) when the broader interests of justice so
require; (c) when the writs issued are null;
and (d) when the questioned order amounts
to an oppressive exercise of judicial
authority.
In this case, while the petition was filed on
July 27, 2002 which was 15 days after July
12, 2002, the expiration of the 15-day
reglementary period for filing an appeal
under Rule 43, the broader interests of
justice warrant relaxation of the rules on
procedure. Besides, petitioner alleges that
the Voluntary Arbitrator’s conclusions have
no basis in fact and in law; hence the
petition should not be dismissed on
Page | cxlviii
procedural grounds. The voluntary
Arbitrator gravely abused its discretion in
giving a strict or literal interpretation of the
CBA provisions that the holiday pay be
reflected in the payroll slips. Such literal
interpretation ignores the admission of
respondent in its position paper that the
employees were paid all the days of the
month even if not worked. In light of such
admission, petitioner’s submission of its 360
divisor in the computation of employees’
salaries gains significance. In the case, the
employees are required to work only from
Monday to Friday. Thus, the minimum
allowable divisor is 263. Considering that
petitioner used the 360-day divisor, which is
clearly above the minimum, indubitably,
petitioner’s employees are being given their
holiday pay. The voluntary arbitrator should
not have simply brushed aside petitioner’s
divisor formula. While the Constitution is
committed to the policy of social justice and
the protection of the working class, it should
not be supposed that every labor dispute
would be automatically resolved in favour of
labor. Management also has its own rights
which, as such, are entitled to respect and
enforcement in the interest of simple fair
play.
____________________________________
10. Bahia Shipping Services vs. Chua,
G.R. No. 162195, April 8, 2008, citing
Cagampan vs. NLRC, 195 SCRA 533
[1998]
Facts
Private respondent Reynaldo Chua was
hired by the petitioner shipping company,
Bahia Shipping Services, Inc., as a
restaurant waiter on board a luxury cruise
ship liner M/S Black Watch pursuant to a
Philippine Overseas Employment
Administration (POEA) approved
employment contract dated October 9, 1996
for a period of nine (9) months from October
18, 1996 to July 17, 1997. On October 18,
1996, the private respondent left Manila for
Heathrow, England to board the said sea
vessel where he will be assigned to work.
On February 15, 1997, the private
respondent reported for his working station
one and one-half (1 1/2) hours late. Two
days later, the master of the vessel served to
the private respondent an official warning-
termination form pertaining to the said
incident. On March 8, 1997, the vessel's
master, ship captain Thor Fleten conducted
an inquisitorial hearing to investigate the
said incident. Thereafter, on March 9, 1997,
private respondent was dismissed from the
service on the strength of an unsigned and
undated notice of dismissal.
On March 24, 1997, the private respondent
filed a complaint for illegal dismissal and
other monetary claims, which case was
assigned to Labor Arbiter Manuel M.
Manansala.
The private respondent alleged that he was
paid only US$300.00 per month as monthly
salary for five (5) months instead of
US$410.00 as stipulated in his employment
contract. Thus, he claimed that he was
underpaid in the amount of US$110.00 per
month for that same period of five (5)
months. He further asserted that his salaries
were also deducted US$20.00 per month by
the petitioner for alleged union dues. Private
respondent argued that it was his first
offense committed on board the vessel. He
averted further that the petitioner has no
proof of being a member of the AMOSUP or
the ITF to justify its claim to deduct the said
union dues from his monthly salary.
Page | cxlix
The petitioner disputed the said allegations
of the private respondent by arguing that it
received a copy of an addendum to the
collective bargaining agreement (CBA) from
the petitioner's principal, Blackfriars
Shipping Company, Ltd. Consequently, the
petitioner requested permission from the
POEA through a letter dated March 17, 1997
to amend the salary scale of the private
respondent to US$300.00 per month. The
petitioner justified its monthly deduction
made for union dues against the private
respondent's salary in view of an alleged
existing CBA between the Norwegian
Seaman's Union (NSU, for brevity) and the
petitioner's principal, Blackfriars Shipping
Co., Ltd. The petitioner further asseverated
that the private respondent has violated the
terms and conditions of his contract as
manifested in the said official warning-
termination form by always coming late
when reporting for duty even prior to the
February 15, 1997 incident.
The Labor Arbiter rendered a Decision
holding petitioner liable to respondent for
illegal dismissal and unauthorized
deductions. Thus, petitioner appealed to the
NLRC, which subsequently affirmed the
decision of the Labor Arbiter. Respondent
did not question the NLRC decision.
Upon a petition for certiorari filed by
petitioner, the CA rendered the decision
assailed herein, modifying the NLRC
decision by deleting the monetary award
representing the salary of the petitioner for
the unexpired portion of the contract which
is limited to three (3) months.
Issues
1) Whether or not reporting for work
one and one-half (1 1/2) hours late
and abandoning his work are valid
grounds for dismissal.
2) Whether or not the Court of Appeals
could grant additional affirmative
relief by increasing the award despite
the fact that respondent did not
appeal the decision of both the Labor
Arbiter and the NLRC.
3) Whether or not respondent is entitled
to overtime pay which was
incorporated in his award for the
unexpired portion of the contract
despite the fact that he did not render
overtime work, and whether or not, it
is proper for the NLRC to award
money claims despite the fact that
the NLRC decision, and affirmed by
the Court of Appeals, did not state
clearly the facts and the evidence
upon which such conclusions are
based
Held
1) NO, it is not a valid ground for
dismissal.
Petitioner assails the ruling of the CA for
being based on the faulty premise that
respondent incurred tardiness only once
when in fact he had done so habitually.
Whether respondent had been habitually
tardy prior to February 15, 1997 when he
reported for work 1 1/2 hours late is purely
factual in nature. As such, the Court defers
to the concurrent assessments of the LA and
NLRC, as affirmed by the CA, for the
evaluation of evidence and the appreciation
of the credibility of witnesses fall within
their expertise.
Petitioner's claim that respondent's tardiness
was habitual lacks evidentiary support as
"no other documents on record were
attached to substantiate that the private
respondent was forewarned for the first and
Page | cl
second time for any infraction or offense,
work-related or not, vis-à-vis the
performance of his regular duties and
functions."
Such empty claim of petitioner, therefore,
cannot persuade the Court to simply
disregard three layers of thorough and in-
depth assessments on the matter by the CA,
NLRC and LA.
2) YES, the CA can grant additional
affirmative relief even if respondent
did not appeal the decisions of the
LA and NLRC.
It being settled that the dismissal of
respondent was illegal, it follows that the
latter is entitled to payment of his salary for
the unexpired portion of his contract, as
provided under RA 8042, considering that
his employment was pre-terminated on
March 9, 1997 or four months prior to the
expiration of his employment contract on
July 17, 1997.
However, the LA limited the award to an
amount equivalent to respondent's salary for
three months. The NLRC affirmed said
award but deducted therefrom his salary for
one day as penalty for the tardiness incurred.
The CA affirmed the one-day salary
deduction imposed by the NLRC but
removed the three months — salary cap *
imposed by the LA.
Petitioner questions the CA for lifting the
three-month salary cap, pointing out that the
LA and NLRC decisions which imposed the
cap can no longer be altered as said
decisions where not questioned by
respondent.
Indeed, a party who has failed to appeal
from a judgment is deemed to have
acquiesced to it and can no longer obtain
from the appellate court any affirmative
relief other that what was already granted
under said judgment. However, when strict
adherence to such technical rule will impair
a substantive right, equity dictates that the
Court set aside the rule to pave the way for a
full and just adjudication of the case.
The Court of Appeals is imbued with
sufficient authority and discretion to review
matters, not otherwise assigned as errors on
appeal, if it finds that their consideration is
necessary in arriving at a complete and just
resolution of the case or to serve the
interests of justice or to avoid dispensing
piecemeal justice.
Section 10 of R.A. No. 8042, entitles an
overseas worker who has been illegally
dismissed to "his salaries for the unexpired
portion of the employment contract or for
three (3) months for every year of the
unexpired term, whichever is less." The CA
correctly applied the interpretation of the
Court in Marsaman Manning Agency, Inc.
v. National Labor Relations Commission
that the second option which imposes a three
months — salary cap * applies only when
the term of the overseas contract is fixed at
one year or longer; otherwise, the first
option applies in that the overseas worker
shall be entitled payment of all his salaries
for the entire unexpired period of his
contract.
3) NO, respondent is not entitled to
overtime pay.
Petitioner contends that there is no factual or
legal basis for the inclusion of said amount
because, after respondent's repatriation, he
could not have rendered any overtime work.
As ruled by the SC in Cagampan v.
National Labor Relations Commission,
although an overseas employment contract
Page | cli
may guarantee the right to overtime pay,
entitlement to such benefit must first be
established, otherwise the same cannot be
allowed.
Hence, it being improbable that respondent
rendered overtime work during the
unexpired term of his contract, the inclusion
of his "guaranteed overtime" pay into his
monthly salary as basis in the computation
of his salaries for the entire unexpired period
of his contract has no factual or legal basis
and the same should have been disallowed.
Petition is PARTLY GRANTED.
____________________________________
11. PNCC Skyway Traffic Management
and Security Division Workers
Organization, GR No. 171231, Feb. 17,
2010
Facts
individual union member has the right to
schedule their vacation. Petitioner alleged
that the scheduling was done to avoid the
monetization of their vacation leave in
December. Petitioner also demanded that the
expenses for the renewal of their licenses
should be shouldered by the respondent and
not by its member security guards.
Respondents neglected the said demands
and asserted to schedule all the vacation
leave. Petitioner then elevated the matter to
the DOLE-NCMB for preventive mediation
but parties failed to reach amicable
settlement. Both then passed the issue to the
voluntary arbitrator.
The VA favored the petitioners and declared
that the scheduling of all vacation leaves
should be left to the union members and that
utilized and paid vacation leaves should be
converted to cash. The VA also ruled that
respondents should pay for the in-service-
training. The VA denied respondent’s
motion for reconsideration.

The respondent elevated the case to the CA

Petitioner is a labor union duly registered
which annulled the VA’s decision on the
with the DOLE while the respondent is a
ground that the CBA of the parties is clear
corporation duly organized and operating
with regard to vacation leave hence VA has
under the Philippines laws. Both parties
no authority to interpret. CA denied
entered into a CBA incorporating the terms
petitioner’s motion for reconsideration.
and conditions of their agreement including
vacation leave and expenses for security
license provisions. The CBA provides that Issue
respondent may take into consideration the
employees’ preferred schedule of vacation
Whether or not the unilateral scheduling of
leave but such is not controlling because it is
the respondent of the vacation leave is valid
the respondent who has the final say. The
CBA also provides that all the expenses in
the renewal of licenses should be personally Held
shouldered by the security guards
themselves.Respondent issued a The unilateral scheduling by the respondent
memorandum unilaterally scheduling the is valid. The CBA is clear that scheduling of
vacation leave for the year 2004. The vacation leave shall be under the employer
petitioner then objected insisting that the

Page | clii
or respondent’s option. Absence of
ambiguity, the plain language should be
applied. Hence, respondent has the right to
schedule the vacation leave and that the
parties should comply. The unused vacation
leave must be converted to cash.
According to the SC, in granting vacation
leave, the employers are given the leeway to
impose conditions on the entitlement to and
commutation of the same as the grant of the
vacation leave is not a standard of law but
management prerogative.
Citing the case of Cuajo v.. Chua Lo Tan,
the Supreme Court highlighted the
importance of vacation leave and that is “to
afford a laborer a chance to get a much-
needed rest to replenish his worn-out energy
and acquire a new vitality to enable him to
efficiently perform his duty, and not merely
to give him additional salary and bounty”.
With regard to the issue of who should
shoulder the expenses of renewing the
licenses, the SC held that it should be by the
respondent in pursuant to the 1994 Revised
Rules and Regulations Implementing
Republic Act No. 5487. The law imposes
that operators of company security forces
are primarily responsible to maintain and
upgrade the standards of efficiency,
discipline, performance of their personnel.
Hence, it follows that they should shoulder
the expenses.
____________________________________
12. Radio Mindanao Network Inc. et al.,
vs. Ybarola, Jr. G.R. No. 198662, Sept. 12,
2012
Facts
Respondents Domingo Z. Ybarola, Jr. and
Alfonso E. Rivera, Jr. were hired on June
15, 1977 and June 1, 1983, respectively, by
RMN. They eventually became account
managers, soliciting advertisements and
servicing various clients of RMN.
The respondents’ services were terminated
as a result of RMN’s
reorganization/restructuring; they were
given their separation pay – P 631,250.00
for Ybarola, and P 481,250.00 for Rivera.
Sometime in December 2002, they executed
release/quitclaim affidavits.
Dissatisfied with their separation pay, the
respondents filed separate complaints
(which were later consolidated) against
RMN and its President, Eric S. Canoy, for
illegal dismissal with several money claims,
including attorney’s fees. They indicated
that their monthly salary rates were P
60,000.00 for Ybarola and P 40,000.00 for
Rivera.
The respondents argued that the
release/quitclaim they executed should not
be a bar to the recovery of the full benefits
due them; while they admitted that they
signed release documents, they did so due to
dire necessity.
The petitioners denied liability, contending
that the amounts the respondents received
represented a fair and reasonable settlement
of their claims, as attested to by the
release/quitclaim affidavits which they
executed freely and voluntarily. They belied
the respondents’ claimed salary rates,
alleging that they each received a monthly
salary of P 9,177.00, as shown by the
payrolls.
Page | cliii
The Labor Arbiter Patricio Libo-on
dismissed the illegal dismissal complaint,
but ordered the payment of additional
separation pay to the respondents – P
490,066.00 for Ybarola and P 429,517.55
for Rivera.
On appeal by the petitioners to the National
Labor Relations Commission (NLRC), the
NLRC set aside the labor arbiter’s decision
and dismissed the complaint for lack of
merit. It ruled that the withholding tax
certificate cannot be the basis of the
computation of the respondents’ separation
pay as the tax document included the
respondents’ cost-of-living allowance and
commissions; as a general rule, commissions
cannot be included in the base figure for the
computation of the separation pay.
The CA granted the petition and set aside
the assailed NLRC dispositions. It reinstated
the labor arbiter’s separation pay award,
rejecting the NLRC’s ruling that the
respondents’ commissions are not included
in the computation of their separation pay. It
pointed out that in the present case, the
respondents earned their commissions
through actual market transactions
attributable to them; these commissions,
therefore, were part of their salary.
The appellate court declared the
release/quitclaim affidavits executed by the
respondents invalid for being against public
policy, citing two reasons: (1) the terms of
the settlement are unconscionable; the
separation pay the respondents received was
deficient by at least P 400,000.00 for each of
them; and (2) the absence of voluntariness
when the respondents signed the document,
it was their dire circumstances and inability
to support their families that finally drove
them to accept the amount the petitioners
offered. Significantly, they dallied and it
took them three months to sign the
release/quitclaim affidavits.
Issues
Whether or not the release/quitclaim
affidavits are invalid for being against public
policy.
Held
Release/Quitclaim; Separation pay. The
release/quitclaim affidavits are invalid for
being against public policy for two reasons:
(1) the terms of the settlement are
unconscionable; the separation pay for
termination due to
reorganization/restructuring was deficient by
Php400,000.00 for each employee; they
were given only half of the amount they
were legally entitled to; and (2) the absence
of voluntariness when the employees signed
the document, it was their dire
circumstances and inability to support their
families that finally drove them to accept the
amount offered. Without jobs and with
families to support, they dallied in executing
the quitclaim instrument, but were
eventually forced to sign given their
circumstances. To be sure, a settlement
under these terms is not and cannot be a
reasonable one, given especially the
respondent’s length of service – 25 years for
Ybarola and 19 years for Rivera.
____________________________________
13. Robina Farms Cebu vs. Villa, GR No.
175869, April 18, 2016
Page | cliv

Facts
Respondent Elizabeth Villa brought against
the petitioner her complaint for illegal
suspension, illegal dismissal, nonpayment of
overtime pay, and nonpayment of service
incentive leave pay in the Regional
Arbitration Branch No. VII of the NLRC in
Cebu City
Villa averred that she had been employed by
petitioner Robina Farms as sales clerk since
August 1981; that in the later part of 2001,
the petitioner had enticed her to avail herself
of the company's special retirement
program; that on March 2, 2002, she had
received a memorandum from Lily Ngochua
requiring her to explain her failure to issue
invoices for unhatched eggs in the months of
January to February 2002; that she had
explained that the invoices were not
delivered on time because the delivery
receipts were delayed and overlooked; that
despite her explanation, she had been
suspended for 10 days from March 8, 2012
until March 19, 2002; that upon reporting
back to work, she had been advised to cease
working because her application for
retirement had already been approved; that
she had been subsequently informed that her
application had been disapproved, and had
then been advised to tender her resignation
with a request for financial assistance
The petitioner admitted that Villa had been
its sales clerk at Robina Farms. It stated that
on December 12, 2001, she had applied for
retirement under the special privilege
program offered to its employees in Bulacan
and Antipolo who had served for at least 10
years; that in February 2002, her attention
had been called by Anita Gabatan of the
accounting department to explain her failure
to issue invoices for the unhatched eggs for
the month of February; that she had
explained that she had been busy; that
Gabatan had referred the matter to Florabeth
Zanoria who had in turn relayed the matter
to Ngochua; and that the latter had then
given Villa the chance to explain, which she
did.
The petitioner added that after the
administrative hearing Villa was found to
have violated the company rule on the
timely issuance of the invoices; that after
serving the suspension, she had returned to
work and had followed up her application
for retirement with Lucina de Guzman, who
had then informed her that the management
did not approve the benefit equivalent to
86% of her salary rate applied for, but only
1/2 month for every year of service; and that
disappointed with the outcome, she had then
brought her complaint against the
petitioners.
Issue
1. Whether or not Villa was illegally
dismissed after her application for
retirement plan
2. Whether or not the CA correctly
affirmed the giving of overtime pay to
Villa
3. Whether or not the CA correctly
affirmed the giving of service incentive
leave to Villa
Page | clv
Held
1. YES because Villa's application for
early retirement did not manifest her
intention to sever the employer- employee
relationship. Although she applied for early
retirement, she did so upon the belief that
she would receive a higher benefit t based
on the petitioner's offer. As such, her
consent to be retired could not be fairly
deemed to have been knowingly and freely
given. Retirement is the result of a bilateral
act of both the employer and the employee
based on their voluntary agreement that
upon reaching a certain age, the employee
agrees to sever his employment. In case of
early retirement programs, the offer of
benefits must be certain while acceptance to
be retired should be absolute.
It is undeniable that private respondent was
suspended for ten (10) days beginning
March 8, 2002 to March 19, 2002.
Ordinarily, after an employee [has] served
her suspension, she should be admitted back
to work and to continue to receive
compensation for her services. In the case
at bar, it is clear that private respondent
was not admitted immediately after her
suspension. Records show that when private
respondent reported back after her
suspension, she was advised by Lucy de
Guzman not to report back anymore as her
application was approved, which was latter
on disapproved.
Records show that when private respondent
reported back after her suspension, she was
advised by Lucy de Guzman not to report
back anymore as her application was
approved, which was latter [sic] on
disapproved. It is at this point that, said
Lucy de Guzman had advised private
respondent to tender a resignation letter with
request for financial assistance. Not only
Lucy De Guzman has advised her to tender
her resignation letter. The letter of petitioner
Lily Ngochua has also advised private
respondent to the same. These acts are
strong indication that petitioners wanted to
sever the employer-employee relationship
between them and that of private
respondent. This is buttressed by the fact
that when private respondent signified her
intention to return back to work after
learning of the disapproval of her
application, she was prevented to enter the
petitioner's premises by confiscating her ID
and informing her that a new employee has
already replaced her.
In case of early retirement programs, the
offer of benefits must be certain while the
acceptance to be retired should be absolute.
The acceptance by the employees
contemplated herein must be explicit,
voluntary, free and uncompelled.
2. NO, Villa is not entitled to overtime pay
because she did not adduce proof of her
having rendered actual overtime work
and that she had not been authorized to
render overtime work. The Court ruled
that entitlement to overtime pay must first
be established by proof that the overtime
work was actually performed before the
employee may properly claim the benefit.
The burden of proving entitlement to
overtime pay rests on the employee because
the benefit is not incurred in the normal
course of business. Failure to prove such
actual performance transgresses the
principles of fair play and equity. And,
secondly, the NLRC's reliance on the daily
time records (DTRs) showing that Villa had
stayed in the company's premises beyond
eight hours was misplaced.
Without the prior authorization, therefore,
Villa could not validly claim having
Page | clvi
performed work beyond the normal hours of
work. Moreover, Section 4 (c), Rule I, Book
III of the Omnibus Rules Implementing the
Labor Code relevantly states as follows:
Section 4. Principles in determining
hours worked. — The following
general principles shall govern in
determining whether the time spent
by an employee is considered hours
worked for purposes of this Rule:
(a) . . . .
(b) . . . .
(c) If the work performed was
necessary, or it benefited the
employer, or the employee could not
abandon his work at the end of his
normal working hours because he
had no replacement, all time spent
for such work shall be considered
as hours worked, if the work was
with knowledge of his employer or
immediate supervisor.
3. YES, as to the grant of service incentive
leave pay, although the grant of vacation
or sick leave with pay of at least five days
could be credited as compliance with the
duty to pay service incentive leave, the
employer is still obliged to prove that it
fully paid the accrued service incentive
leave pay to the employee. In this case,
Petitioner Robina did not present proof that
Villa had been justly paid thus, award of
Service Incentive Leave is proper.
__________________________________
14. Dasco et al., vs. Philtranco Service
Enterprise, GR No. 211141, June 29,
2016
Facts
Petitioners were employed by respondent
bus company on various dates between 2006
and 2010 as either bus driver or conductor.
On July 4, 2011, they filed a complaint for
regularization, underpayment of wages, non-
payment of service incentive leave (SIL)
pay.
Petitioners alleged that they are qualified for
regularization, they were only paid P404.00
per round trip which lasts for 2 to 5 days,
without overtime pay and below the
minimum wage, they are not field
personnels, and that they have not been
given their 5-day service incentive leaves.
Respondents averred that petitioners were
paid a fixed rate of P0.49 per kilometer run,
or minimum wage, whichever is higher; that
petitioners are seasonal employees; and that
they are field personnels, and are not entitled
to overtime pay and SIL.
The Labor Arbiter found petitioners to be
field personnels, thus not entitled to
overtime pay and SIL. The NLRC however
reversed this, finding that petitioners are not
field personnels as they are under strict
supervision of the bus company. The Court
of Appeals reversed the NLRC and
reinstated the LA decisions. Aggrieved,
petitioners now come to the Court on
certiorari.
Issue
Page | clvii
Whether or not petitioners bus drivers and
conductors of respondent bus company are
entitled to overtime pay and SIL as they are
not field personnel.
Held
Yes. As bus drivers and conductors of the
bus company, petitioners are entitled to
overtime pay and SIL. They are not field
personnel.
The determination of whether bus drivers
and/or conductors are considered as field
personnel was already threshed out in the
case of Auto Bus Transport Systems, Inc. v.
Bautista. Field personnel are those who:
(1) regularly perform their duties away
from the principal place of business
of the employer; and
(2) whose actual hours of work in the
field cannot be determined with
reasonable certainty.
The NLRC properly concluded that the
petitioners are not field personnel as
supported by the established facts of the
case:
(1) they are directed to transport their
passengers at a Specified time and
place;
(2) they are not given the discretion to
select and contract with prospective
passengers;
(3) their actual work hours could be
determined with reasonable
certainty, as well as their average
trips per month; and
(4) the respondents supervised their time
and performance of duties.
In view of the foregoing, petitioners are thus
entitled to the benefits accorded to regular
employees of the respondent, including
overtime pay and SIL pay.
WHEREFORE, petition is hereby
GRANTED.
____________________________________
15. HSY Marketing Ltd., vs. Villastique,
GR No. 219569, Aug. 17, 2016
Facts
HSY Marketing Ltd. hired respondent
Virgilio Villastique as a field driver for
Fabulous Jeans & Shirt & General
Merchandise (Fabulous Jeans), tasked to
deliver ready-to-wear items and/or general
merchandise for a daily compensation of
P370.00. Respondent figured in an accident
when the service vehicle he was driving
bumped a pedestrian. Fabulous Jeans
shouldered the hospitalization and medical
expenses of the pedestrian and asked
Villastique to reimburse, but to no avail.
Respondent was allegedly required to sign a
resignation letter, which he refused to do. A
couple of days later, he tried to collect his
salary for that week but was told that it was
withheld because of his refusal to resign.
Convinced that he was already terminated,
he lost no time in filing a complaint for
illegal dismissal with money claims against
petitioner. HSY Marketing Ltd. contended
Page | clviii
that respondent had committed several
violations in the course of his employment,
and had been found by his superior and
fellow employees to be a negligent and
reckless driver, which resulted in the
vehicular mishap.
The Labor Arbiter dismissed the complaint
for illegal dismissal, finding no evidence
that the respondent was illegally dismissed.
The National Labor Relations Commission
(NLRC) and, subsequently, the CA affirmed
the decision of the Labor Arbiter.
Issue
Whether or not respondent Villastique is a
regular employee who is entitled to a service
incentive leave pay
Held
Yes. Respondent Villastique is a regular
employee who is entitled to a service
incentive leave pay.
Respondent is not a field personnel as
defined above because of the nature of his
job as a company driver. Expectedly,
respondent is directed to deliver the goods at
a specified time and place and he is not
given the discretion to solicit, select, and
contact prospective clients. It has been held
that The Court has already held that
company drivers who are under the control
and supervision of management officers —
like respondent herein — are regular
employees entitled to benefits including
service incentive leave pay.
"Service incentive leave is a right which
accrues to every employee who has served
'within 12 months, whether continuous or
broken reckoned from the date the employee
started working, including authorized
absences and paid regular holidays unless
the working days in the establishment as a
matter of practice or policy, or that provided
in the employment contracts, is less than 12
months, in which case said period shall be
considered as one [(1)] year.' It is also
commutable to its money equivalent if not
used or exhausted at the end of the year. In
other words, an employee who has served
for one (1) year is entitled to it. He may use
it as leave days or he may collect its
monetary value."
Petitioner, as the employer of respondent,
and having complete control over the
records of the company, could have easily
rebutted the said monetary claim against it
by presenting the vouchers or payrolls
showing payment of the same. However,
since petitioner opted not to lift a finger in
providing the required documentary
evidence, the ineluctable conclusion that
may be derived therefrom is that it never
paid said benefit and must, perforce, be
ordered to settle its obligation to respondent.
____________________________________
16. Dela Salle Araneta University vs.
Bernardo, GR No. 190809, February 13,
2017
Page | clix

Facts
Bernardo taught as a part-time professional
lecturer at DLS-AU since 1974. On
November 8, 2003, DLS-AU informed him
that he could not teach anymore due to the
retirement age limit. Bernardo was 75 years
old at the time and was being paid P246.50
per hour. DOLE informed him that he was
entitled to receive benefits under RA 7641,
also known as the" New Retirement Law.”
Petitioner DLS-AU argued that Bernardo
was not covered by the law since he was a
part-time employee and that Bernardo was
not entitled to any kind of separation pay or
benefits. Dr. Bautista explained to Bernardo
that as mandated by the DLS-AU's policy
and Collective Bargaining Agreement
(CBA), only full-time permanent faculty of
DLS-AU for at least five years immediately
preceeding the termination of their
employment could avail themselves of the
post-employment benefits. As part-time
faculty member, Bernardo did not acquire
permanent employment under the Manual of
Regulations for Private Schools, in relation
to the Labor Code, regardless of his length
of service.The school further averred that
Bernardo’s employment bond was severed
when he reached the mandatory retirement
age of 65. 10 years have passed since then.
His claim for retirement benefits should
have prescribed, because under Article 291
of the Labor Code, all money claims shall be
filed within three years from the time the
cause of action accrues.
Respondent Bernardo alleged that he started
working as a part-time professional lecturer
at DLS-AU on June 1, 1974 for an hourly
rate of P20.00. Bernardo taught for two
semesters and the summer for the school
year 1974-1975. Bernardo then took a leave
of absence from June 1, 1975 to October 31,
1977 when he was assigned by the
Philippine Government to work in Papua
New Guinea. When Bernardo came back in
1977, he resumed teaching at DLS-AU until
October 12, 2003, the end of the first
semester for school year 20032004.
Bernardo's teaching contract was renewed at
the start of every semester and summer.
However, on November 8, 2003, DLS-AU
informed Bernardo through a telephone call
that he could not teach at the school
anymore as the school was implementing the
retirementagelimit for its faculty members.
As he was already 75 years old, Bernardo
had no choice but to retire. At the time of his
retirement, Bernardo was being paid
P246.50 per hour.
NLRC: The Labor Arbiter dismissed
Bernardo’s complaint on the ground of
prescription. This was reversed by the
NLRC. It held that the school is estopped
from claiming prescription because it
permitted Bernardo to work beyond the
mandatory retirement age. Furthermore,
part-time employees are covered under RA
7641.
Under Republic Act No. 7641, part-time
workers are entitled to retirement pay of
one-half month salary for every years of
service, provided that the following
conditions are present: (a) there is no
retirement plan between the employer and
employees; (b) the employee has reached the
age of 60 years old for optional retirement or
65 years old for compulsory retirement; and
(c) the employee should have rendered
atleast five yearsof service with the
employer. Bernardo vowed that all these
conditions were extant in his case. CA:
Page | clx
TheCA affirmed in toto the NLRC
judgment.

Issue

W/N part-time employees receive retirement

benefits despite a lack of CBA

Held

YES. Based on RA 7641, its Implementing

Rules, and the October 24, 1996 Labor
Advisory, the only employees exempted
from retirement pay are: (1) those of the
National Government and its political
subdivisions, including government-owned
and/or controlled corporations, if they are
covered by the Civil Service Law and its
regulations; and (2) those of retail, service
and agricultural establishments or operations
regularly employing not more than 10
employees. Under expressio unius est
exclusio alterius, Since part-time employees
are not among those specifically exempted,
Bernardo’s claim stands. Being 75 years old
at the time of his retirement, having served
DLS-AU for a total of 27 years, and not
being covered by the grant of retirement
benefits in the CBA - is unquestionably
qualified to avail himself of retirement
benefits under said statutory provision, i.e.,
equivalent to one-half month salary for
every year of service, a fraction of at least
six months being considered as one whole
year.

Page | clxi
Topic 10: Other Special Benefit
1. Reyes vs. NLRC et al., G.R. No. 160233,
August 8, 2007, citing Boie Takeda
Chemicals vs. Dela Serna, 228 SCRA 329
[1993] & Phil. Duplicators vs. NLRC, 241
SCRA 380 [1995]
Facts
Petitioner was employed as a salesman at
private respondent's Grocery Division in
Davao City on August 12, 1977. He was
eventually appointed as unit manager of
Sales Department-South Mindanao District,
a position he held until his retirement on
November 30, 1997. Thereafter, he received
a letter regarding the computation of his
separation pay. Insisting that his retirement
benefits and 13th month pay must be based
on the average monthly salary of
P42,766.19, which consists of P10,919.22
basic salary and P31,846.97 average
monthly commission, petitioner refused to
accept the check issued by private
respondent in the amount of P200,322.21.
Instead, he filed a complaint before the
arbitration branch of the NLRC for
retirement benefits, 13th month pay, tax
refund, earned sick and vacation leaves,
financial assistance, service incentive leave
pay, damages and attorney's fees.
Petitioner contends that the commissions
form part of the basic salary, citing the case
of Philippine Duplicators, Inc. v. National
Labor Relations Commission, wherein the
Court held that commissions earned by
salesmen form part of their basic salary.
Private respondent counters that petitioner
knew that the overriding commission is not
included in the basic salary because it had
not been considered as such for a long time
in the computation of the 13th month pay,
leave commissions, absences and tardiness.
Issue
Whether or not the average monthly sales
commission of thirty one thousand eight
hundred forty six and 97/100
(Php31,846.97) should be included in the
computation of his retirement benefits and
13th month pay.
Held
This Court has held, in Philippine
Duplicators that, the salesmen's
commissions, comprising a pre-determined
percentage of the selling price of the goods
sold by each salesman, were properly
included in the term basic salary for
purposes of computing the 13th month pay.
The salesmen's commission are not overtime
payments, nor profit-sharing payments nor
any other fringe benefit but a portion of the
salary structure which represents an
automatic increment to the monetary value
initially assigned to each unit of work
rendered by a salesman.
Contrarily, in Boie-Takeda, the so-called
commissions paid to or received by medical
representatives of Boie-Takeda Chemicals
or by the rank and file employees of
Philippine Fuji Xerox Co., were excluded
Page | clxii
from the term basic salary because these
were paid to the medical representatives and
rank-and-file employees as productivity
bonuses, which are generally tied to the
productivity, or capacity for revenue
production, of a corporation and such
bonuses closely resemble profit-sharing
payments and have no clear direct or
necessary relation to the amount of work
actually done by each individual employee.
Further, commissions paid by the Boie-
Takeda Company to its medical
representatives could not have been sales
commissions in the same sense that
Philippine Duplicators paid the salesmen
their sales commissions. Medical
representatives are not salesmen; they do not
effect any sale of any article at all.
In fine, whether or not a commission forms
part of the basic salary depends upon the
circumstances or conditions for its payment,
which indubitably are factual in nature for
they will require a re-examination and
calibration of the evidence on record.
As to the main issue whether petitioner's
commissions be considered in the
computation of his retirement benefits and
13th month pay, we rule in the negative.
Article 287 of the Labor Code, as amended
by Republic Act No. 7641, otherwise known
as The New Retirement Law, 22 provides:
Retirement. — Any employee may be
retired upon reaching the retirement age
established in the collective bargaining
agreement or other applicable employment
contract… In the absence of a retirement
plan or agreement providing for retirement
benefits of employees in the establishment,
an employee upon reaching the age of sixty
(60) years or more, but not beyond sixty five
(65) years which is hereby declared the
compulsory retirement age, who has served
at least five (5) years in the said
establishment, may retire and shall be
entitled to retirement pay equivalent to at
least one half (1/2) month salary for every
year of service, a fraction of at least six (6)
months being considered as one whole year.
Unless the parties provide for broader
inclusions, the term one half (1/2) month
salary shall mean fifteen (15) days plus one
twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5)
days of service incentive leaves.
Petitioner filed for optional retirement upon
reaching the age of 60. However, the basis
in computing his retirement benefits is his
latest salary rate of P10,919.22 as the
commissions he received are in the form of
profit-sharing payments specifically
excluded by the foregoing rules. Case law
has it that when these earnings and
remuneration are closely akin to fringe
benefits, overtime pay or profit-sharing
statements, they are properly excluded in
computing retirement pay. However, sales
commissions which are effectively an
integral portion of the basic salary structure
of an employee, shall be included in
determining the retirement pay.
At bar, petitioner Rogelio J. Reyes was
receiving a monthly sum of P10,919.22 as
salary corresponding to his position as Unit
Manager. Thus, as correctly ruled by public
respondent NLRC, the "overriding
commissions" paid to him by Universal
Robina Corp. could not have been 'sales
commissions' in the same sense that
Philippine Duplicators paid its salesmen
sales commissions. Unit Managers are not
salesmen; they do not effect any sale of
article at all. Therefore, any commission
which they receive is certainly not the basic
salary which measures the standard or
amount of work of complainant as Unit
Manager. Accordingly, the additional
payments made to petitioner were not in fact
sales commissions but rather partook of the
Page | clxiii
nature of profit-sharing business. Certainly,
from the foregoing, the doctrine in Boie-
Takeda Chemicals and Philippine Fuji
Xerox Corporation, which pronounced that
commissions are additional pay that does not
form part of the basic salary, applies to the
present case. Aside from the fact that as unit
manager petitioner did not enter into actual
sale transactions, but merely supervised the
salesmen under his control, the disputed
commissions were not regularly received by
him. Only when the salesmen were able to
collect from the sale transactions can
petitioner receive the commissions.
Conversely, if no collections were made by
the salesmen, then petitioner would receive
no commissions at all. In fine, the
commissions which petitioner received were
not part of his salary structure but were
profit-sharing payments and had no clear,
direct or necessary relation to the amount of
work he actually performed. The collection
made by the salesmen from the sale
transactions was the profit of private
respondent from which petitioner had a
share in the form of a commission. Hence,
petition is denied.
____________________________________
2. Arco Metal Products Co., Inc., et al., vs.
Samahan ng Mga Manggagawa sa Arco
Metal-NAFLU, G.R. No. 170734, May 14,
2008
Facts
Petitioner is a company engaged in the
manufacture of metal products, whereas
respondent is the labor union of petitioner’s
rank and file employees. Sometime in
December 2003, petitioner paid the 13th
month pay, bonus, and leave encashment of
three union members in amounts
proportional to the service they actually
rendered in a year, which is less than a full
12 months. Respondent protested the
prorated scheme, claiming that on several
occasions petitioner did not prorate the
payment of the same benefits to 7
employees who had not served for the full
12 months. The payments were made in
1992, 1993, 1994, 1996, 1999, 2003, and
2004. According to respondent, the prorated
payment violates the rule against diminution
of benefits under Article 100 of the Labor
Code. Thus, they filed a complaint before
the NCMB. The parties submitted the case
for voluntary arbitration.
The voluntary arbitrator, Mangabat, ruled in
favor of petitioner and found that the giving
of the contested benefits in full, irrespective
of the actual service rendered within one
year has not ripened into a practice. He
noted the affidavit of Baingan,
manufacturing group head of petitioner,
which states that the giving in full of the
benefit was a mere error. He also interpreted
the phrase “for each year of service” found
in the pertinent CBA provisions to mean that
an employee must have rendered one year of
service in order to be entitled to the full
benefits provided in the CBA.
The CA ruled that the CBA did not intend to
foreclose the application of prorated
payments of leave benefits to covered
employees. The appellate court found that
petitioner, however, had an existing
voluntary practice of paying the aforesaid
benefits in full to its employees, thereby
rejecting the claim that petitioner erred in
paying full benefits to its seven employees.
The appellate court noted that aside from the
affidavit of petitioner’s officer, it has not
presented any evidence in support of its
position that it has no voluntary practice of
granting the contested benefits in full and
without regard to the service actually
rendered within the year. It also questioned
Page | clxiv
why it took petitioner 11 years before it was
able to discover the alleged error.
Issue
WON the grant of 13th month pay, bonus,
and leave encashment in full regardless of
actual service rendered constitutes voluntary
employer practice and, consequently, the
prorated payment of the said benefits does
not constitute diminution of benefits under
Article 100 of the Labor Code.
Held
Petitioner claims that its full payment of
benefits regardless of the length of service to
the company does not constitute voluntary
employer practice. It points out that the
payments had been erroneously made and
they occurred in isolated cases in the years
1992, 1993, 1994, 1999, 2002 and 2003.
According to petitioner, it was only in 2003
that the accounting department discovered
the error “when there were already 3
employees involved with prolonged
absences and the error was corrected by
implementing the pro-rata payment of
benefits pursuant to law and their existing
CBA.” It adds that the seven earlier cases of
full payment of benefits went unnoticed
considering the proportion of one employee
concerned (per year) vis à vis the 170
employees of the company. Petitioner
describes the situation as a “clear oversight”
which should not be taken against it. To
further bolster its case, petitioner argues that
for a grant of a benefit to be considered a
practice, it should have been practiced over
a long period of time and must be shown to
be consistent, deliberate and intentional,
which is not what happened in this case.
Petitioner tries to make a case out of the fact
that the CBA has not been modified to
incorporate the giving of full benefits
regardless of the length of service, proof that
the grant has not ripened into company
practice.
Any benefit and supplement being enjoyed
by employees cannot be reduced,
diminished, discontinued or eliminated by
the employer. The principle of non-
diminution of benefits is founded on the
Constitutional mandate to “protect the rights
of workers and promote their welfare,” and
“to afford labor full protection.” Said
mandate in turn is the basis of Article 4 of
the Labor Code which states that “all doubts
in the implementation and interpretation of
this Code, including its implementing rules
and regulations shall be rendered in favor of
labor.” Jurisprudence is replete with cases
which recognize the right of employees to
benefits which were voluntarily given by the
employer and which ripened into company
practice. Thus in Davao Fruits Corporation
v. Associated Labor Unions, et al. where an
employer had freely and continuously
included in the computation of the 13th
month pay those items that were expressly
excluded by the law, we held that the act
which was favorable to the employees
though not conforming to law had thus
ripened into a practice and could not be
withdrawn, reduced, diminished,
discontinued or eliminated.
In the years 1992, 1993, 1994, 1999, 2002
and 2003, petitioner had adopted a policy of
freely, voluntarily and consistently granting
full benefits to its employees regardless of
the length of service rendered. True, there
were only a total of seven employees who
benefited from such a practice, but it was an
established practice nonetheless.
Jurisprudence has not laid down any rule
specifying a minimum number of years
Page | clxv
within which a company practice must be
exercised in order to constitute voluntary
company practice. Thus, it can be 6 years, 3
years, or even as short as 2 years. Petitioner
cannot shirk away from its responsibility by
merely claiming that it was a mistake or an
error, supported only by an affidavit of its
manufacturing group head.
In cases involving money claims of
employees, the employer has the burden of
proving that the employees did receive the
wages and benefits and that the same were
paid in accordance with law.
____________________________________
3. Universal Robina Sugar Milling Corp.
vs. Caballeda, G.R. No. 156644, July 28,
2008
Facts
Petitioner Universal Robina Sugar Milling
Corporation (URSUMCO) is a domestic
corporation engaged in the sugar milling
business and petitioner Renato Cabati is
URSUMCO’s manager.
Respondent Agripino Caballeda worked as
welder for URSUMCO from March 1989
until June 23, 1997 with a salary of P124.00
per day, while respondent Alejandro Cadalin
worked for URSUMCO as crane operator
from 1976 up to June 15, 1997 with a salary
of P209.30 per day.
On April 24, 1991, John Gokongwei, Jr.,
President of URSUMCO, issued a
Memorandum establishing the company
policy on “Compulsory Retirement”
(Memorandum) of its employees. The
memorandum provides:
All employees corporate-wide who attain 60
years of age on or before
30, 1991 shall be considered retired on May
31,1991. Henceforth, any employee shall be
considered retired 30 days after he
attains age 60.
Subsequently, on December 9, 1992,
Republic Act (RA) No. 7641 was enacted
into law, and it took effect on January 7,
1993, amending Article 287 of the Labor
Code.
On April 29, 1993, URSUMCO and the
National Federation of Labor (NFL), a
legitimate labor organization and the
recognized sole and exclusive bargaining
representative of all the monthly and daily
paid employees of URSUMCO, of which
Alejandro was a member, entered into a
Collective Bargaining Agreement (CBA).
Article XV of the said CBA particularly
provided that the retirement benefits of the
members of the collective bargaining unit
shall be in accordance with law.
Respondents, having reached the age of 60,
were allegedly forced to retire by
URSUMCO. Both filed respective
Complaints for illegal dismissal, damages
and attorney’s fees. They alleged that his
compulsory retirement was in violation of
the provisions of Republic Act (R.A.) 7641
and, was in effect, a form of illegal
dismissal.
LA: declared URSUMCO guilty of illegal
dismissal
NLRC: reversed and held that Alejandro
Page | clxvi
voluntarily retired because he freely
submitted his application for retirement
together with his birth and baptismal
certificates. Moreover, he had his clearance
processed and he received the amount of
P33,476.77 as retirement benefit.
Nevertheless, the NLRC found that since
Alejandro’s retirement benefit was based
merely on fifteen (15) days salary for every
year of service, such benefit should be
recomputed to conform to the provisions of
Art. 287 of the Labor Code as amended.
With respect to Agripino, the NLRC held
that URSUMCO’s claim that Agripino was a
mere casual employee was obviously
designed to avoid paying Agripino his
retirement benefit.
CA: declared that URSUMCO illegally
dismissed the respondents since the
Memorandum unilaterally imposed upon the
respondent’s compulsory retirement at the
age of 60 and found that there is no existing
CBA or employment contract between the
parties that provides for early compulsory
retirement.
Issue
Whether respondents were illegally
terminated on account of compulsory
retirement or the same voluntarily retired.
Held
Retirement is the result of a bilateral act of
the parties, a voluntary agreement between
the employer and the employee whereby the
latter, after reaching a certain age, agrees to
sever his or her employment with the
former. The age of retirement is primarily
determined by the existing agreement
between the employer and the employees.
However, in the absence of such agreement,
the retirement age shall be fixed by law.
Under Art. 287 of the Labor Code as
amended, the legally mandated age for
compulsory retirement is 65 years, while the
set minimum age for optional retirement is
60 years.
In this case, it may be stressed that the CBA
does not per se specifically provide for the
compulsory retirement age nor does it
provide for an optional retirement plan. It
merely provides that the retirement benefits
accorded to an employee shall be in
accordance with law.
Thus, we must apply Art. 287 of the Labor
Code which provides for two types of
retirement: (a) compulsory and (b) optional.
The first takes place at age 65, while the
second is primarily determined by the
collective bargaining agreement or other
employment contract or employer’s
retirement plan. In the absence of any
provision on optional retirement in a
collective bargaining agreement, other
employment contract, or employer’s
retirement plan, an employee may optionally
retire upon reaching the age of 60 years or
more, but not beyond 65 years, provided he
has served at least five years in the
establishment concerned. That prerogative is
exclusively lodged in the employee
____________________________________
4. Cercado vs. Uniprom, Inc. G.R. No.
188154, October 13, 2010
Facts
Page | clxvii
Petitioner, Lourdes Cerdaco, was an
employee of UNIPROM Inc. for 22 years
since December 15, 1978.
When respondent came up with a retirement
plan, sometime in 1980 and then amended in
2001, which provides that any employee
with a minimum of 20 years of service,
regardless of age, may be retired at the
option of the employer.
In December 2000, UNIPROM
implemented a company-wide retirement
program, including herein petitioner. She
was offered an early retirement package
amounting to P171, 982.90 but Cercado
rejected the offer.
UNIPROM exercised its option under the
retirement plan and decided to retire
petitioner effective February 15, 2001 so she
was no longer given any work assignment
after the said date.
This prompted the petitioner to file a
complaint for illegal dismissal before the
Labor Arbiter, alleging that UNIPROM did
not have a bona fide retirement plan, and
even if there was, she didn’t consent thereto.
Respondent averred that Cercado was
automatically covered by the retirement plan
when she agreed to the company’s rules and
regulations, and that her retirement was an
exercise of management prerogative.
The Labor Arbiter ruled in favor of the
petitioner holding that she was illegally
dismissed ordering the respondent to pay for
the full back wages.
The NLRC affirmed the decision of the
Labor Arbiter holding that there was no
evidence that the petitioner consented to the
subject retirement plan.
The Court of Appeals upon a special civil
action for certiorari revered and set aside the
decision of the Labor Arbiter and the NLRC
ruling that the petitioner cannot feign
ignorance to the retirement plan considering
she has been employed there for more than
two decades. And the subject retirement
plan was consistent with the Labor Code.
Issue
1. Whether or not UNIPROM has a
bona fide retirement plan.
2. Whether or not petitioner was validly
retired pursuant thereto.
Held
The Supreme Court reversed and set aside
the decision of the Court of Appeals holding
that retirement is the result of a bilateral act
of the parties, a voluntary agreement
between the employer and the employee
whereby the latter, after reaching a certain
age, agrees to sever his or her employment
with the former.
1. Yes, UNIPROM had a bona fide
retirement plan. Article 287 of the Labor
Code, as amended by R.A 7641, pegs the
age for compulsory retirement at 65 years
old, while the minimum age for optional
retirement is set at 60 years. However, an
employer is free to impose a retirement age
earlier than the foregoing mandates. This
has been upheld in numerous cases as a
valid exercise of management prerogative.
In this case, petitioner was retired by
UNIPROM at the age of 47, after having
Page | clxviii
served the company for 22 years, pursuant to
the company’s retirement plan, which
provides that employees who have rendered
at least 20 years of service can be retired at
the option of the company. Respondent’s
retirement plan can be expediently stamped
with validity and justified under the all-
encompassing phrase “management
prerogative”.
2. No, petitioner was not validly retired.
Jurisprudence has upheld that it is axiomatic
that a retirement plan giving the employer
the option to retire its employees below the
ages provided by law must be assented to
and accepted by the latter, otherwise its
adhesive imposition will amount to a
deprivation of property without due process.
In decided cases, the retirement plans were
either embodied in the CBA, or established
after consultations and negotiations with the
employees’ bargaining representative. The
consent of the employees to be retired even
before the statutory retirement age of 65
years was thus clear and unequivocal.
Acceptance by the employees of an early
retirement age must be explicit, voluntary,
free and uncompelled.
____________________________________
5. Radio Mindanao Network Inc, et al.,
vs. Ybarola, Jr. et al., G.R. No. 198662,
September 12, 2012
Facts
Respondents Domingo Z. Ybarola, Jr. and
Alfonso E. Rivera, Jr. were hired on June
15, 1977 and June 1, 1983, respectively, by
Radio Mindanao Network Inc. (RMN). They
eventually became account managers,
soliciting advertisements and servicing
various clients of RMN. On September 15,
2002, the respondents’ services were
terminated as a result of RMN’s
reorganization/restructuring; they were
given their separation pay – P 631,250.00
for Ybarola, and P 481,250.00 for Rivera.
Sometime in December 2002, they executed
release/quitclaim affidavits. Dissatisfied
with their separation pay, the respondents
filed separate complaints (which were later
consolidated) against RMN and its
President, Eric S. Canoy, for illegal
dismissal with several money claims,
including attorney’s fees. The respondents
argued that the release/quitclaim they
executed should not be a bar to the recovery
of the full benefits due them; while they
admitted that they signed release documents,
they did so due to dire necessity. On July 18,
2007, Labor Arbiter Patricio Libo-on
dismissed the illegal dismissal complaint,
but ordered the payment of additional
separation pay to the respondents. The labor
arbiter adjusted the separation pay award
based on the respondents’ Certificates of
Compensation Payment/Tax Withheld. On
appeal by the petitioners to the National
Labor Relations Commission (NLRC), it
ruled that the withholding tax certificate
cannot be the basis of the computation of the
respondents’ separation pay as the tax
document included the respondents’ cost-of-
living allowance and commissions; as a
general rule, commissions cannot be
included in the base figure for the
computation of the separation pay because
they have to be earned by actual market
transactions attributable to the respondents,
as held by the Court in Soriano v. NLRC7
and San Miguel Jeepney Service v. NLRC.
From the NLRC, the respondents sought
relief from the CA through a petition for
certiorari under Rule 65 of the Rules of
Court. In its decision of February 17, 2011,
the CA granted the petition and reinstated
the labor arbiter’s separation pay award.
Page | clxix
Hence, this petition for motion for
reconsideration.
Issue
Whether or not the CA committed reversible
error in : (1) failing to declare that Canoy is
not personally liable in the present case; (2)
disregarding the rule laid down in Talam v.
National Labor Relations Commission on
the proper appreciation of quitclaims; and
(3) disregarding prevailing jurisprudence
which places on the respondents the burden
of proving that their commissions were
earned through actual market transactions
attributable to them.
Held
The motion for reconsideration is
unmeritorious. The motion raises
substantially the same arguments presented
in the petition. The petitioner’s contention
that respondent’s commissions are profit-
sharing payments which do not form part of
their salaries is untenable. That the salary
structure of the respondents was such that
they only received a minimal amount as
guaranteed wage; a greater part of their
income was derived from the commissions
they get from soliciting advertisements;
these advertisements are the "products" they
sell. As the CA aptly noted, this kind of
salary structure does not detract from the
character of the commissions being part of
the salary or wage paid to the employees for
services rendered to the company.
The petitioners’ reliance on our ruling in
Talam v. National Labor Relations
Commission,17 regarding the "proper
appreciation of quitclaims," as they put it, is
misplaced. In this case, as the CA noted, the
separation pay the respondents each
received was deficient by at least P
400,000.00; thus, they were given only half
of the amount they were legally entitled to.
To be sure, a settlement under these terms is
not and cannot be a reasonable one, given
especially the respondents’ length of service
– 25 years for Ybarola and 19 years for
Rivera.
Lastly, the petitioners are estopped from
raising the issue of Canoy's personal
liability. They did not raise it before the
NLRC in their appeal from the labor
arbiter's decision, nor with the CA in their
motion for reconsideration of the appellate
court's judgment.
____________________________________
6. Padillo vs. Rural Bank of Nabunturan
Inc. G.r. No. 199338, Jan. 21, 2013
Facts
Petitioner, the late Eleazar Padillo (Padillo),
was employed by respondent Rural Bank of
Nabunturan, Inc. (Bank) as its SA
Bookkeeper. Due to liquidity problems, the
Bank took out retirement/insurance plans
with Philam Life for all its employees in
anticipation of its possible closure and the
concomitant severance of its personnel. In
this regard, the Bank procured Philam Life
Plan in favor of Padillo for a benefit amount
of P100,000.00 and which was set to mature
on July 11, 2009. However, on 2004, Bank's
finances improved and eventually, its
liquidity was regained.
Page | clxx
On 2007 Padillo suffered a mild stroke due
to hypertension which consequently
impaired his ability to effectively pursue his
work. Not having received his claimed
retirement benefits, Padillo filed with the
NLRC Regional Arbitration of Davao City a
complaint for the recovery of unpaid
retirement benefits. He asserted, among
others, that the Bank had adopted a policy of
granting its aging employees early
retirement packages, pointing out that one of
his co-employees, Nenita Lusan (Lusan),
was accorded retirement benefits in the
amount of P348,672.72 10 when she retired
at the age of only fifty-three. The Bank and
respondents countered that the claim of
Padillo for retirement benefits was not
favorably acted upon for lack of any basis to
grant the same.
The Labor Arbiter dismissed Padillo's
complaint but directed the Bank to pay him
the amount of P100,000.00 as financial
assistance, treated as an advance from the
amounts receivable under the Philam Life
Plan. NLRC's Fifth Division reversed and
set aside the LA's ruling and ordered
respondents to pay Padillo the amount of
P164,903.70 as separation pay, on top of the
P100,000.00 Philam Life Plan benefit. On
appeal, the CA reinstated the LA’s decision
but with modification. Hence this petition.
Issue
Whether or not Padillo is entitled to receive
any retirement benefits as provided for
under the Labor Code.
Held
No, Padillo is not qualified for any
retirement benefits.
In particular, Article 300 of the Labor Code
as amended by Republic Act Nos. 7641 and
8558 partly provides:
Art. 300.  Retirement. — Any
employee may be retired upon reaching
the retirement age established in the
collective bargaining agreement or other
applicable employment contract.
In case of retirement, the employee shall
be entitled to receive such retirement
benefits as he may have earned under
existing laws and any collective
bargaining agreement and other
agreements: Provided, however, that an
employee's retirement benefits under any
collective bargaining and other
agreements shall not be less than those
provided herein.
In the absence of a retirement
plan or agreement providing
for retirement benefits of
employees in the establishment,
an employee upon reaching the
age of sixty (60) years or more,
but not beyond sixty-five (65)
years which is hereby declared
the compulsory retirement age,
who has served at least five (5)
years in the said
establishment, may retire and
shall be entitled to retirement
pay equivalent to at least one-
half (1/2) month salary for every
year of service, a fraction of at
Page | clxxi
 least six (6) months being Lavandera, GR No. 177845, August 20,
considered as one whole year. 2014

Unless the parties provide for Facts

broader inclusions, the term one
half (1/2) month salary shall
Filipinas was employed by petitioner Grace
mean fifteen (15) days plus one-
Christian High School (GCHS) as high
twelfth (1/12) of the 13th month
school teacher since June 1977, with a
pay and the cash equivalent of
monthly salary of 18,662.00 as of May 31,
not more than five (5) days of
2001.
service incentive leaves.

On August 30, 2001, Filipinas filed a

In this case, it is undisputed that
complaint for illegal (constructive)
there exists no retirement plan,
dismissal, non-payment of service incentive
collective bargaining agreement or
leave (SIL) pay, separation pay, service
any other equivalent contract
allowance, damages, and attorney’s fees
between the parties which set out the
against GCHS and/or its principal, Dr.
terms and condition for the
James Tan. She alleged that on May 11,
retirement of employees, with the
2001, she was informed that her services
sole exception of the Philam Life
were to be terminated effective May 31,
Plan which premiums had already
2001, pursuant to GCHS’ retirement plan
been paid by the Bank.
which gives the school the option to retire a
teacher who has rendered at least 20 years of
All told, in the absence of any service, regardless of age, with a retirement
applicable contract or any evolved pay of one-half (½) month for every year of
company policy, Padillo should have service. At that time, Filipinas was only 58
met the age and tenure requirements years old and still physically fit to work. She
set forth under Article 300 of the pleaded with GCHS to allow her to continue
Labor Code to be entitled to the teaching but her services were terminated,
retirement benefits provided therein. contrary to the provisions of Republic Act
Unfortunately, while Padillo was No. (RA) 7641, otherwise known as the
able to comply with the five (5) year “Retirement Pay Law.”
tenure requirement — as he served
for twenty-nine (29) years — he,
The Labor Arbiter dismissed the illegal
however, fell short with respect to
dismissal case but found the retirement
the sixty (60) year age requirement
benefits payable under GCHS plan to be
given that he was only fifty-five (55)
deficient. NLRC reversed LA’s award and
years old when he retired. Therefore,
held that retirement pay should be computed
without prejudice to the proceeds
based on her monthly salary at the time of
due under the Philam Life Plan,
her retirement. CA modified NLRC’s
petitioners' claim for retirement
decision and ruled that the computation of
benefits must be denied.
“one-half month salary” by equating it
to”22.5 days”.
____________________________________
7. Grace Christian High School vs.

Page | clxxii

Issue
Whether or not the multiplier “22.5 days” is
to be used in computing the retirement pay
differentials of Filipinas.
Held
Yes. RA 7641, which was enacted on
December 9, 1992, amended Article 287 of
the Labor Code, providing for the rules on
retirement pay to qualified private sector
employees in the absence of any retirement
plan in the establishment. The said law
states that “an employee’s retirement
benefits under any collective bargaining
agreement (CBA) and other agreements
shall not be less than those provided” under
the same – that is, at least one-half (1/2)
month salary for every year of service, a
fraction of at least six (6) months being
considered as one whole year – and that
“unless the parties provide for broader
inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-
twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5)
days of service incentive leaves.”
Applicability of the 1/2 month salary
provision
1. There is no CBA or other applicable
agreement providing for retirement benefits
to employees, or
2. There is a CBA or other applicable
agreement providing for retirement benefits
but it is below the requirement set by law.
Verily, the determining factor in choosing
which retirement scheme to apply is still
superiority in terms of benefits provided.
In the present case, GCHS has a retirement
plan for its faculty and non-faculty
members, which gives it the option to retire
a teacher who has rendered at least 20 years
of service, regardless of age, with a
retirement pay of one-half (1/2) month for
every year of service. Considering, however,
that GCHS computed Filipinas’ retirement
pay without including one-twelfth (1/12) of
her 13th month pay and the cash equivalent
of her five (5) days SIL, both the NLRC and
the CA correctly ruled that Filipinas’
retirement benefits should be computed in
accordance with Article 287 of the Labor
Code, as amended by RA 7641, being the
more beneficent retirement scheme. They
differ, however, in the resulting benefit
differentials due to divergent interpretations
of the term “one-half (1/2) month salary” as
used under the law.
Moreover, the Court held that the award of
legal interest at the rate of 6% per annum on
the amount of P68,150.00 representing the
retirement pay differentials due Filipinas
should be reckoned from the rendition of the
LA’s Decision on March 26, 2002 and not
from the filing of the illegal dismissal
complaint.
____________________________________
8. Goodyear Philippines Inc. vs. Angus,
GR No. 185449, November 12, 2015
Facts
Page | clxxiii
On November 19, 1966, Marina was
employed by Goodyear on November 19,
1966 as the secretary to the Manager of
Quality and Technology.
Goodyear experienced economic reversals.
To continue its operations, it resorted to
retrenchment.
On September 18, 2001, Marina received a
letter from Remegio Ramos, HR Director,
stating that management considered her
position redundant and no longer necessary
and is to be abolished on the same day, with
her services to be terminated after a month.
Per company practice, the company only
granted her an early retirement benefit.
Marina claims that she is entitled to
separation pay in addition to retirement
benefits.
Goodyear points to a provision in their CBA
stating that the availment of retirement
benefits therein shall exclude entitlement to
any separation pay, termination pay,
redundancy pay, retrenchment pay, or any
other severance pay.
The parties finally agreed that an employee
shall be entitled to the higher of either
benefit. However, Marina later contested
this.
Issue
Whether or not Marina is entitled to both
retirement benefits and separation pay.
Held
Labor Law; Retirement Benefits; Separation
Pay; Retirement benefits and separation pay
are not mutually exclusive.
—It is worthy to mention at this point that
retirement benefits and separation pay are
not mutually exclusive. Retirement benefits
are a form of reward for an employee’s
loyalty and service to an employer and are
earned under existing laws, CBAs,
employment contracts and company
policies. On the other hand, separation pay
is that amount which an employee receives
at the time of his severance from
employment, designed to provide the
employee with the wherewithal during the
period that he is looking for another
employment and is recoverable only in
instances enumerated under Articles 283 and
284 of the Labor Code or in illegal dismissal
cases when reinstatement is not feasible. In
the case at bar, Article 283 clearly entitles
Angus to separation pay apart from the
retirement benefits she received from
petitioners.
____________________________________
9. Banco De Oro Unibank
vs.Sagaysay,GR No. 214961, Sept 16, 2015
Facts
On May 16, 2006, Guillermo Sagasyay was
hired by Banco De Oro (BDO) as Senior
Accounting Assistant as a result of a merger
with united Overseas Bank with BDO as the
Page | clxxiv
surviving bank. Guillermo was employed in
UOB for two years and in Metrobank for
twenty-eight (28) years. On January 8, 2010,
BDO informed Sagaysay that he will be
formally retired on September 1, 2010
pursuant to the company’s retirement plan
which mandates its retirement age at sixty
(60) years old. Since he had an outstanding
loan and his children were still in college,
Sagaysay requested that his services be
extended up to May 16, 2011 so that he
could render at least five (5) years of
employment which would consequently
entitle him to 50% of his basic pay for every
year of service upon his retirement.
BDO did not grant his wishes. As of his last
day of work, he was earning a monthly
salary of P28,048.00. Sagaysay signed a
Release, Waiver and Quitclaim for an in
consideration of P98,376.14. The quitclaim
stated that in consideration of the amount
given to him, he released and discharged the
bank, its affiliates and subsidiaries from any
action, suit, claim, or demand in connection
with his employment. Sagaysay filed a
complaint for illegal dismissal with
reinstatement and payment of backwages,
moral damages, exemplary damages, and
attorney’s fee against BDO before the Labor
Arbiter. He claimed that his family suffered
damages amounting to P2,225,403.00, the
amount which he would have received if he
was made to retire at the age of sixty-five
(65). BDO on its part said that he was
already paid the amount of P98,376.14 and
stressed that Sagaysay was not dismissed but
retired from service. The Labor Arbiter (LA)
stressed that Sagaysay was illegally
dismissed and that he was forced to avail of
an optional retirement age of sixty (60)
which was contrary to the provisions of
Article 287 of the Labor Code. In addition,
the LA said that he did not freely assent to
the retirement plan and he was only made to
sign a quitclaim in exchange for a small
consideration. BDO appealed to the NLRC
arguing that Sagaysay freely assented to its
retirement plan. The NLRC reversed the
ruling of the LA and explained that BDO ’s
retirement plan was effective as early as
June 1, 1994. When Sagaysay was employed
on May 16, 2006, the retirement plan was
already in full force and effect. NLRC
concluded that when Sagaysay accepted his
employment with BDO, he assented to the
provisions of the retirement plan. NLRC
found it difficult to believe that Sagaysay
did not familiarize the retirement policy of
the bank, considering that he has previously
worked for two other banks. The Court of
Appeals reversed the ruling of NLRC,
saying that there was no negotiation between
BDO and Sagaysay and therefore there was
no mutual agreement. It stated that Sagaysay
was forced to participate in the retirement
plan.
Issue
Whether or not the June 1, 1994 retirement
plan is valid and effective against Sagaysay.
Held
Yes. According to Article 287 of the Labor
Code, The provisions will only be applied in
absence of a retirement plan or agreement
providing for retirement benefits of
employees in the establishment. The Labor
Code permits the employers and employees
to fix applicable retirement age, provided
that the benefits under the Collective
Bargaining Agreement or any other
agreements shall not be less than those
provided by the Code. In the previous Cases
decided by the Court, the retirement plans
were adopted after the employees were hired
by their employer. Therefore they may
contest to the validity of the same unless
they consented to its implementation.
However, in the present case, the retirement
plan came before the hiring of Sagaysay.
Page | clxxv
Sagaysay was sufficiently informed of the
retirement plan. It has been twelve (12)
years from the inception of the retirement
plan, which was prior to the hiring of
Sagaysay, up to the present, no employee
questioned the retirement plan. Further, by
accepting the employment offer of BDO,
Sagaysay was deemed to have assented to
all existing rules, regulations and policy of
the bank, including the retirement plan.
BDO also issued a memorandum on June 1,
2009 regarding the implementation of its
retirement program, reiterating that the
normal retirement date was the first day of
the month following the employees sixtieth
(60th) birthday, this memorandum was
addressed to all employees and officers.
Having knowledge of the retirement plant,
he had every opportunity to question the
same, but he did not. Lastly, the most
convincing detail that Sagaysay assented to
the retirement plan was his e-mails to the
bank. In those e-mails, he did not contest to
the validity of the retirement plan and even
recognized its provisions, he even requested
that his services be extended. The Cercado
Case, which was heavily relied upon by the
Court of Appeals is inapplicable. In the
Cercado case, the petitioner was employed
two years before the adoption of the
employer ’s retirement plan, logically, her
employment contract did not include the
retirement plan. The Court in the Cercado
case held that because of the automatic
application of the retirement plan to the
current employees without they voluntary
consent, the employee was forced to
participate. Further, in the case relied upon
by the CA, the employee refused the early
retirement package provided by the
employer, from the beginning she was
adamant that she did not consent to the
retirement plan of her employer. In the case
at bar, Sagaysay signed a quitclaim and
received at amount of P98,376.14. Given
that Sagaysay is a seasoned banker,
spending 34 years of his life working in
different banking establishments, it cannot
be said that he was naive in dealing with his
employer and that he failed to exercise his
free and voluntary will when faced  with the
documents relating to his retirement.
____________________________________
10. Perez vs. Camparts Industries Inc.
GR No. 197557, October 5, 2016
Facts
Perez after many years of working with
Comparts Industries Inc. (CII) was
eventually appointed as Marketing Manager
and she held such position until the date of
her resignation. CII has a retirement
program for its managerial employees or
officers. Included therein are provisions
relating to optional or early retirement and
optional retirement benefits. Prior to her
resignation, she manifested to CII her
intention to avail of the optional retirement
program since she was already qualified to
retire under it. Her application was denied.
She again applied for such program but still
it was denied. CII justified its denial that
under the Retirement Plan, it has the option
to grant or deny her application for optional
retirement and considering that it is
experiencing financial crisis hence it has no
choice but to dismiss her application.
Perez then again asked for reconsideration
and requested that she will be included in
the retrenchment that CII was planning to
implement. Still, her application was denied
and she was not included in the
retrenchment. When Perez needs to
immediately go to abroad, she applied again
for the optional retirement program and she
Page | clxxvi
also claimed the benefits concomitant to it
as provided by the Retirement Plan. In
response, she was informed by CII that it
could only give her
Php100,000.00 as gratuity for her twenty
years of service as this was the only amount
it could afford. She refused to accept it.
She thereafter received a letter of acceptance
for her resignation letter and stated therein
the denial of her application for the optional
retirement program on the reasons that: 1)
CII has no policy or rules on optional
retirement benefits; 2) It has been so
affected by the global crisis and has been
suffering financial losses; 3) there is no
provision in the Labor Code which grants
separation pay to voluntarily resigning
employees; and 4) she cannot invoke the
provisions of the Collective Bargaining
Agreement (CBA) on optional retirement
benefits because the CBA is for rank-and-
file employees.
Perez then filed a complaint before NLRC
Regional Arbitration Branch praying for
payment of separation pay under all
circumstances of severance of employment,
including separation pay due to a
retrenchment. NLRC-RAB favored her
contending that she is entitled to the optional
retirement benefits. On appeal, NLRC
reverse and set aside the said ruling, it held
that CII has the option to allow or disallow
the application of a member-employee for
optional retirement. On petition for
certiorari, CA affirmed the NLRC’s
decision.
Issue
WON Perez for having rendered service to
CII is entitled to the benefits under the
optional retirement program.
Held
No. She is not entitled to benefits under the
optional retirement program of CII.
First, termination of employment by the
employee, as in this instance, does not
entitle the employee to separation pay and
that such benefit is recoverable only in the
instances enumerated under Article 283 and
284 of the Labor Code or in illegal dismissal
cases where reinstatement is not feasible.
Second, Perez being a managerial employee
is covered by CII’s Retirement plan however
being a contract between the employer and
employee, it is not enough that an employee
of CII who wants to optionally retire meets
the conditions for optional retirement, CII
has to give its consent for the optional
retirement to operate. In this case, CII had
denied Perez’s application. Moreover,
Perez's unilateral act of retiring without the
consent of CII does not bind the latter with
the provisions of the Retirement Plan.
Therefore, CII is not liable to give [Perez]
the optional retirement benefits provided
therein.
Perez contends that as she had already
completed the minimum number of years to
avail of the optional retirement, she has
acquired a vested right to her optional
retirement benefits. Such contention is
misplaced. She has not acquired a vested
right to optional retirement benefits by the
mere fact of her rendering at least fifteen
(15) years of credited service for there is a
provision in the herein subject Retirement
Plan a condition for the allowance and grant
Page | clxxvii
of optional retirement benefits that is the
consent of the Company. And Perez cannot
disregard the stipulated condition.
Perez alternatively argues that she is entitled
to payment of optional/early retirement
benefits based on company practice. She
presented evidence that four (4) of the
employees were approved optional
retirement benefits based on the CBA prior
to the effectivity of the Retirement Plan in
1999, and four (4) other employees actually
received separation pay caused by their
retrenchment. Such contention however
defeats her claim, hence, these isolated and
random payments to managerial employees
of either optional retirement benefits under
the CBA or separation pay due to
retrenchment cannot be deemed as company
practice that would render the withholding
of the benefit to Perez as a diminution of
benefits.
As to her insistence that other managerial
employees had received separation pay from
a retrenchment program of CII which were
equivalent to retirement benefits.
Retrenchment is to prevent losses is an
authorized cause for termination by the
employer; it is a management prerogative to
reduce personnel usually due to poor
financial returns so as to cut down on costs
of operations in terms of salaries and wages
to prevent bankruptcy of the company. It is
not an option of an employee in substitution
for a disapproved early retirement. Thus, she
is not entitled to separation pay due to a
retrenchment of personnel.
____________________________________
11. Dela Salle Araneta University vs.
Bernardo, GR No. 190809, February 13,
2017
Facts
On February 26, 2004, Bernardo filed a
complaint against DLS-AU and its
owner/manager, Dr. Oscar Bautista (Dr.
Bautista), for the payment of retirement
benefits. Bernardo alleged that he started
working as a part-time professional lecturer
at DLS-AU on June 1, 1974 for an hourly
rate of P20.00. On November 8, 2003, DLS-
AU informed Bernardo through a telephone
call that he could not teach at the school
anymore as the school was implementing the
retirement age limit for its faculty members.
As he was already 75 years old, Bernardo
had no choice but to retire. At the time of his
retirement, Bernardo was being paid
P246.50 per hour.
Bernardo immediately sought advice from
the Department of Labor and Employment
(DOLE) regarding his entitlement to
retirement benefits after 27 years of
employment. In letters dated January 20,
2004 and February 3, 2004, the DOLE,
through its Public Assistance Center and
Legal Service Office, opined that Bernardo
was entitled to receive benefits under
Republic Act No. 7641, otherwise known as
the "New Retirement Law," and its
Implementing Rules and Regulations.
However, Dr. Bautista, in a letter dated
February 12, 2004, stated that Bernardo was
not entitled to any kind of separation pay or
benefits. Dr. Bautista explained to Bernardo
that as mandated by the DLS-AU's policy
and Collective Bargaining Agreement
(CBA), only full-time permanent faculty of
DLS-AU for at least five years immediately
preceeding the termination of their
employment could avail themselves of the
postemployment benefits. As part-time
Page | clxxviii
faculty member, Bernardo did not acquire
permanent employment.
On December 13, 2004, the Labor Arbiter
rendered its Decision dismissing Bernardo's
complaint on the ground of prescription. The
Labor Arbiter stated that assuming Bernardo
were indeed entitled to receive his
retirement pay/benefits, he should have
claimed the same ten (10) years ago upon
reaching the age of sixty-five (65). Article
291 of the Labor Code states that money
claims arising from employer-employee
relationships shall be brought within three
(3) years from the time the cause of action
accrued. The NLRC, in its Decision dated
June 30, 2008, reversed the Labor Arbiter's
ruling and found that Bernardo timely filed
his complaint for retirement benefits.
Bernardo's cause of action for payment of
his retirement benefits accrued only on
November 8, 2003, when he was informed
by DLS-AU that his contract would no
longer be renewed and he was deemed
separated from employment. Upon appeal,
the Court of Appeals affirmed the NLRC
decision.
Issue
(1) Whether or not part-time employees,
such as petitioner, are entitled to retirement
benefits.
(2) Whether or not the money claim has
prescribed.
Held
(1) Yes. As a part-time employee with
fixed-term employment, Bernardo is
entitled to retirement benefits.
Through a Labor Advisory dated
October 24, 1996, then Secretary of
Labor, and later Supreme Court
Justice, Leonardo A. Quisumbing,
provided Guidelines for the Effective
Implementation of Republic Act No.
7641, The Retirement Pay Law,
addressed to all employers in the
private sector.
A. COVERAGE
RA 7641 or the Retirement Pay
Law shall apply to all employees
in the private sector, regardless
of their position, designation or
status and irrespective of the
method by which their wages are
paid. They shall include part-
time employees, employees of
service and other job contractors
and domestic helpers or persons
in the personal service of
another.
(2) No. Bernardo's employment was
extended beyond the compulsory
retirement age and the cause of action
for his retirement benefits accrued only
upon the termination of his extended
employment with DLSAU.
Page | clxxix
____________________________________
12. Catotocan vs. Lourdes School of
Quezon City, GR No. 213486, April 26,
2017, citing 1996 Pantranco North
Express
Facts
In 1971, Editha Catotocan started her
employment in Lourdes School of Quezon
City as music teacher with a salary of
P30,081. By school year 2005-2006, she had
already served for 35 years. The school has
a retirement plan providing for retirement at
60 years old, or separation pay depending on
the number of years of service. In 2003, the
school issued an administrative order for all
employees which is an addendum on its
retirement policy. It is stipulated in the order
that the employee may apply for retirement
or be retired by the school when he/she
reaches the age of 60 years or when he/she
completes 30 years of service whichever
comes first.
Catotocan and 7 other co-employees wrote
to the Provincial Minister, Provincial
Council on Education of LSQC and
appealed for the deferment of the
implementation of the addendum to the
retirement plan particularly the provision
that normal retirement will commence after
completing “30 years of service to the
school”. They likewise requested the priest
of the Capuchin order who were running the
school to allow them to retire when they
have reached 60 years of age instead so they
can “fully enjoy the fruits” of their labor. In
a reply, LSQC Provincial Minister and
Chairman of the Board of the Board of
trustees Fr. De los Santos informed them
that the contested retirement age was the
same as provided in the retirement plans of
other schools. In another answer for the
second letter sent by Catotocan and
company, Fr. De los Santos informed that it
would be best if they just wait for the final
determination of a pending case before the
arbitration branch of the NLRC.
Catotocan and her co-employees then sought
the intervention of DOLE-NCR. There was
a series of meetings conducted but on the
later scheduled meeting, school officials no
longer attended. Subsequently, through a
letter, Fr. Acuin notified Catotocan that she
will be retired by the end of the school year
for having served at least 30 years with
accompanying computation of her
retirement pay. Catotocan expressed her
objections in the dialogue with the school
officials. She was however still retired.
Catotocan was then rehired for two school
years as a guidance counselor. When she
reapplied for the third time, the school
however no longer considered her
application for the position.
Catotocan then filed before the labor arbiter
a complaint for illegal dismissal and
monetary claims. The labor arbiter
dismissed Catotocan’s complaint for lack of
merit. On appeal, the NLRC affirmed the
labor arbitrator’s decision. Catotocan had
performed all the acts that a retired
employee would do after retirement under
the new school policy. These were voluntary
Page | clxxx
acts and she cannot be considered to have
been forced to retire or to have been illegally
dismissed. Her motion for reconsideration
was likewise dismissed. Dissatisfied, she
filed a petition for certiorari before the CA.
The CA dismissed the petition for lack of
merit. The CA agreed with the NLRC that
while Catotocan was initially opposed to the
idea of her retirement at an age below 60
years her subsequent actions however, after
retirement are tantamount to consent to the
addendum. She then raised the petition to
the Supreme Court.
Issue
Whether or not Catotocan consented to the
addendum of the retirement policy issued by
LSQC.
Held
Yes. Catotocan consented to the addendum
of the retirement policy issued by LSQC.
Retirement is the result of a bilateral act of
the parties, a voluntary agreement between
the employer and the employee whereby the
latter, after reaching a certain age, agrees to
sever his or her employment with the
former. Under Article 287 of the Labor
Code, the retirement age is primarily
determined by the existing agreement or
employment contract. Only in the absence of
such agreement shall the retirement age
fixed by law which provide for a
compulsory retirement age at 65 years,
while the minimum age for optional
retirement is set at 60 years. Jurisprudence is
replete with cases discussing the employer’s
prerogative to lower the compulsory
retirement age subject to the consent of its
employees. The court cited the case of
Pantranco North Express Inc. v. NLRC
wherein the court upheld the retirement of
the private respondent therein pursuant to a
CBA allowing the employer to compulsorily
retire employees upon completing 25 years
of service to the company. Interpreting
Article 287, the court held that the Labor
Code permits the employers and employees
to fix the applicable retirement age lower
than 60 years of age. Retirement plans, as in
LSQC’s retirement plan, allowing
employers to retire employees who have not
yet reached the compulsory retirement age
of 65 years are not per se repugnant to the
constitutional guarantee of security of
tenure. By its express language, the Labor
Code permits employers and employees to
fix the applicable retirement age at 60 years
or below, provided that the employees’
employment benefits under any CBA and
other agreements shall not be less than those
provided therein. Indeed, acceptance by the
employee of an early retirement age option
must be explicit, voluntary, free, and
uncompelled. The prerogative by the
management however, must be exercised
pursuant to a mutually instituted early
retirement plan. The requirement of due
process only requires that notice of the
employer’s decision to retire an employee
must be given to the employee. It is not
required that the employer must first consult
the employee prior to retiring him.
Page | clxxxi
While it may be true that Catotocan was
initially opposed to the idea of her
retirement at an age below 60 years, it must
be stressed that Catotocan’s subsequent
actions after her “retirement” are actually
tantamount to her consent to the addendum
to the LSQC’s retirement policy of retiring
her from service upon serving the school for
at least 30 continuous years. To wit: (1) after
being notified that she was being retired
from service by the school, she opened a
savings account with BDO, the trustee bank;
(2) she accepted all the proceeds of her
retirement package; (3) upon acceptance of
the retirement benefits, there was no
notation that she was accepting the
retirement benefits under protest or without
prejudice to the finding of an illegal
dismissal case. Looking into the exchange of
communications between the school
administrators and Catotocan, although the
latter express her objection to the new
retirement policy years earlier, Catotocan
eventually assented thereto when doing the
abovementioned acts. The most telling detail
indicative of Catotocan’s voluntary assent to
LSQC’s retirement policy was her
correspondence with the latter following her
“retirement”. In her letter, Catotocan availed
of the privilege of being rehired after
retirement by virtue of the “Contractual
Employment of Retired Employees”
provision of the LSQC’s retirement policy
that rehiring was exclusive only for those
employees who have availed of the
retirement benefits or who has been retired
by the school but who has not yet reached
65 years of age. Since Catotocan has availed
of this contractual employment which is
only available to those qualified retirees for
three consecutive years following her
retirement, she can no longer dispute that
she has indeed legitimately retired from
employment and was not illegally dismissed.
____________________________________
13. Philippine Airlines vs. Hassaram, GR.
No. 217730, June 5, 2017
Facts
Respondent Arjan T. Hassaram (Hassaram),
a former pilot of respondent Philippine
Airlines, filed a complaint against the latter
for illegal dismissal and the payment of
retirement benefits, damages, and attorney's
fees. He claimed that he had applied for
retirement from PAL in August 2000 after
rendering 24 years of service, but that his
application was denied. Instead, PAL
informed him that he had lost his
employment in the company as of 9 June
1998, in view of his failure to comply with
the Return to Work Order issued by the
Secretary of Labor against members of the
Airline Pilots Association of the Philippines
(ALPAP) on 7 June 1998.
Hassaram argued before the Labor Arbiter
that he was not covered by the Secretary's
Return to Work Order; hence, PAL had no
valid ground for his dismissal. He asserted
that on 9 June 1998, he was already on his
way to Taipei to report for work at Eva Air,
pursuant to a four-year contract approved by
PAL itself. Petitioner further claimed that
his arrangement with PAL allowed him to
go on leave without pay while working for
Eva Air, with the right to accrue seniority
and retire from PAL during the period of his
leave.
Meanwhile, PAL contended that (a) the LA
had no jurisdiction over the case, which was
a mere off-shoot of ALPAP's strike, a matter
over which the Secretary of Labor had
already assumed jurisdiction; (b) the
Complaint should be considered barred by
res judicata, forum shopping, and
prescription; (c) the case should be
Page | clxxxii
suspended while PAL was under
receivership; and (d) if at all, Hassaram was
entitled only to retirement benefits of P5,000
for every year of service pursuant to the
Collective Bargaining Agreement (CBA)
between PAL and ALPAP.
The LA awarded retirement benefits and
attorney's fees to Hassaram and explained
that Hassaram did not defy the Return to
Work Order, as he was in fact already on
leave when the order was implemented. As
to the computation of benefits, the LA ruled
that Article 287 of the Labor Code should be
applied, since the statute provided better
benefits than the PAL-ALPAP CBA.
Hassaram's other claims, on the other hand,
were dismissed.
PAL appealed the LA’s decision to the
NLRC. It contended that Hassaram was not
entitled to retirement benefits, because he
had earlier been terminated from
employment for defying the Return to Work
Order. The NLRC initially affirmed the LA's
Decision to award retirement benefits to
Hassaram under Article 287 of the Labor
Code. However, in resolving PAL’s motion
for reconsideration, it reversed its earlier
Decision and set aside the ruling of the LA
on account of Hassaram's receipt of
retirement benefits under the Plan. This was
after PAL cited for the first time Hassaram's
purported receipt of retirement benefits in
the amount of P4,456,817.75 pursuant to the
Plan.
Respondent Hassaram then elevated the
matter to the CA via a Petition for
Certiorari. While admitting that he received
P4,456,817.75 under the Plan, he maintained
that his receipt of that sum did not preclude
him from claiming retirement benefits from
PAL, since that amount represented only a
return of his share in a distinct and separate
provident fund established for PAL pilots.
Consequently, the CA reversed the NLRC
and reinstated the decision of the LA. CA
declared that the funds received under the
Plan were not the retirement benefits
contemplated by law. Hence, it ruled that
Hassaram was still entitled to receive
retirement benefits in the amount of
P2,111,984.60 pursuant to Article 287 of the
Labor Code.
Hence, this petition filed by PAL. PAL no
longer questions the entitlement of
Hassaram to retirement benefits. Its only
contention is that the CA erred in declaring
that his benefits should be computed on the
basis of Section 287 of the Labor Code.
PAL asserts, instead, that its own company
retirement plans — both the PAL Pilots'
Retirement Benefit Plan and the 1967 PAL-
ALPAP Retirement Plan — should have
been applied to determine Hassaram's
retirement benefits.
Issues
1. Whether the amount received by
Hassaram under the Plan should be deemed
part of his retirement pay
2. Whether Hassaram is entitled to receive
retirement benefits under Article 287 of the
Labor Code
Held
1) YES, the amount received by
Hassaram under the Plan should be
deemed part of his retirement pay.
PAL avers that this amount formed part of
Hassaram's retirement pay, because the Plan
was a retirement fund wholly financed by
the company. Hassaram, on the other hand,
insists that the amount he received from the
Plan represented only a return of his share in
Page | clxxxiii
a distinct and separate provident fund
established for PAL pilots.
It is clear from the provisions of the Plan
that it is the company that contributes to a
"retirement fund" for the account of the
pilots. These contributions comprise the
benefits received by the latter upon
retirement, separation from service, or
disability.
Pursuant to the Decisions of the SC in
Elegir v. PAL and PAL v. ALPAP, the
amount received by Hassaram under the
Plan must be considered part of his
retirement pay. Combined with the
retirement benefits under the CBA between
PAL and ALPAP, this scheme would allow
Hassaram to receive superior retirement
benefits, thereby rendering Article 287 of
the Labor Code inapplicable. The amount of
P4,456,817.75 received by Hassaram from
the PAL Plan formed part of his retirement
pay.
2) NO, respondent is not entitled to
receive retirement benefits under
Article 287 of the Labor Code.
Hassaram’s retirement pay should be
computed on the basis of the retirement
plans provided by PAL.
It can be clearly inferred from the language
of the Article 287 that it is applicable only
to a situation where (1) there is no CBA
or other applicable employment contract
providing for retirement benefits for an
employee, or (2) there is a CBA or other
applicable employment contract
providing for retirement benefits for an
employee, but it is below the requirement
set by law.
It is clear from the records that Hassaram is
a member of ALPAP and as such, is entitled
to benefits from both the retirement plans
under the 1967 PAL-ALPAP CBA and the
Plan.
In view of the undisputed fact that Hassaram
has received his benefits under the Plan, he
is now entitled to claim only his remaining
benefits under the CBA,i.e., the amount of
P120,000 (24 years x P5,000) for his 24
years of service to the company.
Petition is GRANTED.
____________________________________
14. Laya vs. Court of Appeals, GR No.
205813, January 10, 2018, En Banc
Facts
Petitioner was appointed by the respondent
Philippine Veterans Bank as the Chief Legal
Counsel with a rank of Vice President in
2001. The terms and conditions of his
appointment include the early compulsory
retirement at the age of 60.
In 2007, respondent informed the petitioner
of his retirement. The latter requested for an
extension for two more years but such was
denied. Petitioner sought the reconsideration
but the bank certified his retirement.
Petitioner filed a complaint for illegal
dismissal against the respondent bank before
the Labor Arbiter. LA however dismissed
the case for lack of merit. Petitioner
appealed to the NLRC which affirmed LA’s
dismissal. The case was elevated to CA.
CA favored the respondent and held that
petitioner’s acceptance of the appointment
means that he conformed to the retirement
program. CA ruled that the retirement plan
Page | clxxxiv
was a valid exercise of respondent’s
management prerogative. CA denied
petitioner’s motion for reconsideration.
Issue
Whether or not the retirement plan is valid
Held
The retirement plan is invalid since
retirement should be the result of the
bilateral act of both parties based on their
voluntary agreement. Citing the case of
Cercado v. Uniprom Inc, the SC reiterated
that acceptance of an early retirement age
option must be explicit, voluntary, free and
uncompelled.
In the case at hand, mere mention of the
retirement plan in the appointment letter did
not sufficiently inform the petitioner about
the details of the retirement program. His
implied knowledge regardless of duration
did not equate that to his voluntary
acceptance of the early retirement age.
Article 302 [287] of the Labor Code
provides that any employee may retire upon
reaching the retirement age established in
the CBA or other applicable contract.
Absence of such agreement, an employee
upon reaching the age of 60 or more but not
more than 65, which is declared as the
compulsory age, and who has rendered at
least 5 years of service may retire and shall
be entitled to retirement pay.
Since petitioner was dismissed because of
the retirement provision that he had not
knowingly and voluntarily agreed thereto,
respondent is guilty of illegal dismissal.
Hence, petitioner is entitled to reinstatement
without loss of seniority rights and other
privileges and to his full backwages under
Article 279 of the Labor Code. However,
since the petitioner’s reinstatement is no
longer feasible because he already reached
the compulsory age of 65 then he should be
granted separation pay.
The SC granted the petition and reversed the
CA’s decision. The respondent was ordered
to pay the backwages, separation pay, and
the costs of the suit.
____________________________________
15. Maria De Leon Transportation Inc., et
al., vs. Macuray, GR No. 214940, June 6,
2018
Facts
Respondent Daniel Macuray filed a
complaint for illegal dismissal against
petitioner Maria De Leon Transportation.
In his position paper, he claimed that in
1991, he was employed as a bus driver by
petitioner Maria De Leon Transportation - a
company engaged in paid public
transportation; that he received a monthly
pay/commission of P20,000; that, in
November 2009, petitioner's dispatcher did
not assign a bus to him, for no apparent
reason; that for a period of one month, he
continually returned to follow up if a bus
Page | clxxxv
had already been assigned to him; that when
he returned to the company premises, the
bus dispatcher informed him that he was
already considered AWOL (absent without
leave); that he went back to follow up his
status for about six months in 2010, but
nobody attended to him; that he was not
given any notice or explanation regarding
his employment status; that he served
petitioner for 18 years; that he considered
himself illegally dismissed; that during this
time, he was already 62 years old, but he
received no benefits for his service; and that
petitioner owed him three months' salary for
the year 2009. Thus, he prayed that he be
awarded backwages, separation pay,
retirement pay, 13th month pay, damages,
attorney's fees, and costs of suit.
Petitioner claimed that respondent was hired
on commission basis, on a "no work, no pay
"and "per travel, per trip" basis; that
respondent was paid an average of
P10,000.00 commission per month without
salary; that, contrary to his claim of illegal
dismissal, respondent permanently
abandoned his employment effective March
31, 2009, after he failed to report for work;
that it received information later on that
respondent was already engaged in driving
his family truck and was seen doing so at
public roads and highways; that respondent's
claim of illegal dismissal was not true, as
there was no dismissal or termination of his
services, and no instructions to do so were
given; that the bus dispatcher from whom
respondent inquired about his status had no
power to terminate or declare him AWOL;
that respondent had not actually approached
management to inquire about his
employment status.
The Labor Arbiter dismissed the case for
lack of merit. Macuray filed a Memorandum
of Appeal to the NLRC. The NLRC issued a
resolution modifying the Labor Arbiter’s
decision by awarding in favor of Macuray
the amount of P50,000 as financial
assistance. The CA rendered the assailed
decision stating that Macuray was illegally
dismissed by petitioner company.
Issue
1) Was respondent Macuray illegally
dismissed?
2) Is Macuray entitled to monetary claims?
Held
1) No, Macuray was not not illegally
dismissed.
Macuray left his work as a bus driver to
work for his family's trucking business.
There is no truth to the allegation that
Macuray was dismissed, actually or
constructively. Macuray claims that the
dispatcher informed him that he was
AWOL; however, a mere bus dispatcher
does not possess the power to fire him from
work — this being a prerogative belonging
to management.
However, it cannot be said that respondent
abandoned his employment. Petitioner itself
admitted that it sanctioned the practice of
Page | clxxxvi
allowing its drivers to take breaks from Retirement Benefits
work in order to afford them the opportunity
to recover from the stresses of driving the
Macuray is entitled to retirement benefits
same long and monotonous bus routes by
which are due to him for the reason that he
accepting jobs elsewhere, as some form of
reached the age of retirement while under
vacation or sabatical, without losing
petitioner's employ. He is entitled to them
productivity and income and to safeguard
considering that he was never dismissed
the interests of the company and its patrons,
from work, either for cause or by resignation
as well as to avoid fatal accidents were the
or abandonment. As far as petitioner is
drivers to be suffered to work under
concerned, he merely went on a company-
continuous stressful conditions occasioned
sanctioned sabbatical. It just so happened
by driving on the same monotonous routes
that during this sabbatical, he reached the
day in and day out. Respondent availed of
retirement age of 60; by this time, he is
petitioner's company practice and unwritten
already 67 years old.
policy — of allowing its bus drivers to take
needed breaks to enable them to recover
from the monotony of driving the same
route for long periods — and obtained work
elsewhere. Applying Article 287 of the Labor Code - In
the absence of a retirement plan or
agreement in Maria De Leon Transportation,
Inc., Macuray is entitled to one month's
salary for every year of service, that is:
2) Since Macuray was not dismissed from
P10,000 (monthly salary) x 18 years (years
work, petitioner is not liable for monetary
of service) = P180,000.
claims except those owed to Macuray by
way of unpaid salary/commission, and
retirement benefits.

Retirement compensation equivalent to one

Unpaid Salaries/Commissions
Petitioner failed to pay respondent three
months' worth, that is, for the period January
to March, 2009 — which, at P10,000.00 per
month — amounts to P30,000.00. Indeed,
this could be one of the reasons why
respondent stopped reporting after March
31, 2009, as he complained of petitioner's
failure to pay his salaries/commissions for
the said period.
month's salary for every year of service is
more equitable and just than the CA's
pronouncement of one-half month's salary
per year of service, which the Court finds
insufficient. This is considering that
petitioner has been paying its drivers
commission equivalent to less than the
minimum wage for the latter's work, and in
Macuray’s case, it has delayed payment of
the latter's compensation for three months.

In sum, respondent Macuray was not

illegally dismissed. However, he is entitled
to (1) P30,000 as unpaid salary/commissions

Page | clxxxvii
for the period January to March 2009 (2)
P180,000 as retirement pay for his 18 years
of service with the company.

Page | clxxxviii
Topic 11: Jurisdiction of the Labor
Arbiter
Topic 12: 2011 NLRC Rules of
Procedure, amended
1. Lockheed Detective & Watchman
Agency, G.R. No. 185918, April 18, 2012
Facts
Petitioner Lockheed entered into a contract
for security services with the University of
the Philippines. On 1998, several guards
assigned to UP filed a complaint for
payment of underpaid wages, 25% overtime
pay, premium pay for rest days and special
holidays, holiday pay, service incentive
leave pay, night shift differentials, 13th
month pay, refund of cash bond, refund of
deductions for the Mutual Benefits Aids
System (MBAS), unpaid wages from
December 16-31, 1998, and attorney's fees.
The Labor Arbiter declared UP, as job
contractor, solidarily liable with Lockheed
Detective and Watchman Agency, Inc for
underpaid wages/salaries, premium pay for
work on rest day and special holiday,
holiday pay, 5 days service incentive leave
pay, 13th month pay for 1998, refund of
cash bond (deducted at P50.00 per month
from January to May 1996, P100.00 per
month from June 1996 and P200.00 from
November 1997), refund of deduction for
MBAS at the rate of P50.00 a month, and
attorney’s fees; in the total amount of
P1,184,763.12. The decision was appealed
but sustained by the NLCR, albeit a few
modifications to the effect that premium pay
for work on rest day and special holiday,
and 5 days service incentive leave pay, are
dismissed but respondent UP is still
solidarily liable with Lockheed in the
payment of the rest of the claims covering
the period of their service contract. The
parties did not appeal the NLRC decision
and the same became final and executory on
October 26, 2002.
UP moved to reconsider the NLRC
resolution. On December 28, 2004, the
NLRC upheld its resolution but with
modification that the satisfaction of the
judgment award in favor of Lockheed will
be only against the funds of UP which are
not identified as public funds.
The NLRC order and resolution having
become final, Lockheed filed a motion for
the issuance of an alias writ of execution.
The same was granted on May 23, 2005.
On July 25, 2005, a Notice of Garnishment
10 was issued to Philippine National Bank
(PNB) UP Diliman Branch for the
satisfaction of the award of P12,142,522.69
(inclusive of execution fee).
On August 16, 2005, UP filed an Urgent
Motion to Quash Garnishment. UP
contended that the funds being subjected to
garnishment at PNB are government/public
funds. However, the execution of the
garnishment was carried out.
UP elevated their case to the court of
appeals. On reconsideration, however, the
CA issued the assailed Amended Decision.
It held that without departing from its
findings that the funds covered in the
savings account sought to be garnished do
not fall within the classification of public
funds, it reconsiders the dismissal of the
petition in light of the ruling in the case of
National Electrification Administration v.
Morales (NEA Case) which mandates that
Page | clxxxix
all money claims against the government
must first be filed with the Commission on
Audit (COA).
Lockheed appealed this decision to the
Supreme Court. Arguing mainly that the
NEA case should not apply and that UP
could be both sued and held liable. And that
the quashal of garnishment sought was moot
because it had already become fait accompli.
Issue
1. Whether or not the NEA Case applies
and the funds be garnished directly
bypassing the COA.
2. Whether or not the previous
garnishment and withdrawal of funds was
fait accompli.
Held
1. YES because like NEA, UP is a juridical
personality separate and distinct from the
government and has the capacity to sue and
be sued. Thus, also like NEA, it cannot
evade execution, and its funds may be
subject to garnishment or levy. However,
before execution may be had, a claim for
payment of the judgment award must first be
filed with the COA. (suability does not
immediately mean liability). However,
before execution may be had, a claim for
payment of the judgment award must first be
filed with the COA. Under Commonwealth
Act No. 327, as amended by Section 26 of
P.D. No. 1445, it is the COA which has
primary jurisdiction to examine, audit and
settle “all debts and claims of any sort” due
from or owing the Government or any of its
subdivisions, agencies and instrumentalities,
including government-owned or controlled
corporations and their subsidiaries. With
respect to money claims arising from the
implementation of Republic Act No. 6758,
their allowance or disallowance is for COA
to decide, subject only to the remedy of
appeal by petition for certiorari to this Court.
A reading of the pertinent Commonwealth
Act provision clearly shows that it does not
make any distinction as to which of the
government subdivisions, agencies and
instrumentalities, including government-
owned or controlled corporations and their
subsidiaries whose debts should be filed
before the COA
2. NO, the previous garnishment cannot be
fait accompli since the garnishment was
erroneously carried out and did not go
through the proper procedure (the filing of a
claim with the COA), UP is entitled to
reimbursement of the garnished funds plus
interest of 6% per annum, to be computed
from the time of judicial demand to be
reckoned from the time UP filed a petition
for certiorari before the CA which occurred
right after the withdrawal of the garnished
funds from PNB.
____________________________________
2. Portillo vs. Rudolf Lietz, Inc. et al.,
G.R. No. 196539, October 10, 2012
Facts
Petitioner Marietta Portillo was an employee
of respondent Rudolf Lietz, Inc. On her
tenth year, she was promoted and thereafter
signed a letter agreement with a Goodwill
Clause. The Clause stipulated that upon
termination of employment, for a period of
Page | cxc
three (3) years thereafter, she shall not
engage directly or indirectly as employee,
manager, proprietor, or solicitor for yourself
or others in a similar or competitive
business. Breach of the clause will make her
liable for liquidated damages in the amount
of 100% of her gross compensation over the
last 12 months.
Portillo resigned three years thereafter. Lietz
Inc. then learned that Portillo had been hired
by Ed Keller Philippines, Limited, which is
purportedly a direct competitor. Meanwhile,
Portillo’s demands from Lietz Inc. for the
payment of her remaining salaries and
commissions went unheeded. Thus, on 14
September 2005, Portillo filed a complaint
with the National Labor Relations
Commission (NLRC) for non-payment of
1½ months’ salary, two (2) months’
commission, 13th month pay, plus moral,
exemplary and actual damages and
attorney’s fees.
Lietz Inc. admitted liability for Portillo’s
money claims in the total amount of
P110,662.16. It raised the defense that
Portillo’s money claims should be offset
against her liability to Lietz Inc. for
liquidated damages for breaching the
Goodwill Clause.
The Labor Arbiter, NLRC and CA all ruled
in favor of petitioner. However, upon
motion for reconsideration, the CA modified
its decision and allowed legal compensation
or set-off of such award of monetary claims
by petitioner’s liability to respondents for
liquidated damages arising from her
violation of the “Goodwill Clause”.
Aggrieved, petitioner now comes to Court.
Issue
Whether or not the Court of Appeals erred in
allowing the off-set of liquidated damages as
the breach of the Goodwill Clause is not a
labor dispute cognizable by the labor
tribunals.
Held
Yes. The Court of Appeals erred in allowing
legal compensation. The labor tribunals did
not have jurisdiction over the supposed
breach of the Goodwill Clause as it did not
have a reasonable causal connection to the
employer-employee relations between the
parties.
The claim for liquidated damages that
emanated from the Goodwill Clause of the
employment contract is not a claim for
damages arising from the employer-
employee relations. As early as Singapore
Airlines Limited v. Paño, it is established
that not all disputes between an employer
and his employees fall within the
jurisdiction of the labor tribunals. The
“money claims of workers" referred to in
paragraph 3 of Article 217 embraces money
claims which arise out of or in connection
with the employer-employee relationship, or
some aspect or incident of such relationship.
Put a little differently, that money claims of
workers which now fall within the original
and exclusive jurisdiction of Labor Arbiters
are those money claims which have some
reasonable causal connection with the
employer-employee relationship.
In Dai-Chi Electronics Manufacturing
Corporation v. Villarama, Jr., which
reiterated the San Miguel ruling and allied
jurisprudence, a non-compete clause, as in
the “Goodwill Clause” referred to in the
present case, with a stipulation that a
violation thereof makes the employee liable
to his former employer for liquidated
Page | cxci
damages, refers to post-employment
relations of the parties.
The “Goodwill Clause” or the “Non-
Compete Clause” is a contractual
undertaking effective after the cessation of
the employment relationship between the
parties. Breach of the undertaking is a civil
law dispute, not a labor law case. There is
no causal connection between the petitioner
employees’ claim for unpaid wages and the
respondent employers’ claim for damages
for the alleged “Goodwill Clause” violation.
The alleged contractual violation did not
arise during the existence of the employer-
employee relationship. It was a post-
employment matter, a post-employment
violation.
Thus, the alleged breach of the Goodwill
Clause by the petitioner is akin to a post-
employment matter which is beyond the
jurisdiction of labor tribunals to resolve.
Such matter should be threshed out is the
regular courts.
WHEREFORE, petition is hereby
GRANTED.
3. Building Care Corp. vs. Macaraeg,
G.R. No. 198357, December 10, 2012
Facts
Petitioners Building Care Corp./ Leopard
Security & Investigation Agency which are
in the business of providing security services
to their clients hired respondent, Myrna
Macaraeg, as a security guard assigning her
at Genato Building in Caloocan City.
However,, respondent was relieved of her
post. She was re-assigned to Bayview Park
Hotel, but thereafter, she was allegedly no
longer given any assignment.
Thus, respondent filed a complaint against
petitioners for illegal dismissal,
underpayment of salaries, non-payment of
separation pay and refund of cash bond.
Respondent claimed that petitioners failed to
give her an assignment for more than nine
months, amounting to constructive
dismissal, and this compelled her to file the
complaint for illegal dismissal. Petitioners,
however, alleged that respondent was
relieved from her post because of her
habitual tardiness, persistent borrowing from
employees and tenants of the client, and
sleeping on the job.
The Labor Arbiter dismissed the complaint
for lack of merit. After the respondent filed
an appeal to The National Labor Relations
Commission, the NLRC dismissed the
appeal for having been filed out of time and
declared that the decision of the Labor
Arbiter had become final and executory.
Respondent Macaraeg then appealed to the
Court of Appeals which reversed and set
aside the decision of the NLRC. The CA
rationaciated that the respondent’s appeal
should be allowed and resolved on merits
despite having been filed out of time.
Issue
Whether or not the Court of Appeals erred
when it liberally applied the rules of
procedure and ruled that the respondent’s
appeal should be allowed and resolved on
the merits despite having been filed out of
time.
Page | cxcii

Held
Yes. The Court of Appeals erred when it
liberally applied the rules of procedure and
ruled that the respondent’s appeal should be
allowed and resolved on the merits despite
having been filed out of time.
It should be emphasized that the resort to a
liberal application, or suspension of the
application of procedural rules, must remain
as the exception to the well-settled principle
that rules must be complied with for the
orderly administration of justice. Allowing
an appeal, even if belatedly filed, should
never be taken lightly. The judgment attains
finality by the lapse of the period for taking
an appeal without such appeal or motion for
reconsideration being filed.
The Decision of the Labor Arbiter became
final and executory as to respondent when
she failed to file a timely appeal therefrom.
The importance of the concept of finality of
judgment cannot be gainsaid.
It should also be borne in mind that the right
of the winning party to enjoy the finality of
the resolution of the case is also an essential
part of public policy and the orderly
administration of justice. Hence, such right
is just as weighty or equally important as the
right of the losing party to appeal or seek
reconsideration within the prescribed period.
When the Labor Arbiter’s Decision became
final, the petitioners’ attained a vested right
to said judgement. They had the right to
fully rely on the immutability of said
Decision.
In sum, the Court cannot countenance
relaxation of the rules absent the showing of
extraordinary circumstances to justify the
same. In this case, no compelling reasons
can be found to convince this Court that the
CA acted correctly by according respondent
such liberality.
____________________________________
4. McBurnie vs. Ganzon, GR No.
178034/1718117, October 17, 2013, En
Banc
Facts
McBurnie, instituted a complaint for illegal
dismissal and other monetary claims against
the respondents. The Labor Arbiter (LA)
declared McBurnie as having been illegally
dismissed from employment. He is entitled
to receive from the respondents
P54,083,910.00. The respondents appealed
to the NLRC and filed a Motion to Reduce
Bond and posted an appeal bond in the
amount of P100,000.00. The NLRC denied
the Motion to Reduce Bond. They elevate
the matter to the CA. It directed the
respondent to post bond in the amount of
P10,000,000.00.
Petitioner argues that in cases involving
monetary award, an employer seeking to
appeal the decision of the LA to the
Commission is unconditionally required by
Art. 223 of the Labor Code to post bond in
the amount equivalent to the monetary
award.
Respondent’s argue that the monetary
awards of the LA were null and excessive. It
has the intention of rendering them
incapable of posting the appeal bond. They
lacked the capacity to pay the bond of
Page | cxciii
almost P60 million because of their business
losses that may be attributed to an economic
crisis.
Issue
Whether or not an appeal bond to the NLRC
may be reduced
Held
Yes, the appeal bond to the NLRC may be
reduced
On the matter of the filing and acceptance of
motions to reduce appeal bond,as provided
in Section 6, Rule VI of the 2011 NLRC
Rules of Procedure, the following guidelines
shall be observed:
(a)The filing of a motion to reduce appeal
bond shall be entertained by the NLRC
subject to the following conditions: (1)there
is meritorious ground; and (2) a bond in
areasonable amount is posted;
(b) For purposes of compliance with
condition no. (2), a motion shall be
accompanied by the posting of a provisional
cash or surety bond equivalent to ten percent
(10%) of the monetary award subject of the
appeal, exclusive of damages and attorney's
fees;
(c)Compliance with the foregoing conditions
shall suffice to suspend the running of the
10-day reglementary period to perfect an
appeal from the labor arbiter's decision to
the NLRC;
(d) The NLRC retains its authority and duty
to resolve the motion to reduce bond and
determine the final amount of bond that
shall be posted by the appellant, still in
accordance with the standards of
"meritorious grounds "and" reasonable
amount";and
(e) In the event that the NLRC denies the
motion to reduce bond, or requires a bond
that exceeds the amount of the provisional
bond, the appellant shall be given a fresh
period of ten (10) days from notice of the
NLRC order within which to perfect the
appeal by posting the required appeal bond.
In this case, a serious error of the NLRC was
its outright denial of the motion to reduce
the bond, without even considering the
respondent’s arguments and totally
unmindful of the rules and jurisprudence
that allow the bond’s reduction. Instead of
resolving the motion to reduce the bond on
its merits, the NLRC insisted on an amount
that was equivalent to the monetary award.
The NLRC should have considered the
respondents’ arguments. By such haste, it
effectively denied the respondents of their
opportunity tos eek a reduction of the bond
even when the same is allowed under the
rules and settled jurisprudence.
The Court finds the reduction of the appeal
bond is justified by the substantial amount
of the LA’s monetary award. To require an
appeal bond in such amount could only
deprive them of the right to appeal,
evenforcethemoutofbusinessandaffectthelive
lihoodoftheiremployees.
Page | cxciv
The CA’s rendition of its decision which
allowed a reduced appeal bond, the
respondents have posted a bond in the
amount of P10,000,000.00.In determining
the reasonable amount of appeal bonds, the
Court primarily considers the merits of the
motions and appeal.
Thus, given the circumstances and merits in
this case, the respondents had posted a bond
in reasonable amount, and complied with the
requirements for the perfection of an appeal
from the LA’s decision.
____________________________________
5. Indophil Textile Mills Inc. vs. Engr.
Adviento, GR No. 171212, August 4, 2014
Facts
On August 21, 1990, petitioner a domestic
corporation hired respondent Engr. Salvador
Adviento as Civil Engineer to maintain its
facilities in Bulacan. On August 7, 2002,
respondent consulted a physician due to
recurring weakness and dizziness. A few
days later, he was diagnosed with Chronic
Poly Sinusitis, and thereafter, with
moderate, severe and persistent Allergic
Rhinitis.
Distressed, respondent filed a complaint
against petitioner with the National Labor
Relations Commission (NLRC), San
Fernando, Pampanga, for alleged illegal
dismissal and for the payment of backwages,
separation pay, actual damages and
attorney's fees. The case was still pending
before the NLRC when the instant petition
was filed. Subsequently, respondent filed
another Complaint 9 with the Regional Trial
Court (RTC) of Aparri, Cagayan
a) Petitioner’s argument:
In his reply, petitioner filed a Motion to
Dismiss on the ground that:
1) the RTC has no jurisdiction over the
subject matter of the complaint because the
same falls under
the original and exclusive jurisdiction of the
Labor Arbiter (LA) under Article 217 (a) (4)
of the
Labor Code; and
2) there is another action pending with the
Regional Arbitration Branch III of the
NLRC in Pampanga,
involving the same parties for the same
cause.
b) Private respondent’s argument:
In his complaint, respondent alleged that he
contracted such occupational disease by
reason of the
gross negligence of petitioner to provide him
with a safe, healthy and workable
environment.
Page | cxcv
Issue
Whether or not the RTC has jurisdiction
over the subject matter of respondent's
complaint
Held
The Court in this case find that the
jurisdiction rests on the regular courts
because claims for damages under Article
217 (a) (4) of the Labor Code,to be
cognizable by the LA, must have a
reasonable causal connection with any of the
claims provided for in that article.Only if
there is such a connection with the other
claims can a claim for damages be
considered as arising from employer-
employee relations. It also bears stressing
that respondent is not praying for any relief
under the Labor Code of the Philippines.
He neither claims for reinstatement nor
backwages or separation pay resulting from
an illegal termination. The cause of action
herein pertains to the consequence of
petitioner's omission which led to a work-
related disease suffered by respondent,
causing harm or damage to his person. Such
cause of action is within the realm of Civil
Law, and jurisdiction over the controversy
belongs to the regular courts.
Rule:
The jurisdiction of the LA and the NLRC is
outlined in Article 217 of the Labor Code,as
amended by Section 9 of Republic Act
(R.A.) No. 6715, to wit:
ART. 217. Jurisdiction of Labor Arbiters
and the Commission — (a) Except as
otherwise provided under this Code the
Labor Arbiter shall have original and
exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the
submission of the case by the parties for
decision without extension, even in the
absence of stenographic notes, the following
cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for
reinstatement, those cases that workers may
filen involving wages, rates of pay, hours of
work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and
other forms of damages arising from
employer-employee relations;
5. Cases arising from any violation of
Article 264 of this Code including questions
involving the legality of strikes and
lockouts; and
6. Except claims for Employees
Compensation, Social Security, Medicare
and maternity benefits, all other claims,
arising from employer-employee relations,
including those of persons in domestic or
household service, involving an amount
exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a
claim for reinstatement.
Page | cxcvi
While the Court have upheld the present
trend to refer worker-employer controversies
to labor courts in light of the aforequoted
provision, the Court have also recognized
that not all claims involving employees can
be resolved solely by our labor courts,
specifically when the law provides
otherwise.

For this reason, we have formulated the

"reasonable causal connection rule",
wherein if there is a reasonable causal
connection between the claim asserted and
the employer-employee relations, then the
case is within the jurisdiction of the labor
courts; and in the absence thereof, it is the
regular courts that have jurisdiction.

Conclusion:

Therefore, the RTC has jurisdiction over the

subject matter of respondent's complaint
praying for

moral damages, exemplary damages,

compensatory damages, anchored on
petitioner's alleged gross negligence

in failing to provide a safe and healthy

working environment for respondent.

Page | cxcvii
____________________________________
6. Manila Mining Corp., vs. Amor GR No.
182800, April 20, 2015, citing 2015
Mcburnie
Facts
Respondents Lowito Amor, et al. were
regular employees of petitioner Manila
Mining Corporation, a domestic corporation
which operated a mining claim in Placer,
Surigao del Norte. In compliance with
existing environmental laws, petitioner
maintained Tailing Pond (TP) No. 7, a
tailings containment facility required for the
storage of waste materials generated by its
mining operations. When the mine tailings
being pumped into TP No. 7 reached the
maximum level in December 2000,
petitioner temporarily shut down its mining
operations pending approval of its
application to increase said facility's
capacity by DENR-Environment
Management Bureau. Although the DENR-
EMB issued a temporary authority for it to
be able to continue operating for another 6
months and to increase its capacity,
petitioner failed to secure an extension
permit when the authority eventually lapsed.
On 27 July 2001, petitioner served a notice,
informing its employees and DOLE of the
temporary suspension of its operations for 6
months and the temporary lay-off of two-
thirds of its employees. Petitioner notified
the DOLE on 11 December 2001 that it was
extending the temporary shutdown. Affected
by petitioner's continued failure to resume
its operations, respondents filed the
complaint for constructive dismissal and
monetary claims before the Regional
Arbitration Branch No. XIII of the NLRC.
Executive Labor Arbiter rendered a decision
holding petitioner liable for constructive
dismissal. Petitioner filed its memorandum
of appeal before the NLRC and moved for
the reduction of the appeal bond to
P100,000.00 due to its financial losses in the
preceding years making it unable to put up
one in cash and/or surety. The NLRC
reversed the decision. Respondents filed the
Rule 65 petition for certiorari before the
CA. The CA granted respondents' petition
and nullified the NLRC's resolution.
Issue
1. W/N petitioner’s appeal with the
NLRC was fatally defective
2. W/N a bond is necessary to perfect
an appeal from the LA’s decision
involving monetary awards.
Held
1. The right to appeal is not a natural
right or a part of due process; it is
merely a statutory privilege, and may
be exercised only in the manner and
in accordance with the provisions of
law. The party must comply with the
requirements of the rules, failing
which the right to appeal is
invariably lost.
Article 223 of the Labor Code:
"(d)ecisions, awards, or orders of
the Labor Arbiter are final and
executory unless appealed to the
[NLRC] by any or both parties
within ten (10) calendar days from
the receipt of such decisions, awards
or orders."
For judgments involving monetary
award, the same provision mandates
that, "an appeal by the employer may
be perfected only upon the posting of
Page | cxcviii
a cash or surety bond issued by a
reputable bonding company duly
accredited by the [NLRC] in the
amount equivalent to the monetary
award in the judgment appealed
from." Appellant shall furnish a copy
of the memorandum of appeal to the
other party. The same rules are
reiterated under Sections 1, 4 and 6,
Rule VI of the NLRC Rules of
Procedure in force at the time
petitioner appealed the LA’s
decision. Having received the Labor
Arbiter's Decision on 24 November
2004, petitioner had ten (10)
calendar days or until 4 December
2004 within which to perfect an
appeal. Considering that the latter
date fell on a Saturday, petitioner
had until the next working day, 6
December 2004.
The rule is settled that the burden of
evidence lies with the party who
asserts the affirmative of an issue.
The respondents claim the non-
perfection of petitioner's appeal, they
had the burden of proving that said
memorandum of appeal was, indeed,
filed out of time. The fact that the
copy of memorandum of appeal
intended for respondents was served
upon them by registered mail only on
7 February 2005 does not necessarily
mean that petitioner's appeal from
the Labor Arbiter's decision was
filed out of time. Justice should not
be sacrificed for technicality, it has
been ruled that the failure of a party
to serve a copy of the memorandum
to the opposing party is not a
jurisdictional defect and does not bar
the NLRC from entertaining the
appeal.
2. The issue that has been clarified by
the ruling in McBurnie v. Ganzon, et
al. SC ruled that:
While it is true that reduction of the appeal
bond has been allowed in meritorious cases
on the principle that substantial justice is
better served by allowing appeals on the
merits it has been ruled that the employer
should comply with the following
conditions:
● The motion to reduce the bond shall
be based on meritorious grounds;
and
● A reasonable amount in relation to
the monetary award is posted by the
appellant, otherwise the filing of the
motion to reduce bond shall not stop
the running of the period to perfect
an appeal.
In that case, the Court also pronounced that:
a) For purposes of compliance with
condition no. (2), a motion shall be
accompanied by the posting of a provisional
cash or surety bond equivalent to ten percent
(10%), of the monetary award subject of the
appeal, exclusive of damages and attorney's
fees;
b) Compliance with the foregoing conditions
shall suffice to suspend the running of the
10-day reglementary period to perfect an
appeal from the labor arbiter's decision to
the NLRC;
In this case, the SC sees that with no proof
to substantiate its claim, petitioner moved
for a reduction of the appeal bond on the
preferred basis of serious losses and reverses
it supposedly sustained. The SC considers
that the amount of P100,000.00 supposedly
posted was provisional bond sufficient to
suspend the running of the 10-day period to
perfect an appeal from LA’s decision. But
the fact that the check submitted by
petitioner was also dishonored upon
Page | cxcix
presentment for payment, thereby rendering
the tender ineffectual.
The record shows that petitioner only
manifested its deposit of the funds for the
check 24 days before the resolution of its
appeal or 116 days after its right to appeal
the Labor Arbiter's decision had expired.
Having filed its motion and memorandum
on the very last day of the period to appeal,
petitioner must blame itself for failing to
post the full amount pending the NLRC's
action on its motion for reduction of the
appeal bond. If redundancy be risked, it
must be emphasized that the posting of a
bond is indispensable to the perfection of an
appeal in cases involving monetary awards
from the decision of the Labor Arbiter.
Since it is the posting of a cash or surety
bond which confers jurisdiction upon the
NLRC, the rule is settled that non-
compliance is fatal and has the effect of
rendering the award final and executory.
The perfection of an appeal in the manner
and within the period prescribed by law is
not only mandatory but also jurisdictional
and failure of a party to conform to the rules
regarding appeal will render the judgment
final and executory. The basic rule of
finality of judgment is grounded on the
fundamental principle of public policy and
sound practice that, the judgment of courts
and the award of quasi-judicial agencies
must become final at some definite date
fixed by law.
____________________________________
7. Toyota Alabang Inc vs. Games, GR No.
206612, Aug 17, 2015
Facts
Games worked as a foreman for Toyota
Alabang. He was dismissed by the petitioner
for allegedly stealing vehicle lubricants and
charged him with Qualified theft before the
trial Court. Two years later, Games filed a
Complaint for illegal dismissal, non-
payment of benefits, and damages against
petitioner. Petitioner failed to file its
position paper alleging that the failure was
due to the fact that their lawyer is no longer
connected with the company. Despite
repeated rescheduling of the hearings,
Toyota still failed to appear hence the case
was submitted for decision.
Labor Arbiter: ruled in favor of Games and
Toyota did not file an MR so it became final
and executory.
NLRC: denied due course because it had
failed to show proof of its security deposit
for the appeal bond under Section 6, Rule VI
of the 2005 NLRC Rules of Procedure.
According to the it, the bonding company's
mere declaration in the Certification of
Security Deposit that the bond was fully
secured was not tantamount to a faithful
compliance with the rule, because there
must first be an accompanying assignment
of the employer's bank deposit.
On the merits, it dismissed the case citing
that the LA decision is now final and
executory.
CA: dismissed due to their failure to comply
with the bond requirements and that the
decision is no longer appealable.
Issue
WON posting a bond is required to perfect
the appeal.
Page | cc
Held
Yes, bond is required to perfect an appeal.

Article 223 of the Labor Code and Section

6, Rule VI of the 2011 NLRC Rules of
Procedure, uniformly state that “In case the
decision of the Labor Arbiter or the
Regional Director involves a monetary
award, an appeal by the employer may be
perfected only upon the posting of a bond,
which shall either be in the form of cash
deposit or surety bond equivalent in amount
to the monetary award, exclusive of
damages and attorney's fees.” These rules
generally state that in case the ruling of the
LA involves a monetary award, an
employer's appeal may be perfected only
upon the posting of a bond. Therefore,
absent any qualifying terms, so long as the
decision of the LA involves a monetary
award, as in this case, that ruling can only be
appealed after the employer posts a bond.
The purpose of the bond is to ensure that the
employee has properties on which he or she
can execute upon in the event of a final,
providential award

Page | cci
____________________________________
8. Social Security System vs. Ubana, GR
No. 200114, Aug 25, 2015
Facts
In July 1995, Debbie Ubrana applied for
employment with SSS and passed all the
tests and qualifications, however she was
referred to the DBP Service Corporation for
“transitory employment”. In May 1996 she
was told to report for training to SSS Naga
for immediate deployment to SSS Daet and
made to sign a six-month Service Contract
Agreement on May 28, 1996 by the DBP
Service Corp. assigning her as a clerk for
SSS Daet with a daily wage of only
P171.00.
On May 27, 1996-December 15, 1999: She
was assigned as “Frontliner” of the SSS
Members Assistance Section.
On December 16, 1999-May 15, 2001: She
was assigned as Data Encoder in the
Membership Section.
On December 16, 2001 she was transferred
to the SSS Retirees Association as Processor
(salary P229.00/day) at the Membership
Section until her resignation on August 26,
2002 (Note: the regular SSS Processor wage
was P846.46/day).
Throughout her professional life her May
28, 1996 Service Contract Agreement with
DBP Service Corporation was never
renewed, but she was required to work for
SSS continuously under different
assignments with a maximum daily salary of
only P229.00 and was consistently assured
of being absorbed into the SSS plantilla. She
claimed she was qualified for the position of
a regular Processor, having passed the
requirements and qualification tests but she
was not given the proper salary. Due to the
oppressive and prejudicial treatment of SSS,
she was forced to resign on August 26, 2002
after six years as she can no longer stand
being exploited, and the agony of
dissatisfaction, anxiety, demoralization, and
injustice.
She filed a civil case for damages against
DBP Service Corp, SSS, and SSS Retirees
Association. She claimed petitioners
violated civil service laws, and Civil Code
Art. 19, 20 and 21. As a result, she suffered
actual losses by way of unrealized income,
moral and exemplary damages, attorney’s
fees and litigation expenses.
She prayed for an award of P572,682.67
actual damages representing the difference
between the legal and proper salary she
should have received and the actual salary
she received during her six-year stint with
petitioner; P300,000.00 moral damages;
exemplary damages at the discretion of the
court; P20,000.00 attorney’s fees and
P1,000.00 appearance fees; and other just
and equitable relief.
Page | ccii
 The RTC dismissed the complaint for lack
of jurisdiction. There is a reasonable causal
connection with ER-EE relations and is
Petitioners and co-defendants filed Motions
grounded on the alleged fraudulent manner
to Dismiss (MtD) arguing the subject matter
defendants conspired to exploit her which is
of the case arose from employer-employee
ULP.
relations, which are beyond the RTC’s
jurisdiction and properly cognizable by the
NLRC. Reversed on MR. Under Art. IX-B, 1987
Constitution, the civil service embraces all
branches, subdivisions and agencies of the
Ubana opposed the MtD saying that
government including GOCCs with original
pursuant to civil service rules and
charters (those created by special laws and
regulations, service contracts such as her
not through the general corporation law).
Service Contract Agreement with DBP
Labor law claims against GOCCs w/o
Service Corporation should cover only a)
original charters fall within the jurisdiction
lump sum work or services such as
of the DOLE and not the CSC. Since SSS
janitorial, security or consultancy services,
has its original charter and was created by
and b) piece work or intermittent jobs of
RA No. 1161 as amended by RA 828 it is
short duration not exceeding six months on a
governed by the CSC. However, since SSS
daily basis.
denied the existence of an ER-EE
relationship and the case is one for damages,
it is not the CSC with the jurisdiction to try
the case but the regular courts.
She posited that her service contract
involved the performance of sensitive work,
and not merely janitorial, security,
consultancy services, or work of intermittent
The Court of Appeals held that the petitioner
or short duration. In fact, she was made to
complained that the TC does not have
work continuously even after the lapse of
jurisdiction over claims for unrealized salary
her 6-month service contract.
income and other damages which is a labor
dispute. It also argued there was gad in
dismissing the case against co-defenants
DBP Service Corp. and SSS Retirees Assn.
Citing CSC Memorandum Circular No. 40, as these are legitimate independent job
respondent contended that the performance contractors thus making the respondent an
of functions outside of the nature provided employee of these 2 entities and not of SSS.
in the appointment and receiving salary way
below that received by regular SSS
employees amount to an abuse of rights; and
that her cause of action is anchored on the
CA denied. Petitioner filed certiorari
provisions of the Civil Code on Human
Relations.

Page | cciii
Issue
Whether or not the RTC has jurisdiction to
hear and decide the case
Held
The Supreme Court ruled that the RTC had
jurisdiction. The rule is that, the nature of an
action, the subject matter and which court or
agency of the government has jurisdiction
over the same are determined by the
material allegations of the complaint in
relation to the law involved and the
character of the reliefs prayed for, whether
or not the complainant/plaintiff is entitled to
any or all of such reliefs. A prayer or
demand for relief is not part of the petition
of the cause of action; nor does it enlarge the
cause of action stated or change the legal
effect of what is alleged. In determining
which body has jurisdiction over a case, the
better policy is to consider not only the
status or relationship of the parties but also
the nature of the action that is the subject of
their controversy. Not every dispute between
an employer and employee involves matters
that only labor arbiters and the NLRC can
resolve in the exercise of their adjudicatory
or quasi-judicial powers. Where the
principal relief sought is to be resolved not
by reference to the Labor Code or other
labor relations statute or a CBA agreement
but by the general civil law, the jurisdiction
over the dispute belongs to the regular
courts of justice.
It is the character of the principal relief
sought that is essential in this connection. If
the principal relief is to be granted under
labor legislation or a CBA, the case should
fall within the jurisdiction of the Labor
Arbiter and the NLRC, even though a claim
for damages might be asserted as an incident
to such claim. The question is whether the
Labor Code has any relevance to the
principal relief sought in the complaint.
While it is true that labor arbiters and the
NLRC have jurisdiction to award not only
reliefs provided by labor laws, but also
damages governed by the Civil Code, these
reliefs must still be based on an action that
has a reasonable causal connection with the
Labor Code, other labor statutes, or
collective bargaining agreements. Claims for
damages under paragraph 4 of Article 217
must have a reasonable causal connection
with any of the claims provided for in the
article in order to be cognizable by the labor
arbiter. Only if there is such a connection
with the other claims can the claim for
damages be considered as arising from
employer- employee relations.
CAB: Ubana’s complaint is rooted on the
principle of abuse of right laid in the NCC.
She was claiming damages based on the
alleged exploitation of defendants in
depriving her of her rightful income. She
never invoked provisions of the Labor Code
or labor laws but provisions of human
relations under the NCC. In this case, the
issues raised in the instant complaint do not
require the expertise acquired by labor
officials and it is the court of general
jurisdiction (RTC) with jurisdiction. It was
the transgression of Art. 19 and 20 of the
NCC she insisted on this case as the primary
relief sought is for moral and exemplary
damages for the abuse of rights. The claims
for actual damages for unrealized income
are the natural consequence for abuse of
such rights.
Tolosa v. NLRC: “it is not the NLRC but the
regular courts that have jurisdiction over
Page | cciv
action for damages, in which the employer- issued its Decision approving the parties'
employee relations is merely incidental, and compromise agreement and granting their
in which the cause of action proceeds from a Joint Motion to Dismiss.
different source of obligation such as tort.
Since petitioner’s claim for damages is
On January 25, 2010, or after a lapse of
predicated on a quasi-delict or tort that has
more than eleven (11) years from the time of
no reasonable causal connection with any of
execution of the subject MOA, petitioners
the claims provided for in Article 217, other
filed with the NLRC a Motion for Writ of
labor statutes or collective bargaining
Execution contending that they have not
agreements, jurisdiction over the action lies
been paid the amounts they are entitled to in
with the regular courts · not with the NLRC
accordance with the MOA.
or the labor arbiters.”

Respondent filed its Opposition to the

____________________________________
Motion for Writ of Execution contending
9. ILaw Buklod ng Manggagawa Nestle
that petitioners' remedy is already barred by
Phils Chapter vs. Nestle Phils, GR No.
prescription because, under the 2005
198675, Sept 23, 2015
Revised Rules of the NLRC, a decision or
order may be executed on motion within
five (5) years from the date it becomes final
and executory and that the same decision or
order may only be enforced by independent
Facts
action within a period of ten (10) years from
the date of its finality.
On January 13, 1997, herein petitioner union
staged a strike against herein respondent
On November 18, 2010, the NLRC
company's Ice Cream and Chilled Products
promulgated its Resolution denying
Division, citing, as grounds, respondent's
petitioners' application for the issuance of a
alleged violation of the collective bargaining
writ of execution on the ground of
agreement (CBA), dismissal of union
prescription. Motion for Reconsideration
officers and members, discrimination and
was dismissed. Petitioners then filed a
other unfair labor practice (ULP) acts.
petition for certiorari with the CA
questioning the above Resolutions of the
However, after a series of conciliation NLRC.
meetings and discussions between the
parties, they agreed to resolve their
differences and came up with a compromise
which was embodied in a Memorandum of
Agreement (MOA). Issue

On August 6, 1998, the parties filed a Joint Whether or not petitioners' claim for
Motion to Dismiss stating that they are no payment is barred by prescription.
longer interested in pursuing the petition for
injunction filed by respondent as a
consequence of the settlement of their
dispute. On October 12, 1998, the NLRC

Page | ccv
Held
Yes, petitioners’ claim for payment is barred
by prescription, due to the following
reasons:
a. Petitioners failed to enforce their right
under the subject MOA within the
five-and ten-year periods provided by
law and the rules.
b. Petitioners failed to prove their
allegation that they are vigilant in
exercising their right to pursue
payment of the monetary awards in
their favor.
It is settled that when a compromise
agreement is given judicial approval, it
becomes more than a contract binding upon
the parties. Having been sanctioned by the
court, it is entered as a determination of a
controversy and has the force and effect of a
judgment. It is immediately executory and
not appealable, except for vices of consent
or forgery. The non-fulfillment of its terms
and conditions justifies the issuance of a
writ of execution; in such an instance,
execution becomes a ministerial duty of the
court. Stated differently, a decision on a
compromise agreement is final and
executory. Such agreement has the force of
law and is conclusive between the parties. It
transcends its identity as a mere contract
binding only upon the parties thereto, as it
becomes a judgment that is subject to
execution in accordance with the Rules.
A judgment may be executed on motion
within five years from the date of its entry or
from the date it becomes final and
executory. After the lapse of such time, and
before it is barred by the statute of
limitations, a judgment may be enforced by
action. If the prevailing party fails to have
the decision enforced by a mere motion after
the lapse of five years from the date of its
entry (or from the date it becomes final and
executory), the said judgment is reduced to a
mere right of action in favor of the person
whom it favors and must be enforced, as are
all ordinary actions, by the institution of a
complaint in a regular form. In the present
case, the five-and ten-year periods provided
by law and the rules are more than sufficient
to enable petitioners to enforce their right
under the subject MOA.
In this case, it is clear that the judgment of
the NLRC, having been based on a
compromise embodied in a written contract,
was immediately executory upon its
issuance on October 12, 1998. Thus, it could
have been executed by motion within five
(5) years. It was not. Nonetheless, it could
have been enforced by an independent
action within the next five (5) years, or
within ten (10) years from the time the
NLRC Decision was promulgated. It was
not. Therefore, petitioners' right to have the
NLRC judgment executed by mere motion
as well as their right of action to enforce the
same judgment had prescribed by the time
they filed their Motion for Writ of Execution
on January 25, 2010.
Instances when this Court allowed execution
by motion even after the lapse of five years
—when the delay is caused or occasioned by
actions of the judgment debtor and/or is
incurred for his benefit or advantage. In the
present case, there is no indication that the
delay in the execution of the MOA, as
claimed by petitioners, was caused by
respondent nor was it incurred at its instance
or for its benefit or advantage. Moreover, no
proof was ever presented showing that
petitioners did not sleep on their rights.
Despite their claims to the contrary, the
records at hand are bereft of any evidence to
Page | ccvi
establish that petitioners exerted any effort
to enforce their rights under the subject
MOA, either individually, through their
union or their counsel.
Even granting, for the sake of argument, that
the records of the case were lost, as alleged
by petitioners, leading to the delay in the
enforcement of petitioners' rights, such loss
of the records cannot be regarded as having
interrupted the prescriptive periods for filing
a motion or an action to enforce the NLRC
Decision because such alleged loss could not
have prevented petitioners from attempting
to reconstitute the records and, thereafter,
filing the required motion or action on time.
____________________________________
10. Quantum Foods, Inc. vs. Esloyo, GR.
No. 213696, December 9, 2015, citing 2015
Mcburnie
Facts
Petitioner Quantum Foods, Inc. is a
domestic corporation engaged in the
distribution and selling of food products
nationwide. It hired Esloyo as Major
Accounts Representative and later on
promoted to the position of Regional Sales
Manager for Visayas and Mindanao. On the
other hand, it hired Magsila as Key
Accounts Representative for the Panay Area.
Quantum decided to reorganize its sales
force nationwide following a drastic drop in
its net income, and Magsila was among
those retrenched. However, Magsila’s final
pay and other benefits were not release due
to alleged discovery of
unauthorized/undocumented deductions,
which he purportedly failed to explain.
Esloyo was terminated from work on the
ground of loss of trust and confidence due to
his numerous violations of the company
rules and regulations.
Aggrieved, Esloyo and Magsila filed
separate complaints for illegal dismissal
with money claims against Quantum. They
also impleaded Dole Philippines, Inc. as
party to the case, claiming that said
company required them to perform
additional tasks that were necessary and
desirable for its operations, and that Dole, as
well as its Executive personnel had created
and organized Quantum, and thus, should be
held jointly and solidarily liable with
Quantum for respondent’s claims.
Quantum maintained that respondents’
dismissal were valid, hence, it is not liable
for their money claims. On the other hand,
Dole denied any employer-employee
relationship with respondents. The Labor
Arbiter found respondents to have been
illegally dismissed and ordered Quantum to
pay respondents a total monetary judgment
of P1,817,856.71 but DOLE was deleted as
party to the case, upon a finding that it has
no employer-employee relationship with
respondents. Dissatisfied, Quantum filed its
Notice of Appeal and Memorandum of
Appeal before the NLRC accompanied by a
Motion to Reduce Bond and a cash bond in
the amount of P400,000 (partial bond).
Before the NLRC could act on the Motion to
Reduce Bond, Quantum posted a surety
bond from an accredited insurance company
fully covering the monetary judgment. The
NLRC gave due course to Quantum’s appeal
Page | ccvii
holding that there was substantial
compliance with the bond requirement and
held that respondents were not illegally
dismissed. The Court of Appeals reversed
and set aside the NLRC’s ruling and
reinstated the LA’s Decision. It ruled that
Quantum’s failure to post the required bond
in an amount equivalent to the monetary
judgment impeded the perfection of its
appeal, and rendered the LA’s Decision final
and executory. Thus, the NLRC was bereft
of jurisdiction and abused its discretion in
entertaining the appeal.
Issue
Whether or not the appeal bond posted
accompanied by a motion to reduce bond is
reasonable in order to suspend the period to
perfect an appeal.
Held
Yes, the posting of a P400,000.00 cash bond
equivalent to more than 20% of the
monetary judgment, together with the
Motion to Reduce Bond within the
reglementary period was sufficient to
suspend the period to perfect the appeal. The
posting of the said partial bond coupled with
the subsequent posting of a surety bond in
an amount equivalent to the monetary
judgment also signified Quantum’s good
faith and willingness to recognize the final
outcome of its appeal.
In this relation, Section 4, Rule VI of the
2005 Revised Rules of Procedure of the
NLRC 55 (the Rules) enumerates the
requisites for the perfection of appeal, viz.:
Section 4. Requisites for Perfection of
Appeal. — a) The appeal shall be: 1) filed
within the reglementary period provided in
Section 1 of this Rule; 2) verified by the
appellant himself in accordance with Section
4, Rule 7 of the Rules of Court, as amended;
3) in the form of a memorandum of appeal
which shall state the grounds relied upon
and the arguments in support thereof, the
relief prayed for, and with a statement of the
date the appellant received the appealed
decision, resolution or order; 4) in three (3)
legibly typewritten or printed copies; and 5)
accompanied by i) proof of payment of the
required appeal fee; ii) posting of a cash or
surety bond as provided in Section 6 of this
Rule; iii) a certificate of non-forum
shopping; and iv) proof of service upon the
other parties.
b) A mere notice of appeal without
complying with the other requisites
aforestated shall not stop the running of the
period for perfecting an appeal.
In the present case, it is apparent that the
plausible merit of the case was the "special
circumstance" or "compelling reason" 61
that prompted the NLRC to relax the
certification requirement and give due
course to Quantum’s appeal as it, in fact,
arrived at a contrary ruling from that of the
LA. It is well to emphasize that technical
rules are not binding in cases submitted
before the NLRC. In fact, labor officials are
enjoined to use every and reasonable means
to ascertain the facts in each case speedily
and objectively, without regard to
technicalities of law or procedure, in the
interest of due process. 62 Consequently, the
NLRC cannot be faulted for relaxing its own
rules in the interest of substantial justice.
It should be emphasized that the NLRC has
full discretion to grant or deny the motion to
reduce bond, 77 and its ruling will not be
disturbed unless tainted with grave abuse of
discretion. Verily, an act of a court or
Page | ccviii
tribunal can only be considered to be tainted contending that the causes of action are
with grave abuse of discretion when such act different.
is done in a capricious or whimsical exercise
of judgment as is equivalent to lack of
Ruling on Compulsory Arbitration: Upheld
jurisdiction, which clearly is not extant with
the petitioners’ position and dismissed the
respect to the NLRC's cognizance of
complaint on the grounds of forum
Quantum’s appeal. Far from having gravely
shopping. Respondent appealed the LA’s
abused its discretion, the NLRC correctly
ruling. On July 31 2012, the NLRC 1st
preferred substantial justice over the rigid
Division granted the appeal, reversed LA’s
and stringent application of procedural rules.
dismissal order, and reinstated the
This, by all means, is not a case of grave
complaint.
abuse of discretion calling for the issuance
of a writ of certiorari, warranting the
reversal of the CA's ruling granting the NLRC held that the respondents could not
certiorari petition and the remand of the case have committed forum shopping because
to the CA for appropriate action. there was no identity of causes of action
between the two cases. The first complaint
____________________________________
charged the petitioners with illegal dismissal
11. Dela Rosa Liner Inc et vs. Borela et
and unfair labor practice, while the second
GR No. 207286, July 29, 2016
was based on non-payment/underpayment of
salaries and monetary benefits, and violation
of wage orders. Petitioner moved for
reconsideration, but NLRC denied.
Facts
CA Decision: CA denied the petitioner. It
September 23, 2011, respondents Calixto found no grave abuse of discretion in the
Borela, a bus driver, & Estelo Amarille, NLRC ruling. The parties resolved the first
conductor, filed complaints against case through a compromise agreement, but it
petitioners Dela Rosa Liner, a public had a different cause of action.
transport company, Rosauro Dela Rosa Sr.,
and Nora Dela Rosa, for underpayment/non-
payment of salaries, holiday pay, overtime
pay, service incentive leave, 13th month
Issue
pay, sick leave and vacation leave, night
shift differential, illegal deductions, and
violation of Wage Order Nos. 13, 14, 15 and Whether or not the CA erred in ruling that
16. there was no forum shopping nor res
judicata.
In a motion dated Oct. 26, 2011, petitioners
asked the LA to dismiss the case for forum
shopping. They alleged that on Sept. 28,
2011, the CA 13th Division disposed of a Held
similar case between the parties after they
entered into a compromise agreement.
Respondents opposed the motion,

Page | ccix
Supreme Court ruled that the NLRC did not
commit any grave abuse of discretion when
it ruled that the second complaint is not
barred by the rule on forum shopping nor by
the principle of res judicata.Contrary to
petitioners’ submission, respondents’ second
complaint, a money claim, is not a similar
case to the first complaint. Thus, the filing
of the second complaint did not constitute
forum shopping and the judgment in the first
case is not a res judicata ruling that bars the
second complaint.The CA established the
elements of forum shopping which are: (1)
identity of parties; (2) identity of rights
asserted and relief prayed for, and (3)
identity of the two preceding particulars
such that any judgement in one would bar
the other on the ground of res judicata.
Supreme Court said that there is no identity
of rights asserted and reliefs prayed for, and
the judgment in the first case does not
amount to res judicata.
There is also no identity of causes of action
in the first and second complaint. In Yap v.
Chua, it was held that the test to ascertain
whether there is an identity in causes of
action is if the same evidence would support
both actions, or whether there is an identity
in the facts essential to the two actions.
Under the circumstances of the case at bar,
sufficient basis exists that there is no
identity of causes of action between the 2
complaints. CA was correct in holding that
the same facts/evidence would not support
both actions.The petitioners’ argument that
the Compromise Agreement covered all
claims and causes of action cannot be
accepted. The Compromise Agreement
expressly stated that no further actions shall
be brought on the same grounds. The phrase
same grounds can only refer to the grounds
raised in the first complaint. The coverage of
“covered all claims and causes of action”
cannot be allowed because it is too sweeping
and effectively excludes all other claims by
the respondents against petitioner, including
those that cannot be waived without
appropriate consideration.
____________________________________
12. Fontana Development Corp., vs.
Vukasinovic, GR No. 222424, September
21, 2016
Facts
In July 2009, respondent Sascha
Vukasinovic was hired by petitioner Fontana
Development Corporation (FDC) as its
Director for Business Development for one
year.
Sometime in May 2010, he allegedly
received a text message from one Jenny
Mallari informing him that Nestor Dischoso
(Dischoso) and Chief Hotel Engineer Jaime
Villareal (Engr. Villareal), both officers of
petitioner FDC, were receiving commissions
from company transactions.
Sascha met with Mallari and offered her
money in exchange for evidence that will
support her allegations. Mapari handed over
to respondent a photocopy of a check issued
to Engr. Villareal, as proof of receiving
commission. Respondent then paid Mallari
the total amount of fourteen thousand pesos
(P14,000) on different occasions.
Mallari eventually gave respondent two
invoices issued by one of the suppliers of
petitioner FDC as proof of her allegations.
Further investigations were conducted on
the alleged corruptions of Engr. Villareal.
Engr. Villareal and Mallari were brought to
the NBI Office for questioning.
Page | ccx
During the inquiry, Mallari denied that Engr.
Villareal asked for commissions from her
and revealed that she merely fabricated the
story against Engr. Villareal so that she can
ask money from respondent.
Following this turn of events, FDC received
a complaint from Engr. Villareal claiming
that Sascha paid Mallari a substantial
amount of money to concoct a story
depicting Engr. Villareal as a corrupt
employee.chanrobleslaw
On October 2, 2010, respondent received a
Show Cause/Preventive Suspension Order
from petitioner FDC's Human Resources
Department, informing him of the complaint
filed by Engr. Villareal and directing him to
explain why no disciplinary action should be
taken against him for violating the
provisions of the Company Code of Conduct
on Dishonesty.
Sascha did not deny the allegations against
him and, instead, admitted that he gave
money to Mallari because "it is a common
practice in Fontana to give money to
informants for vital information."
FDC approved the recommendation of the
Investigating Panel and terminated
respondent's employment after finding him
guilty of acts of dishonesty in the form of
"bribery in any form or manner."
Respondent, however, refused to
acknowledge the receipt of the notice of
dismissal and, instead, filed a complaint for
illegal dismissal, illegal suspension,
regularization, non-payment of salaries,
service incentive leave, 13th month pay,
actual, moral and exemplary damages,
attorney's fees and demands for his
reinstatement with full backwages against
petitioner FDC and its officers.
Labor Arbiter dismissed the complaint for
lack of factual or legal basis, and ruled that
respondent cannot be regularized as he is an
employee with a legal and valid fixed-term
employment and that his dismissal was for a
just cause.
Respondent appealed the said Decision to
the National Labor Relations Commission
(NLRC).
NLRC dismissed and the noted that Sascha
had previously filed another complaint
before the same branch of the NLRC in San
Fernando, Pampanga, involving the same
facts, issues, and prayer, entitled Sascha
Vukasinovic v. Jimei International Ltd., Suk
Man Choi, as Group Financial Comptroller,
and Chris Cheng, as Deputy Group
Financial Comptroller, and docketed as
NLRC Case No. RAB III-09-18113-11. This
previous case has been dismissed 11 by
Labor Arbiter on the ground of forum
shopping. The dismissal was eventually
sustained by both the NLRC and the CA.
Respondent then filed a petition for
certiorari with the CA. The CA agreed with
the NLRC when it ruled that herein
respondent's employment had not ripened
into regular employment and that he was
validly dismissed. Respondent, being a
managerial employee, can be terminated on
the ground of loss of trust and confidence.
However, contrary to the Decision of the
NLRC, the CA ordered the award of unpaid
salaries to respondent. So the case is
REMANDED to the Labor Arbiter for the
computation, with dispatch, of the amounts
due.
Page | ccxi
Issue
Whether or not the CA gravely erred in not
dismissing the petition for deliberate forum
shopping.
Held
YES. Respondent is guilty of forum
shopping.
What constitutes forum Shopping
There is forum shopping when a party
repetitively avails of several judicial
remedies in different courts, simultaneously
or successively, all substantially founded on
the same transactions and the same essential
facts and circumstances, and all raising
substantially the same issues either pending
in or already resolved adversely by some
other court. Forum shopping is an act of
malpractice that is prohibited and
condemned because it trifles with the courts
and abuses their processes. It degrades the
administration of justice and adds to the
already congested court dockets.nrobleslaw
elements of litis pendentia are present: (a)
identity of parties, or at least such parties as
representing the same interests in both
actions; (b) identity of rights asserted and
reliefs prayed for, the relief being founded
on the same facts; and (c) the identity of the
two preceding particulars, such that any
judgment rendered in the other action will,
regardless of which party is successful,
amount to res judicata in the action under
consideration. Said requisites are also
constitutive of the requisites for auter action
pendant or lis pendens
In the instant case, there is no doubt that all
the elements of litis pendentia have already
been established.
It should be noted that in his Decision in
NLRC Case, Labor Arbiter Abdon observed
that there is an identity of parties between
the 2 cases. He pointed out that both
complaints show that petitioners Chris
Cheng and Man Choi are similarly
impleaded in their capacities as officers of
petitioner FDC and that there is also an
identity of causes of action and reliefs
prayed for by respondent. This was affirmed
by the NLRC and the CA.

What the prohibition on forum shopping

seeks to prevent

The grave evil sought to be avoided by the

rule against forum shopping is the rendition
by two competent tribunals of two separate
and contradictory decisions. Unscrupulous
party litigants, taking advantage of a variety
of competent tribunals, may repeatedly try
their luck in several different fora until a
favorable result is reached. Test of Forum
Shopping The test for determining the
existence of forum shopping is whether a
final judgment in one case amounts to res
judicata in another or whether the following

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