I.

THE APPLICABLE LAWS

II. BASIC PRINCIPLES

1. Sonza vs ABS-CBN

Facts:

 Respondent ABS-CBN signed an agreement with Mel&Jay Management

and Development Corporation (MJMDC). ABS was represented by its
corporate officers while MJMDC was represented by Sonza, as President
and General Manager and Carmela Tiangco as EVP and Treasurer. In an
agreement labelled as “agent,” MJMDC agreed to provide Sonza’s services
exclusively to ABS as talent for radio and television.

 By April 1996, Sonza wrote a letter to ABS rescinding their agreement and
the he had resigned in view of the recent events which were alleged to be a
violation of the agreement. He also informed ABS that he is waiving
recovery of the remaining amount but reserves the right to seek recovery of
the other benefits under the agreement.

 Then, Sonza filed a complaint against ABS before the DOLE, Quezon City.
He complained that ABS did not pay his salaries, separation pay, service
incentive leave pay, 13th month pay, bonus, travel allowance and amounts
under the Employees Stock Option Plan. ABS filed a motion to dismiss on
the ground that there was no employer-employee relationship between
petitioner.

 Under the respondent’s position paper, they presented two witnesses stating
that the prevailing practice in the television and broadcast industry is to treat
talents like Sonza as independent contractors.

 The Labor Arbiter dismissed the complaint for lack of jurisdiction. Sonza
appealed to the NLRC, however NLRC affirmed the decision of the Labor
Arbiter. Sonza filed a special civil action for certiorari before the CA
assailing the decision of the NLRC, but the CA dismissed the case. Hence,
this petition.
Issue: Whether or not an employer-employee relationship existed between Sonza
and ABS

Ruling:
No. Case law has consistently held that 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. The last element, the so-called "control test", is the most important
element. 

In relation to the first element, the Supreme Court held that independent
contractors often present themselves to possess unique skills, expertise or talent to
distinguish them from ordinary employees. 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. Hence, the method of selecting and
engaging SONZA does not conclusively determine his status. All the
circumstances of the relationship must be considered, with the control test being
the most important element.

For the second element, all the talent fees and benefits paid to SONZA were
the result of negotiations that led to the Agreement. If SONZA were ABS-CBN's
employee, there would be no need for the parties to stipulate on benefits such as
"SSS, Medicare, . . . 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.

For the third element, for violation of any provision of the Agreement, either
party may terminate their relationship. SONZA failed to show that ABS-CBN
could terminate his services on grounds other than breach of contract, such as
retrenchment to prevent losses as provided under labor laws. During the life of the
Agreement, ABS-CBN agreed to pay SONZA's talent fees as long as "AGENT and
Jay Sonza shall faithfully and completely perform each condition of this
Agreement."  Even if it suffered severe business losses, ABS-CBN could not
retrench SONZA because ABS-CBN remained obligated to pay SONZA's talent
fees during the life of the Agreement. This circumstance indicates an independent
contractual relationship between SONZA and ABS-CBN.
 Applying the control test, which is the last and most important element of
employer-employee relationship, the Supreme Court held that Sonza is not an
employee but an independent contractor. This test is based on the extent of
control the hirer exercises over a worker. The greater the supervision and
control the hirer exercises, the more likely the worker is deemed an employee.
The converse holds true as well — the less control the hirer exercises, the
more likely the worker is considered an independent contractor.

In the case at bar, ABS-CBN engaged SONZA's services specifically to co-

host the "Mel & Jay" programs. ABS-CBN did not assign any other work
to SONZA. To perform his work, SONZA only needed his skills and talent.
How SONZA delivered his lines, appeared on television, and sounded on radio
were outside ABS-CBN's control. SONZA did not have to render eight hours
of work per day. The Agreement required SONZA to attend only rehearsals
and tapings of the shows, as well as pre- and post-production staff meetings.
ABS-CBN could not dictate the contents of  SONZA's script. However, the
Agreement prohibited SONZA from criticizing in his shows ABS-CBN or its
interests. The clear implication is that SONZA had a free hand on what to say
or discuss in his shows provided he did not attack ABS-CBN or its interests.|||

Also, ABS-CBN was not involved in the actual performance that produced
the finished product of SONZA's work.  ABS-CBN did not instruct SONZA how
to perform his job. ABS-CBN merely reserved the right to modify the program
format and airtime schedule "for more effective programming." 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.

In Vaughan, et al. v. Warner, et al., the United States Circuit Court of

Appeals ruled that vaudeville performers were independent contractors although
the management reserved the right to delete objectionable features in their shows.
Since the management did not have control over the manner of performance of the
skills of the artists, it could only control the result of the work by deleting
objectionable features|||

SONZA further contends that ABS-CBN exercised control over his work by

supplying all equipment and crew. No doubt, ABS-CBN supplied the equipment,
crew and airtime needed to broadcast the "Mel & Jay" programs. However,
the equipment, crew and airtime are not the "tools and
instrumentalities" SONZA needed to perform his job.
What SONZA principally needed were his talent or skills and the costumes
necessary for his appearance.  Even though ABS-CBN provided SONZA with
the place of work and the necessary equipment, SONZA was still an independent
contractor since ABS-CBN did not supervise and control his work.  ABS-
CBN's sole concern was for SONZA to display his talent during the airing of
the programs.

A radio broadcast specialist who works under minimal supervision is an

independent contractor. SONZA's work as television and radio program host
required special skills and talent, which SONZA admittedly possesses. The records
do not show that ABS-CBN exercised any supervision and control over
how SONZA utilized his skills and talent in his shows.||| 

Lastly, 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. The Court
agreed with the findings of the Labor Arbiter and the Court of Appeals
that SONZA's claims are all based on the May 1994 Agreement and stock option
plan, and not on the Labor Code. 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. In effect, SONZA's cause of action is for breach of
contract which is intrinsically a civil dispute cognizable by the regular courts. 

Hence, the petition was denied.

2. Lazaro vs Social Security Commission

Facts:

 Private respondent Rosalina M. Laudato ("Laudato") filed a petition before

the SSC for social security coverage and remittance of unpaid monthly
social security contributions against her three (3) employers. Among the
respondents was herein petitioner Angelito L. Lazaro ("Lazaro"), proprietor
of Royal Star Marketing ("Royal Star"), which is engaged in the business of
selling home appliances.|

 Laudato alleged that despite her employment as sales supervisor of the sales
agents for Royal Star from April of 1979 to March of 1986, Lazaro had
 failed during the said period, to report her to the SSC for compulsory
coverage or remit Laudato's social security contributions.

 While Petitioner denied that Laudato was a sales supervisor of Royal Star
averring instead that she was a mere sales agent whom he paid purely on
commission basis. Lazaro also maintained that Laudato was not subjected to
definite hours and conditions of work. As such, Laudato could not be
deemed an employee of Royal Star and not qualified for social security
coverage.

 SSC promulgated a decision ruling in favor of Laudato. Applying the

"control test," it held that Laudato was an employee of Royal Star, and
ordered Royal Star to pay the unremitted social security contributions and
made liable to pay damages to the SSC pursuant to the Social Security Law.

 Petitioner’s motion for reconsideration was denied by the SSC, hence, he

filed a petition for review before the CA. However, since petitioner was not
able to show that the Commission’s ruling was not supported by substantial
evidence, the appellate court affirmed the assailed decision, finding Laudato
was an employee of Royal Star.

Issue: Whether or not Laudato was an employee of Royal Star.

Ruling:
Yes. 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 SSC, as sustained by the Court of Appeals, applying the control
test found that Laudato was an employee of Royal Star. The Court finds no
reversible error.||| 
 Suffice it to say, the fact that Laudato was paid by way of commission
does not preclude the establishment of an employer-employee relationship.
In Grepalife v. Judico, the Court upheld the existence of an employer-employee
relationship between the insurance company and its agents, despite the fact that the
compensation that the agents on commission received was not paid by the
company but by the investor or the person insured. The relevant factor remains, as
stated earlier, whether the "employer" controls or has reserved the right to control
the "employee" not only as to the result of the work to be done but also as to the
means and methods by which the same is to be accomplished.

Neither does it follow that a person who does not observe normal hours
of work cannot be deemed an employee. In Cosmopolitan Funeral Homes, Inc.
v. Maalat,  the employer similarly denied the existence of an employer-employee
relationship, as the claimant according to it, was a "supervisor on commission
basis" who did not observe normal hours of work. This Court declared that there
was an employer-employee relationship, noting that "[the] supervisor, although
compensated on commission basis, [is] exempt from the observance of normal
hours of work for his compensation is measured by the number of sales he makes.||

It should also be emphasized that the SSC, also as upheld by the Court of
Appeals, found that Laudato was a sales supervisor and not a mere agent.  As such,
Laudato oversaw and supervised the sales agents of the company, and thus
was subject to the control of management as to how she implements its
policies and its end results. We are disinclined to reverse this finding, in the
absence of countervailing evidence from Lazaro and also in light of the fact that
Laudato's calling cards from Royal Star indicate that she is indeed a sales
supervisor.
The finding of the SSC that Laudato was an employee of Royal Star is
supported by substantial evidence. The SSC examined the cash vouchers issued
by Royal Star to Laudato,  calling cards of Royal Star denominating Laudato
as a "Sales Supervisor" of the company,  and Certificates of Appreciation
issued by Royal Star to Laudato in recognition of her unselfish and loyal efforts
in promoting the company. 
Also, a piece of documentary evidence appreciated by the SSC is
Memorandum dated 3 May 1980 of Teresita Lazaro, General Manager of
Royal Star, directing that no commissions were to be given on all "main office"
sales from walk-in customers and enjoining salesmen and sales supervisors to
observe this new policy. The Memorandum evinces the fact that, contrary to
Lazaro's claim, 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.||| 

On the other hand, Lazaro has failed to present any convincing contrary
evidence, relying instead on his bare assertions. The Court of Appeals correctly
ruled that petitioner has not sufficiently shown that the SSC's ruling was not
supported by substantial evidence.|||

Hence, the petition was denied.

3. Philippine Global Communication vs De Vera

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 themedical needs of its employees.

 At the crux of the controversy is Dr. De Vera's status vis a vis petitioner
when the latter terminated his engagement. It appears that on 15 May 1981,
De Vera, via a letter dated 15 May 1981, offered his services to the
petitioner, therein proposing his plan of works required of a practitioner in
industrial medicine.

 The parties agreed and formalized respondent's proposal in a document

denominated as RETAINERSHIP CONTRACT which will be for a period
of one year subject to renewal, it being made clear therein that respondent
will cover "the retainership the Company previously had with Dr. K. Eulau
and that respondent's "retainer fee" will be at P4,000.00 a month. Said
contract was renewed yearly. The retainership arrangement went on from
1981 to 1994 with changes in the retainer's fee. However, for the years 1995
and 1996, renewal of the contract was only made verbally.

 The turning point in the parties' relationship surfaced in December 1996

when Philcom, thru a letter bearing on the subject boldly written as
"TERMINATION — RETAINERSHIP CONTRACT", informed De Vera
of its decision to discontinue the latter's "retainer's contract with the
 Company effective at the close of business hours of December 31, 1996"
because management has decided that it would be more practical to provide
medical services to its employees through accredited hospitals near the
company premises. jurcd20

 On 22 January 1997, De Vera led a complaint for illegal dismissal before the
National Labor Relations Commission (NLRC), alleging that that he had
been actually employed by Philcom as its company physician since 1981
and was dismissed without due process. He averred that he was designated
as a "company physician on retainer basis" for reasons allegedly known only
to Philcom. He likewise professed that since he was not conversant with
labor laws, he did not give much attention to the designation as anyway he
worked on a full-time basis and was paid a basic monthly salary plus fringe
benefits, like any other regular employees of Philcom.

 On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out

with a decision dismissing De Vera's complaint for lack of merit, on the
rationale that as a "retained physician" under a valid contract mutually
agreed upon by the parties, De Vera was an "independent contractor" and
that he "was not dismissed but rather his contract with [PHILCOM] ended
when said contract was not renewed after December 31, 1996".

 On De Vera's appeal to the NLRC, the latter, in a decision dated 23 October

2000, reversed (the word used is "modified") that of the Labor Arbiter, on a
finding that De Vera is Philcom's "regular employee" and accordingly
directed the company to reinstate him to his former position without loss of
seniority rights and privileges and with full backwages from the date of his
dismissal until actual reinstatement.

 Philcom then went to the Court of Appeals on a petition for certiorari,

imputing grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the NLRC when it reversed the findings of the
labor arbiter and awarded thirteenth month pay and traveling allowance to
De Vera even as such award had no basis in fact and in law. The Court of
Appeals rendered a decision, modifying that of the NLRC by deleting the
award of traveling allowance, and ordering payment of separation pay to De
Vera in lieu of reinstatement.

 Hence, this petition.

Issue: Whether or not an employer-employee exists between petitioner and
respondent.

Ruling:

In a long line of decisions, the Court, in determining the existence of an

employer- employee relationship, has invariably adhered to the four-fold test, to
wit: [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.

Applying the four-fold test to this case, we initially find that it was
respondent himself who sets the parameters of what his duties would be in offering
his services to petitioner. This is borne by no less than his 15 May 1981 letter.

The fact that the complainant was not considered an employee was
recognized by the complainant himself in a signed letter to the respondent wherein
the letter indicated that the complainant was proposing to extend his time with the
respondent and seeking additional compensation for said extension. This shows
that the respondent PHILCOM did not have control over the schedule of the
complainant as it is the complainant who is proposing his own schedule and asking
to be paid for the same.

The labor arbiter added the indicia, not disputed by respondent, that from the
time he started to work with petitioner, he never was included in its payroll; was
never deducted any contribution for remittance to the Social Security System
(SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding
tax for his professional fee, in accordance with the National Internal Revenue
Code, matters which are simply
inconsistent with an employer-employee relationship.

Finally, remarkably absent from the parties' arrangement is the element of

control, whereby the employer 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 to be accomplished. Here, petitioner had no control over the
means and methods by which respondent went about performing his work at the
company premises. He could even embark in the private practice of his profession,
not to mention the fact that respondent's work hours and the additional
compensation therefor were negotiated upon by the parties. In fine, the parties
themselves practically agreed on every terms and conditions of respondent's
engagement, which thereby negates the element of control in their relationship.

Hence, petition was granted.

4. ABS-CBN vs Nazareno

Facts:

 Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan

as production assistants (PAs) on different dates. They were assigned at the
news and public affairs, for various radio programs in the Cebu
Broadcasting Station, with a monthly compensation of P4,000. They were
issued ABS-CBN employees' identification cards and were required to work
for a minimum of eight hours a day, including Sundays and holidays.

 The PAs were under the control and supervision of Assistant Station
Manager Dante J. Luzon, and News Manager Leo Lastimosa. On December
19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a
Collective Bargaining Agreement (CBA) to be effective during the period
from December 11, 1996 to December 11, 1999. However, since petitioner
refused to recognize PAs as part of the bargaining unit, respondents were not
included to the CBA.

 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.

 Respondents insisted that they belonged to a "work pool" from which

petitioner chose persons to be given specific assignments at its discretion,
and were thus under its direct supervision and control regardless of
nomenclature.

 Complainants further pray of this Arbiter to declare them regular and

permanent employees of respondent ABS-CBN as a condition precedent for
their admission into the existing union and collective bargaining unit of
respondent company where they may as such acquire or otherwise perform
 their obligations thereto or enjoy the benefits due therefrom.

 For its part, petitioner alleged in its position paper that the respondents were
PAs who basically assist in the conduct of a particular program ran by an
anchor or talent among their duties include monitoring and receiving
incoming calls from listeners and field reporters and calls of news sources;
generally, they perform leg work for the anchors during a program or a
particular production. They are considered in the industry as "program
employees" in that, as distinguished from regular or station employees, they
are basically engaged by the station for a particular or specific program
broadcasted by the radio station.

 Petitioner maintained that PAs, reporters, anchors and talents occasionally

"sideline" for other programs they produce, such as drama talents in other
productions. As program employees, a PA's engagement is coterminous with
the completion of the program, and may be extended/renewed provided that
the program is on-going; a PA may also be assigned to new programs upon
the cancellation of one program and the commencement of another. As such
program employees, their compensation is computed on a program basis, a
fixed amount for performance services irrespective of the time consumed. At
any rate, petitioner claimed, as the payroll will show, respondents were paid
all salaries and benefits due them under the law.

 The Labor Arbiter rendered judgment in favor of the respondents, but did
not awards benefits as provided in the CBA on his belief that he had no
jurisdiction. On the other hand, the NLRC rendered judgment modifying the
decision of the Labor Arbiter. The NLRC ruled that respondents were
entitled to the benefits under the CBA because they were regular employees
who contributed to the profits of petitioner through their labor.

 On appeal, the appellate court stated that respondents are not mere project
employees, but regular employees who perform tasks necessary and
desirable in the usual trade and business of petitioner and not just its project
employees. Moreover, the CA added, the award of benefits accorded to
rank-and- file employees under the 1996-1999 CBA.

Issue: Whether or not the respondents are regular employees of petitioner

Ruling:

We agree with respondents' contention that where a person has rendered at

least one year of service, regardless of the nature of the activity performed, or
where the work is continuous or intermittent, the employment is considered regular
as long as the activity exists, the reason being that a customary appointment is not
indispensable before one may be formally declared as having attained regular
status.

The primary standard, therefore, of determining regular employment is the

reasonable connection between the particular activity performed by the employee
in relation to the usual trade or business of the employer. The test is whether the
former is usually necessary or desirable in the usual business or trade of the
employer.

Not considered regular employees are "project employees," the completion

or termination of which is more or less determinable at the time of employment,
such as those employed in connection with a particular construction project, and
"seasonal employees" whose employment by its nature is only desirable for a
limited period of time. Even then, any employee who has rendered at least one
year of service, whether continuous or intermittent, is deemed regular with
respect to the activity performed and while such activity actually exists.

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

actresses or radio specialists or mere clerks or utility employees. They are regular
employees who perform several different duties under the control and direction of
ABS-CBN executives and supervisors. Thus, there are two kinds of regular
employees under the law: (1) those engaged to perform activities which are
necessary or desirable in the usual business or trade of the employer; and (2) those
casual employees who have rendered at least one year of service, whether
continuous or broken, with respect to the activities in which they are employed.

What determines whether a certain employment is regular or otherwise is

not the will or word of the employer, to which the worker oftentimes acquiesces,
much less the procedure of hiring the employee or the manner of paying the salary
or the actual time spent at work. It is the character of the activities performed in
relation to the particular trade or business taking into account all the circumstances,
and in some cases the length of time of its performance and its continued existence.
It is obvious that one year after they were employed by petitioner, respondents
became regular employees by operation of law.
 In the case at bar, however, the employer-employee relationship between
petitioner and respondents has been proven. First. In the selection and engagement
of respondents, no peculiar or unique skill, talent or celebrity status was required
from them because they were merely hired through petitioner's personnel
department just like any ordinary employee. Second. The so-called "talent fees" of
respondents correspond to wages given as a result of an employer-employee
relationship. Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship. Third. Petitioner could
always discharge respondents should it find their work unsatisfactory, and
respondents are highly dependent on the petitioner for continued work. Fourth. The
degree of control and supervision exercised by petitioner over respondents through
its supervisors negates the allegation that respondents are independent contractors.

The presumption is that when the work done is an integral part of the regular
business of the employer and when the worker, relative to the employer, does not
furnish an independent business or professional service, such work is a regular
employment of such employee and not an independent contractor.

The petition was denied.

5. Francisco vs NLRC

Facts:

 In 1995, petitioner was hired by Kasei Corporation during its incorporation

stage. She was designated as Accountant and Corporate Secretary and was
assigned to handle all the accounting needs of the company. She was also
designated as Liaison Officer to the City of Makati to secure business
permits, construction permits and other licenses for the initial operation of
the company.

 Although she was designated as Corporate Secretary, she was not entrusted
with the corporate documents; neither did she attend any board meeting nor
required to do so. She never prepared any legal document and never
represented the company as its Corporate Secretary. However, on some
occasions, she was prevailed upon to sign documentation for the company.
 In 1996, petitioner was designated Acting Manager. The corporation also
hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager,
petitioner was assigned to handle recruitment of all employees and perform
management administration functions; represent the company in all dealings
with government agencies, especially with the Bureau of Internal Revenue
(BIR), Social Security System (SSS) and in the city government of Makati;
and to administer all other matters pertaining to the operation of Kasei
Restaurant which is owned and operated by Kasei Corporation.

 For five years, petitioner performed the duties of Acting Manager. As of

December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing
allowance and a 10% share in the profit of Kasei Corporation.

 In January 2001, petitioner was replaced by Liza R. Fuentes as Manager.

Petitioner alleged that she was required to sign a prepared resolution for her
replacement but she was assured that she would still be connected with
Kasei Corporation

 Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month

beginning January up to September 2001 for a total reduction of P22,500.00
as of September 2001. Petitioner was not paid her mid-year bonus allegedly
because the company was not earning well. On October 2001, petitioner did
not receive her salary from the company.

 On October 15, 2001, petitioner asked for her salary from Acedo and the rest
of the officers but she was informed that she is no longer connected with the
company.

 Since she was no longer paid her salary, petitioner did not report for work
and filed an action for constructive dismissal before the labor arbiter.
  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 accounting matters and act concurrently as
Corporate Secretary. As technical consultant, petitioner performed her work
at her own discretion without control and supervision of Kasei Corporation.
Petitioner had no daily time record and she came to the office any time she
wanted. The company never interfered with her work except that from time
to time, the management would ask her opinion on matters relating to her
profession.

 To prove that petitioner was not an employee of the corporation, private

respondents submitted a list of employees for the years 1999 and 2000 duly
received by the BIR showing that petitioner was not among the employees
reported to the BIR, as well as a list of payees subject to expanded
withholding tax which included petitioner. SSS records were also submitted
showing that petitioner's latest employer was Seiji Corporation

 Labor Arbiter found that petitioner was illegally dismissed. NLRC affirmed
with modification the Decision of the Labor. However, the Court of Appeals
reversed the decision of the NLRC.

Issue: Whether or not there was an employer- employee relationship between

petitioner and private respondent Kasei Corporation

Ruling:

Generally, courts have relied on the so-called right of control test where the
person for whom the services are performed reserves a right to control not only the
end to be achieved but also the means to be used in reaching such end. In addition
to the standard of right-of-control, the existing economic conditions prevailing
between the parties, like the inclusion of the employee in the payrolls, can help in
determining the existence of an employer-employee relationship.

However, in certain cases the control test is not sufficient to give a complete
picture of the relationship between the parties, owing to the complexity of such a
relationship where several positions have been held by the worker. There are
instances when, aside from the employer's power to control the employee with
respect to the means and methods by which the work is to be accomplished,
economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving:

(1) the putative employer's power to control the employee with respect to the
means and methods by which the work is to be accomplished; and (2) the
underlying economic realities of the activity or relationship. This two-tiered test
would provide us with a framework of analysis, which would take into
consideration the totality of circumstances surrounding the true nature of the
relationship between the parties. This is especially appropriate in this case where
there is no written agreement or terms of reference to base the relationship on; and
due to the complexity of the relationship based on the various positions and
responsibilities given to the worker over the period of the latter's employment.

The proper standard of economic dependence is whether the worker is

dependent on the alleged 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. She reported for work
regularly and served in various capacities as Accountant, Liaison Officer,
Technical Consultant, Acting Manager and Corporate Secretary, with substantially
the same job functions, that is, rendering accounting and tax services to the
company and performing functions necessary and desirable for the proper
operation of the corporation.

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, and benefits. 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.
 It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latter's line of
business.

Therefore, the petition was granted.

6. Nogales et al., vs Capitol Medical Center et al.,

Facts :

 Pregnant with her fourth child, Corazon Nogales ("Corazon"), who was then
37 years old, was under the exclusive prenatal care of Dr. Oscar Estrada
("Dr. Estrada") beginning on her fourth month of pregnancy or as early as
December 1975. 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.

 Around midnight of 25 May 1976, Corazon started to experience mild labor

pains prompting Corazon and Rogelio Nogales ("Spouses Nogales") to see
Dr. Estrada at his home. After examining Corazon, Dr. Estrada advised her
immediate admission to the Capitol Medical Center ("CMC").

 On 26 May 1976, Corazon was admitted at 2:30 a.m. at the CMC after the
staff nurse noted the written admission request of Dr. Estrada. Upon
Corazon's admission at the CMC, Rogelio Nogales ("Rogelio") executed and
signed the "Consent on Admission and Agreement" and "Admission
Agreement." Corazon was then brought to the labor room of the CMC.

 Dr. Rosa Uy ("Dr. Uy"), who was then a resident physician of CMC,
conducted an internal examination of Corazon. Dr. Uy then called up Dr.
Estrada to notify him of her findings. Subsequently, when asked if he needed
the services of an anesthesiologist, Dr. Estrada refused. Despite Dr. Estrada's
refusal, Dr. Enriquez stayed to observe Corazon's condition.

 At 6:00 a.m., Corazon was transferred to Delivery Room No. 1 of the CMC.
At 6:10 a.m., Corazon's bag of water ruptured spontaneously. At 6:12 a.m.,
 Corazon's cervix was fully dilated. At 6:13 a.m., Corazon started to
experience convulsions. At 6:15 a.m., Dr. Estrada ordered the injection of
ten grams of magnesium sulfate. However, Dr. Ely Villafor ("Dr. Villafor"),
who was assisting Dr. Estrada, administered only 2.5 grams of magnesium
sulfate.

 At 6:22 a.m., Dr. Estrada, assisted by Dr. Villafor, applied low forceps to
extract Corazon's baby. The baby came out in an apnic, cyanotic, weak and
injured condition. Consequently, the baby had to be intubated and
resuscitated by Dr. Enriquez and Dr. Payumo.
 At 6:27 a.m., Corazon began to manifest moderate vaginal bleeding which
rapidly became profuse. Corazon's blood pressure dropped from 130/80 to
60/40 within five minutes. There was continuous profuse vaginal bleeding.

 At 7:45 a.m., Dr. Estrada ordered blood typing and cross matching with
bottled blood. It took approximately 30 minutes for the CMC laboratory,
headed by Dr. Perpetua Lacson ("Dr. Lacson"), to comply with Dr. Estrada's
order and deliver the blood.

 At 8:00 a.m., Dr. Noe Espinola ("Dr. Espinola"), head of the Obstetrics-
Gynecology Department of the CMC, was apprised of Corazon's condition
by telephone. Upon being informed that Corazon was bleeding profusely,
Dr. Espinola ordered immediate hysterectomy. Rogelio was made to sign a
"Consent to Operation."

 Due to the inclement weather then, Dr. Espinola, who was fetched from his
residence by an ambulance, arrived at the CMC about an hour later or at
9:00 a.m. He examined the patient and ordered some resuscitative measures
to be administered. Despite Dr. Espinola's efforts, Corazon died at 9:15 a.m.
The cause of death was "hemorrhage, post partum."

 Petitioners filed a complaint for damages with the Regional Trial Court of
Manila against CMC, Dr. Estrada, Dr. Villafor, Dr. Uy, Dr. Enriquez, Dr.
Lacson, Dr. Espinola, and a certain Nurse J. Dumlao for the death of
Corazon. Petitioners mainly contended that defendant physicians and CMC
personnel were negligent in the treatment and management of Corazon's
condition. Petitioners charged CMC with negligence in the selection and
supervision of defendant physicians and hospital staff.
  The trial court rendered judgment finding Dr. Estrada solely liable for
damages stating that his fault began from his incorrect and inadequate
management and lack of treatment of the pre- eclamptic condition of his
patient. On appeal, the CA affirmed the decision of the RTC. Hence, this
petition.

Issue: Whether or not Dr. Estrada is an employee of CMC, and in turn, makes
CMC also liable for the negligence of Dr. Estrada against petitioners.

Ruling:

A hospital which is the employer, master, or principal of a physician

employee, servant, or agent, may be held liable for the physician's negligence
under the doctrine of respondeat superior.

The Court had the occasion to determine the relationship between a hospital
and a consultant or visiting physician and the liability of such hospital for that
physician's negligence in Ramos v. Court of Appeals stating that private hospitals,
hire, fire and exercise real control over their attending and visiting "consultant"
staff. While "consultants" 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 important
hallmarks of an employer-employee relationship, with the exception of the
payment of wages. Accordingly, on the basis of the foregoing, we rule that for the
purpose of allocating responsibility in medical negligence cases, an employer-
employee relationship in effect exists between hospitals and their attending and
their attending physician.

The control test essentially determines whether an employment relationship

exists between a physician and a hospital based on the exercise of control over the
physician as to details. Specifically, the employer (or the hospital) must have the
right to control both the means and the details of the process by which the
employee (or the physician) is to accomplish his task.

The Court finds no single evidence pointing to CMC's exercise of control

over Dr. Estrada's treatment and management of Corazon's condition. It is
undisputed that throughout Corazon's pregnancy, she was under the exclusive
prenatal care of Dr. Estrada. At the time of Corazon's admission at CMC and
during her delivery, it was Dr. Estrada, assisted by Dr. Villafor, who attended to
Corazon. 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 when Corazon was about to give birth, which CMC considered an
emergency. Considering these circumstances, Dr. Estrada is not an employee of
CMC, but an independent contractor.

In general, a hospital is not liable for the negligence of an independent

contractor-physician. There is, however, an exception to this principle. The
hospital may be liable if the physician is the "ostensible" agent of the hospital. This
exception is also known as the "doctrine of apparent authority." In Gilbert v.
Sycamore Municipal Hospital, the Illinois Supreme Court explained the doctrine of
apparent authority stating that under 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. The elements of the action have been set out as follows:

For a hospital to be liable under the doctrine of apparent authority, a plaintiff must
show that: (1) the hospital, or its agent, acted in a manner that would lead a
reasonable person to conclude that the individual who was alleged to be negligent
was an employee or agent of the hospital; (2) where the acts of the agent create the
appearance of authority, the plaintiff must also prove that the hospital had
knowledge of and acquiesced in them; and (3) the plaintiff acted in reliance upon
the conduct of the hospital or its agent, consistent with ordinary care and
prudence."

7. Coca-Cola Bottlers Phils., vs Dr. Climaco

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
and a there was a Comprehensive Medical Plan, which contains the duties
and responsibilities of respondent, adverted to in the Retainer Agreement.
 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 until he received a letter dated
March 9, 1995 from petitioner company concluding their retainership
agreement effective 30 days from receipt thereof.

 It is noted that as early as September 1992, petitioner was already making

inquiries regarding his status with petitioner company. First, he wrote a
letter addressed to Dr. Willie Sy, the Acting President and Chairperson of
the Committee on Membership, Philippine College of Occupational
Medicine. In response, Dr. Sy wrote a letter to the Personnel Officer of
Coca-Cola Bottlers Phils., Bacolod City, stating that respondent should be
considered as a regular part-time physician, having served the company
continuously for four (4) years. He likewise 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. 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.

 While the complaint was pending before the Labor Arbiter, 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, Bacolod City.

 Labor Arbiter Jesus N. Rodriguez, Jr. 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 in the first case. Later, the
second case was also dismissed.

 On appeal, 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.

 However, the Court of Appeals ruled that an employer-employee

relationship existed between petitioner company and respondent after
applying the four-fold test

 Hence, this petition.

Issue: Whether or not there exists an employer-employee relationship between the

parties.

Rule:

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 Court agrees with the finding of the Labor Arbiter and the NLRC that the
circumstances of this case show that no employer-employee relationship exists
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. The Labor Arbiter reasoned that the Comprehensive
Medical Plan, which contains the respondent's objectives, duties and obligations,
does not tell respondent how to conduct his physical examination, how to
immunize, or how to diagnose and treat his patients, employees of [petitioner]
company, in each case.

In effect, the Labor Arbiter held that 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 NLRC affirmed the findings of the Labor Arbiter and stated that it is
precisely because the company lacks the power of control that the contract
provides that respondent shall be directly responsible to the employee concerned
and their dependents for any injury, harm or damage caused through professional
negligence, incompetence or other valid causes of action.

8. Escasinas et al., vs Shangri-las Mactan Island Resort et al.,

Facts:

 Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners)

were engaged in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito
(respondent doctor) to work in her clinic at respondent Shangri-la's Mactan
Island Resort (Shangri-la) in Cebu of which she was a retained physician.

 In late 2002, petitioners filed with the National Labor Relations Commission
(NLRC) a complaint for regularization, underpayment of wages, non-
payment of holiday pay, night shift differential and 13th month pay
differential against respondents, claiming that they are regular employees of
Shangri-la.

 Shangri-la claimed, however, that petitioners were not its employees but of
respondent doctor whom it retained via Memorandum of Agreement (MOA)
pursuant to Article 157 of the Labor Code, as amended.

 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.

 Labor Arbiter declared petitioners to be regular employees of Shangri-la.

The Arbiter thus ordered Shangri-la to grant them the wages and benefits
due them as regular employees from the time their services were engaged. In
finding petitioners to be regular employees of Shangri-la, the Arbiter 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 the MOA between Shangri-la
and respondent doctor was an "insidious mechanism in order to circumvent
[the doctor's] tenurial security and that of the employees under her".
  Shangri-la and respondent doctor appealed to the NLRC. Petitioners
appealed too, but only with respect to the non-award to them of some of the
benefits they were claiming.

 The NLRC held that the Arbiter erred in interpreting Article 157 in relation
to Article 280 of the Labor Code, as what is required under Article 157 is
that the employer should provide the services of medical personnel to its
employees, but nowhere in said article is a provision that nurses are required
to be employed. Petitioners cannot be automatically deemed a regular
employee; and that the MOA amply shows that respondent doctor was in
fact engaged by Shangri-la on a retainer basis, under which she could hire
her own nurses and other clinic personnel.

 On appeal, the Court of Appeals affirmed the NLRC Decision that no

employer-employee relationship exists between Shangri-la and petitioners.
The appellate court concluded that all aspects of the employment of
petitioners being under the supervision and control of respondent doctor and
since Shangri-la is not principally engaged in the business of providing
medical or healthcare services, petitioners could not be regarded as regular
employees of Shangri- la.
 Hence, this petition.

Issue: Whether or not there exists an employer-employee relationship between the

parties

Ruling:

The existence of an independent and permissible contractor relationship

is generally established by considering the following determinants: whether
the contractor is carrying on an independent business; the nature and extent
of the work; the skill required; the term and duration of the relationship; the right
to assign the performance of a specified piece of work; the control and supervision
of the work to another; the employer's power with respect to the hiring, firing and
payment of the contractor's workers; the control of the premises; the duty to supply
the premises, tools, appliances, materials and labor; and the mode, manner and
terms of payment.
 On the other hand, 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.

Against the above-listed determinants, the Court holds that respondent

doctor is a legitimate independent contractor. That Shangri-la provides the
clinic premises and medical supplies for use of its employees and guests 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.

As to payment of wages, respondent doctor is the one who underwrites the

following: salaries, SSS contributions and other benefis of the staff; group life,
group personal accident insurance and life/death insurance for the staff with
minimum benefit payable at 12 times the employee's last drawn salary, as well as
value added taxes and withholding taxes, sourced from her P60,000.00 monthly
retainer fee and 70% share of the service charges from Shangri-la's guests who
avail of the clinic services. It is unlikely that respondent doctor would report
petitioners as workers, pay their SSS premium as well as their wages if they were
not indeed her employees.

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.

Contrary to petitioners' contention, the various office directives issued by

Shangri- la's officers do not imply that it is Shangri-la's management and not
respondent doctor who exercises control over them or that Shangri-la has control
over how the doctor and the nurses perform their work. It is, at most,
administrative in nature, related as it is to safety matters; while the letter forbidding
the clinic from receiving cash payments from the resort's guests is a matter of
financial policy in order to ensure proper sharing of the proceeds, considering that
Shangri-la and respondent doctor share in the guests' payments for medical
services rendered. In fine, as Shangri-la does not control how the work should be
performed by petitioners, it is not petitioners' employer.

Hence, the petion was denied.

9. Semblante et al,, vs Court of Appeals

Facts:

 Petitioners Semblante and 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.

 As the masiador, Semblante calls and takes the bets from the gamecock
owners and other bettors and orders the start of the cockfight. He also
distributes the winnings after deducting the arriba, or the commission for the
cockpit. Meanwhile, as the sentenciador, Pilar oversees the proper gaffing of
fighting cocks, determines the fighting cocks' physical condition and
capabilities to continue the cockfight, and eventually declares the result of
the cockfight.

 For their services as masiador and sentenciador, Semblante receives

PhP2,000 per week or a total of PhP8,000 per month, while Pilar gets
PhP3,500 a week or PhP14,000 per month. They work every Tuesday,
Wednesday, Saturday, and Sunday every week, excluding monthly derbies
and cockfights held on special holidays. Their working days start at 1:00
p.m. and last until 12:00 midnight, or until the early hours of the morning
depending on the needs of the cockpit. Petitioners had both been issued
employees' identification cards that they wear every time they report for
duty. They alleged never having incurred any infraction and/or violation of
the cockpit rules and regulations.

 However, petitioners were denied entry into the cockpit upon the
instructions of respondents, and were informed of the termination of their
services effective that date. This prompted petitioners to file a complaint for
illegal dismissal against respondents.
  In answer, respondents denied that petitioners were their employees and
alleged that they were associates of respondents' independent contractor,
Tomas Vega. Respondents claimed that petitioners have no regular working
time or day and they are free to decide for themselves whether to report for
work or not on any cockfighting day.

 The Labor Arbiter found petitioners to be regular employees of respondents

as they performed work that was necessary and indispensable to the usual
trade or business of respondents for a number of years. The Labor Arbiter
also ruled that petitioners were illegally dismissed, and so ordered
respondents to pay petitioners their backwages and separation pay

 On the other hand, the NLRC rendered a decision that there was no
employer-employee relationship between petitioners and respondents,
respondents having no part in the selection and engagement of petitioners,
and that no separate individual contract with respondents was ever executed
by petitioners.

 In its Decision, the appellate court found for respondents, noting that
referees and bet-takers in a cockfight need to have the kind of expertise that
is characteristic of the game to interpret messages conveyed by mere
gestures. Hence, petitioners are akin to independent contractors who possess
unique skills, expertise, and talent to distinguish them from ordinary
employees. Further, respondents did not supply petitioners with the tools and
instrumentalities they needed to perform work. Petitioners only needed their
unique skills and talents to perform their job as masiador and sentenciador.

 Hence, the petition.

Issue: Whether or not the petitioners are independent contractors.

Ruling:

It is evident, on the other hand, that petitioners are NOT employees of

respondents, since their relationship fails to pass muster the four-fold test of
employment We have repeatedly mentioned in countless decisions: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employee's conduct, which is
the most important element.

As found by both the NLRC and the CA, respondents had no part in
petitioners' selection and management; petitioners' compensation was paid out of
the arriba (which is a percentage deducted from the total bets), not by petitioners;
and petitioners performed their functions as masiador and sentenciador free from
the direction and control of respondents. In the conduct of their work, petitioners
relied mainly on their "expertise that is characteristic of the cockfight gambling,"
and were never given by respondents any tool needed for the performance of their
work.

Respondents, not being petitioners' employers, could never have dismissed,

legally or illegally, petitioners, since respondents were without power or
prerogative to do so in the first place.

Hence, the petition was denied.

10.Bernarte vs Philippine Basketball Association

Facts:

 Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were
invited to join the PBA as referees. During the leadership of Commissioner
Emilio Bernardino, they were made to sign contracts on a year-to-year basis.

 On January 15, 2004, Bernarte received a letter from the Office of the
Commissioner advising him that his contract would not be renewed citing
his unsatisfactory performance on and off the court. It was a total shock for
Bernarte who was awarded Referee of the year in 2003. He felt that the
dismissal was caused by his refusal to fix a game upon order of Ernie De
Leon.

 On the other hand, complainant Guevarra alleges that he was invited to join
the PBA pool of referees in February 2001. On March 1, 2001, he signed a
contract as trainee. Beginning 2002, he signed a yearly contract as Regular
Class C referee. On May 6, 2003, respondent Martinez issued a
memorandum to Guevarra expressing dissatisfaction over his questioning on
 the assignment of referees officiating out-of-town games. Beginning
February 2004, he was no longer made to sign a contract.

 According to the respondents, complainants were not illegally dismissed

because they were not employees of the PBA. Their respective contracts of
retainer were simply not renewed. PBA had the prerogative of whether or
not to renew their contracts, which they knew were fixed.

 The Labor Arbiter declared petitioner an employee whose dismissal by

respondents was illegal. The NLRC affirmed the Labor Arbiter's judgment.
However, the Court of Appeals, overturned the decisions of the NLRC and
Labor Arbiter.

Issue: Whether or not petitioner is an independent contractor

Ruling:

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

The foregoing stipulations in the retainer contract hardly demonstrate control

over the means and methods by which petitioner performs his work as a referee
officiating a PBA basketball game. The contractual stipulations do not pertain to,
much less dictate, how and when petitioner will blow the whistle and make calls.
On the contrary, they merely serve as rules of conduct or guidelines in order to
maintain the integrity of the professional basketball league. As correctly observed
by the Court of Appeals, "how could a skilled referee perform his job without
blowing a whistle and making calls? . . . [H]ow can the PBA control the
performance of work of a referee without controlling his acts of blowing the
whistle and making calls?

In Sonza v. ABS-CBN Broadcasting Corporation, which determined the

relationship between a television and radio station and one of its talents, the Court
held that not all rules imposed by the hiring party on the hired party indicate that
the latter is an employee of the former. The Court held that these general rules 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.

We agree with respondents that once in the playing court, the referees
exercise their own independent judgment, based on the rules of the game, as to
when and how a call or decision is to be made. The referees decide whether an
infraction was committed, and the PBA cannot overrule them once the decision is
made on the playing court. The referees are the only, absolute, and final authority
on the playing court.

Moreover, the following circumstances indicate that petitioner is an

independent contractor: (1) the referees are required to report for work only when
PBA games are scheduled, which is three times a week spread over an average of
only 105 playing days a year, and they officiate games at an average of two hours
per game; and (2) the only deductions from the fees received by the referees are
withholding taxes.

Furthermore, the applicable foreign case law declares that a referee is an

independent contractor, whose special skills and independent judgment are
required specifically for such position and cannot possibly be controlled by the
hiring party.

In Yonan v. United States Soccer Federation, Inc., the United States District
Court of Illinois held that plaintiff, a soccer referee, is an independent contractor,
and not an employee of defendant which is the statutory body that governs soccer
in the United States.

In McInturff v. Battle Ground Academy of Franklin, it was held that the

umpire was an independent contractor.

Hence, the petition was denied.

11.Jao vs BCC Product Sales Inc.

Facts:
  Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its
President, respondent Terrance Ty (Ty), employed him as comptroller with a
monthly salary of P20,000.00 to handle the financial aspect of BCC's
business;

 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 were frustrated because
he continued to be barred from entering the premises of BCC.

 He filed a complaint 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.

ac
 Although the Labor Arbiter ruled in favor of petitioner, the NLRC vacated
the ruling and remanded the case for further proceedings. Thereafter, Labor
Arbiter rendered a new decision dismissing petitioner's complaint for want
of an employer-employee relationship between the parties.

 On appeal, the NLRC rendered a decision reversing Labor Arbiter Mayor's

decision, and declaring that petitioner had been illegally dismissed. It
ordered the payment of unpaid salaries, backwages and 13th month pay,
separation pay and attorney's fees.

 Respondents assailed the NLRC decision on certiorari in the CA. The CA

agreed with the finding that no employer-employee relationship existed
between petitioner BCC and the private respondent.

Issue: Whether or not an employer- employee relationship existed between

petitioner and BCC.

Ruling:
 Our perusal of the affidavit of petitioner compels a conclusion similar to that
reached by the CA and the Labor Arbiter to the effect that the a􏰆davit actually
supported the contention that petitioner had really worked in BCC as SFC's
representative.

Moreover, in determining the presence or absence of an employer-employee

relationship, the Court has consistently looked for the following incidents, to wit:
(a) the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer's power to control the employee on
the means and methods by which the work is accomplished. The last element, the
so-called control test, is the most important element.

It can be deduced from the March 1996 affidavit of petitioner that

respondents challenged his authority to deliver some 158 checks to SFC.
Considering that he contested respondents' challenge by pointing to the existing
arrangements between BCC and SFC, it should be clear that respondents did not
exercise the power of control over him, because he thereby acted for the benefit
and in the interest of SFC more than of BCC.

In addition, petitioner presented no document setting forth the terms of his

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

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 as 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.

The decision of the CA was affirmed.

12. Legend Hotel (Manila) vs Realuyo

Facts:
  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.

 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;

 Joey R. Roa filed a complaint for alleged unfair labor practice, constructive
illegal dismissal, and the underpayment/nonpayment of his premium pay for
holidays, separation pay, service incentive leave pay, and 13th month pay.
 According to him, he insisted 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.

 In its defense, petitioner denied the existence of an employer-employee

relationship with respondent, insisting that he had been only a talent engaged
to provide live music at Legend Hotel's Madison Coffee Shop for three
hours/day on two days each week; and stated that the economic crisis that
had hit the country constrained management to dispense with his services. E

 The Labor Arbiter (LA) dismissed the complaint for lack of merit upon
finding that the parties had no employer-employee relationship.

 Respondent appealed, but the National Labor Relations Commission

(NLRC) but affirmed the decision of the LA.

 Respondent assailed the decision of the NLRC in the Court of Appeals (CA)
on certiorari and the CA set aside the decision of the NLRC.

Issue: Whether or not respondent was an employee of petitioner

Ruling:

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. EAISDH

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.

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. Respondent's remuneration, albeit denominated as
talent fees, was still considered as included in the term wage.
 That respondent worked for less than eight hours/day was of no consequence
and did not detract from the CA's finding on the existence of the employer-
employee relationship. In providing that the "normal hours of work of any
employee shall not exceed eight (8) hours a day," Article 83 of the Labor Code
only set a maximum of number of hours as "normal hours of work" but did not
prohibit work of less than eight hours.

Thirdly, the power of the employer to control the work of the employee is
considered the most significant determinant of the existence of an employer-
employee relationship. This is the so-called control test, and is premised on
whether the person for whom the services are performed reserves the right to
control both the end achieved and the manner and means used to achieve that end.

A review of the records shows, however, that respondent performed his work as a
pianist under petitioner's supervision and control. Specifically, petitioner's control
of both the end achieved and the manner and means used to achieve that end was
demonstrated by the following, to wit: (1) He could not choose the time of his
performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six
times a week; (2) He could not choose the place of his performance;

(3) The restaurant's manager required him at certain times to perform only Tagalog
songs or music, or to wear barong Tagalog to conform to the Filipiniana motif; and
(4) He was subjected to the rules on employees' representation check and chits, a
privilege granted to other employees.

Relevantly, it is worth remembering that the employer need not actually

supervise the performance of duties by the employee, for it sufficed that the
employer has the right to wield that power.

Lastly, petitioner claims that it had no power to dismiss respondent due to

his not being even subject to its Code of Discipline, and that the power to terminate
the working relationship was mutually vested in the parties, in that either party
might terminate at will, with or without cause. The claim is contrary to the records.
Indeed, the memorandum informing respondent of the discontinuance of his
service because of the present business or financial condition of petitioner showed
that the latter had the power to dismiss him from employment.

13. New Philippine Skylanders, Inc. vs Dakila

Facts:
 Respondent Dakila was employed by petitioner corporation as early as 1987
and terminated for cause in April 1997 when the corporation was sold. In
May 1997, he was rehired as consultant by the petitioners under a Contract
for Consultancy Services dated April 30, 1997.

 Thereafter, in a letter dated 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 Dakila filed a complaint for constructive illegal

dismissal, non-payment of retirement benefits, under/non-payment of wages
and other benefits of a regular employee, and damages against petitioners
before the NLRC.

 He averred, among others, 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. In support of his claim, he submitted, among
others, copies of his time cards, Official Business Itinerary Slips, Daily
Attendance Sheets and other documents prescribing the manner in which his
tasks were to be accomplished under the control of the petitioners and
acknowledging his status as a regular employee of the corporation.

 On the other hand, petitioners asserted that respondent Dakila 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 Dakila terminated his contract in a
letter dated April 19, 2007, thus, negating his dismissal.

 Labor Arbiter rendered a decision finding respondent Dakila to have been

illegally dismissed and ordered his reinstatement. On appeal, the NLRC
sustained the Labor Arbiter's (LA) finding that respondent Dakila was a
regular employee and that his dismissal was illegal.
  The CA dismissed the petition for failure to show that the NLRC committed
grave abuse of discretion in affirming the LA's Decision. It found the factual
findings of the LA and the NLRC to be supported by substantial evidence
and thus, should be accorded respect and finality. Hence, the instant petition
reiterating the arguments raised before the CA.

Issue: Whether or not there is the existence of employer-employee relationship

Ruling:

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 there is a clear showing of palpable error or arbitrary
disregard of evidence which does not obtain in this case. Records reveal that both
the LA and the NLRC, as affirmed by the CA, have found substantial evidence to
show that respondent Dakila was a regular employee who was dismissed without
cause.

14. Tesoro et al., vs Metro Manila Retreaders Inc., et al.,

Facts:

 On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro,

Pedro Ang, and Gregorio Sharp used to work as salesmen for respondents
Metro Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or Power
Tire and Rubber Corporation, apparently sister companies, collectively
called "Bandag." Bandag offered repair and retread services for used tires.

 In 1998, however, Bandag developed a franchising scheme that would

enable others to operate tire and retreading businesses using its trade name
and service system.
  Petitioners quit their jobs as salesmen and entered into separate Service
Franchise Agreements (SFAs) with Bandag for the operation of their
respective franchises. Under 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 incomes.

 At first, petitioners managed and operated their respective franchises without

any problem. After a length of time, however, they began to default on their
obligations to submit periodic liquidations of their operational expenses in
relation to the revolving funds Bandag provided them. Consequently,
Bandag terminated their respective SFA.

 Aggrieved, petitioners filed a complaint for constructive dismissal, non-

payment of wages, incentive pay, 13th month pay and damages against
Bandag with the National Labor Relations Commission (NLRC).
 Petitioners contend that, notwithstanding the execution of the SFAs, they
remained to be Bandag's employees, the SFAs being but a circumvention of
their status as regular employees.

 For its part, Bandag pointed out that petitioners freely resigned from their
employment and decided to avail themselves of the opportunity to be
independent entrepreneurs under the franchise scheme that Bandag had.
Thus, no employer- employee relationship existed between petitioners and
Bandag.

 The Labor Arbiter rendered a Decision, dismissing the complaint on the

ground that no employer-employee relationship existed between Bandag and
petitioners. Upon petitioners' appeal to the NLRC the latter affirmed the
Labor Arbiter's Decision. The CA rendered a decision dismissing the
petition for lack of merit.

Issue: Whether or not petitioners remained to be Bandag’s salesmen under the

franchise scheme it entered into with them.

Ruling:
 The tests for determining 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 with
respect to the means and methods by which the work is to be accomplished. The
last is called the "control test," the most important element.

When petitioners agreed to operate Bandag's franchise branches in different

parts of the country, they knew that this substantially changed their former
relationships. They were to cease working as Bandag's salesmen, the positions they
occupied before they ventured into running separate Bandag branches. They were
to cease receiving salaries or commissions.

It is pointed out that Bandag continued, like an employer, to exercise control

over petitioners' work. It points out that Bandag: (a) retained the right to adjust the
price rates of products and services; (b) imposed minimum processed tire
requirement (MPR); (c) reviewed and regulated credit applications; and (d)
retained the power to suspend petitioners' services for failure to meet service
standards.

But uniformity in prices, quality of services, and good business practices are
the essence of all franchises. A franchisee will damage the franchisor's business if
he sells at different prices, renders different or inferior services, or engages in bad
business practices. These business constraints are needed to maintain collective
responsibility for faultless and reliable service to the same class of customers for
the same prices.

This is not the "control" contemplated in employer-employee relationships.

Control in such relationships addresses the details of day to day work like
assigning the particular task that has to be done, monitoring the way tasks are done
and their results, and determining the time during which the employee must report
for work or accomplish his assigned task.

The Court held, in Tongko v. The Manufacturers Life Insurance Co. (Phils.),
Inc., that, results-wise, the insurance company, as principal, can impose
production quotas upon its independent agents and determine how many individual
agents, with specific territories, such independent agents ought to employ to
achieve the company's objectives. These are management policy decisions that the
labor law element of control cannot reach. Petitioners' commitment to abide by
Bandag's policy decisions and implementing rules, as franchisees does not make
them its employees.
 Hence, the petition was denied.

15. Cabaobas et al., vs Pepsi Cola

Facts:

 Respondent Pepsi-Cola Products Philippines, Inc. (Pepsi) is a domestic

corporation engaged in manufacturing, bottling and distributing of soft
drink products which operates all over the country. In this case, the facts
center on the Tanauan Plant in Tanauan, Leyte.

 In 1999, Pepsi’s Tanauan plant incurred business losses amounting to

29,167,390 pesos. As a result, the company implemented a company-
wide retrenchment program and retrenched 47 employees in its Tanauan
plant.

 In 2000, the petitioners, who were permanent and regular employees of

the Tanuan plant, were included in the retrenchment program which led
to the filing of complaints for illegal dismissal before the National Labor
Relations Commission (NLRC) in Tacloban City.

 Petitioners alleged that Pepsi was not facing any financial losses as they
had regularized four employees and hired replacements for the 47
dismissed employees and such retrenchment program was designed to
prevent their union from becoming the certified bargaining agent of
Pepsi’s rank and file employees.

 On the other hand, the Pepsi contends that the retrenchment program was
a valid exercise of management prerogative and that they submitted
audited financial statements to prove that the company was suffering
losses.

 In December 2000, the Labor Arbiter rendered a decision finding the

dismissal of the petitioner illegal and ordered that they be reinstated to
their former positions. Pepsi appealed the decision to the NLRC of
Tacloban City which led to the dismissal of the complaints for illegal
dismissal and declared that the retrenchment program was valid.
  Unsatisfied, petitioner filed a petition for certiorari before the CA but the
petition was denied and the decision of the NLRC was upheld. Hence,
petitioners filed a review on certiorari assailing the decision of the CA.

Issue: Whether or not the petition for review on certiorari should be denied under
the principle of stare decisis

Ruling:

The Court sustains PCPPI's contention.

The principle of stare decisis et non quieta movere (to adhere to precedents
and not to unsettle things which are established) is well entrenched in Article 8 of
the New Civil Code which states that judicial decisions applying or interpreting the
laws or the Constitution shall form part of the legal system of the Philippines.

In Pepsi-Cola Products Philippines, Incorporated v. Pagdanganan, the Court

explained such principle that the he doctrine of stare decisis embodies the legal
maxim that a principle or rule of law which has been established by the decision of
a court of controlling jurisdiction will be followed in other cases involving a
similar situation. It is founded on the necessity for securing certainty and stability
in the law and does not require identity of or privity of parties. This is
unmistakable from the wordings of Article 8 of the Civil Code.

Guided by the jurisprudence on stare decisis, the remaining question is

whether the factual circumstances of this present case are substantially the same as
the Pepsi-Cola Products Philippines, Inc. v. Molon case. The Court rules in the
affirmative.

There is no dispute that the issues, subject matters and causes of action between the
parties in Pepsi-Cola Products Philippines, Inc. v. Molon and the present case are
identical, namely, the validity of PCPPI's retrenchment program, and the
legality of its employees' termination. There is also substantial identity of parties
because there is a community of interest between the parties in the first case and
the parties in the second case, even if the latter was not impleaded in the 􏰃rst case.
The respondents in Pepsi- Cola Products Philippines, Inc. v. Molon are
petitioners' former co-employees and co- union members of LEPCEU-ALU who
were also terminated pursuant to the PCPPI's retrenchment program. The only
difference between the two cases is the date of the employees' termination. That
the validity of the same PCPPI retrenchment program had already been passed
upon and, thereafter, sustained in the related case of Pepsi-Cola Products
Philippines, Inc. v. Molon, albeit involving different parties, impels the Court to
accord a similar disposition and uphold the legality of same program.

however, abandonment of the ruling in Pepsi-Cola Products Philippines,

Inc. v. Molon on the same issue of the validity of PCPPI's retrenchment program
must be based only on strong and compelling reasons. After a careful review of the
records, the Court finds no such reasons were shown to obtain in this case.

16. Apelanio vs Arcanys

Facts:

 Petitioner Apelanio was hired by respondents Arcanys, Inc. and CEO as a

Usability/Web Design Expert. He was placed on a "probationary status" for
a period of six months.

 On October 3, 2012, his sixth (6th) month evaluation, he received a rating

of 2.77. Respondents then served petitioner a letter informing him that they
were not converting his status into a regular employee since his performance
fell short of the stringent requirements and standards set by respondent
corporation. Petitioner was given his final pay and he signed a Waiver,
Release and Quitclaim in favor of respondents. CAIHTE

 Petitioner averred that when his probationary contract was terminated, he

was immediately offered a retainership agreement which involved a similar
scope of work and responsibilities. He was told that he did not meet the
"reasonable standards of satisfactory performance," but was nevertheless
offered said retainership agreement with identical requirements on a project
basis, without security of tenure, with lesser pay, and without any labor
standard benefits. Petitioner was confused with the arrangement, but agreed
since he had a family to support. He believed that he was still undergoing
respondents' evaluation.
 After the lapse of the retainership agreement, petitioner was offered another
retainership agreement again with an identical scope of work but at a
reduced daily rate of P857.14, down from the daily rate of P1,257.15 from
the initial agreement.

 As a result, petitioner became suspicious of the respondent corporation's

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. Petitioner alleged that respondents
found him qualified for the position, but opted to hire his services on a per
project basis, justifying the lesser pay and the lack of security of tenure and
labor standard benefits.

 On the other hand, respondents stated that they hired petitioner as a web
designer and was made aware that he would be placed on probationary
status, and that his failure to meet the stringent requirements and standards
set forth would terminate his employment contract.

 Respondents also alleged that at the time petitioner's probationary

employment ended, respondent corporation experienced several hacking
incidents that were reported to the police authorities. The hacking incidents
caused severe losses and damage to respondents, and the management was
determined to go after the perpetrator.

 Respondents claimed that petitioner took advantage of their predicament

when he personally approached respondent corporation's CEO and
represented that he had information about the hacking perpetrator.
Ultimately, however, it dawned on respondents that petitioner did not
actually have information or leads about the hacking and that he just took
advantage of their situation.

 The Labor Arbiter rendered a Decision dismissing petitioner's illegal

dismissal complaint against respondents. On appeal, the NLRC reversed and
set aside the decision of the LA. On the other hand, the Court of Appeals
granted the petition and reversed the NLRC's Decision and Resolution, and
reinstated the decision of the Labor Arbiter dismissing petitioner's complaint
for illegal dismissal.
Issue: Whether or not petitioner was an employee of respondent company

Ruling:

Jurisprudence is replete with circumstances stating that an employer may

unilaterally prepare an employment contract, stating the terms and conditions
required of a potential employee, and that a potential employee had only to adhere
to it by signing it. Such contract is known as a contract of adhesion, which is
allowed by law albeit construed in favor of the employee in case of ambiguity.

It bears emphasis that in contracts of adhesion, "[o]ne party prepares the

stipulation in the contract, while the other party merely affixes his signature or his
'adhesion' thereto[.]" Besides, "[t]he one who adheres to the contract is in reality
free to reject it entirely; if he adheres, he gives his consent." In this case, however,
it cannot be denied that in the retainership agreements provided by petitioner, his
signature or "adherence" is notably absent. As a result, said retainership
agreements remain ineffectual and cannot be used as evidence against respondents.

Furthermore, a review of the retainership agreements indicates that

petitioner was merely engaged as a consultant, in relation to the hacking incidents
endured by respondents. Petitioner merely alleged that he was hired as an
employee under said retainership agreements, but has yet to provide evidence to
support such claim

Thus, petition was denied.

17. Dr. Loreche Amit vs Cagayan De Oro Medical Center

Facts:

 Dr. Mary Jean P. Loreche-Amit (petitioner) started working with Cagayan

De Oro Medical Center, Inc. (CDMC), sometime in May 1996, when she
was engaged by the late Dr. Jose N. Gaerlan (Dr. Gaerlan) as Associate
Pathologist in the Department of Laboratories. Upon the demise of Dr.
Gaerlan, CDMC's Board of Directors formally appointed petitioner as Chief
Pathologist for five years or until May 15, 2011.
 Board of Directors passed a resolution, recalling petitioner's appointment as
Chief Pathologist. This prompted petitioner to file a complaint for illegal
dismissal, contending that she was dismissed by CDMC from her work
without just cause and due process.

 In her complaint, petitioner narrated the circumstances which surrounded the

recall of her appointment. She averred that Dr. Emano asked her to help his
daughter to qualify as a pathologist considering that petitioner is one of the
six members of the Board of Governors accredited by the Professional
Regulation Commission. However, petitioner refused to assist Dr. Emano-
Bleza because the latter failed to qualify in the clinical pathology
examination. Such refusal, according to petitioner, started the subtle attempt
of Dr. Emano to oust her from her job|
 Later, Dr. Oh issued an Inter-Office Memorandum addressed to all
laboratory personnel stating that working in and out of the building without
proper permission is to be treated as absence without official leave and
payment for printing of duplicate copies not endorsed to the hospital is a
form of stealing.

 As petitioner slammed the Memorandum against the wall and tagged the
name of Dr. Oh as an irrational man, she received an Inter-Office
Memorandum from Dr. Oh for alleged conduct unbecoming/insubordination,
and to explain why her appointment should not be revoked due to such
behavior. Finally, a Memorandum recalling her appointment was issued. 

 Respondents averred that petitioner was not hired by them as she merely
assisted Dr. Gaerlan in operating the hospital's laboratory. Respondents
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.

 Labor Arbiter dismissed the complaint for the lack of jurisdiction. The Labor
Arbiter found that petitioner is a corporate officer of the hospital because of
her appointment by the Board of Directors through a resolution; thus,
matters relating to the propriety of her dismissal is under the jurisdiction of
the Regional Trial Court (RTC).
  On appeal, the NLRC affirmed the ruling of the LA. Petitioner filed a
petition for certiorari before the CA, but dismissed the petition. Hence, the
petition.

Issue: Whether or not there was the existence of an employee-employer

relationship between the petitioner and respondent.

Rule:

The four-fold test, to wit: 1) the selection and engagement of the employees;
2) the payment of wages; 3) the power of dismissal; and 4) the power to control the
employee's conduct, must be applied to determine the existence of an employer-
employee relationship.

In the case at bar, CDMC does not exercise the power of control over
petitioner. The power to control the work of the employee is considered the most
significant determinant of the existence of an employer-employee relationship.
This test is premised on whether the person for whom the services are performed
reserves the right to control both the end achieved and the manner and means used
to achieve that end.

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. The benchmark of economic reality
in analyzing possible relationships for purposes of applying the Labor Code ought
to be the economic dependence of the workers on his employer. Thus, the fact that
petitioner continued to work for other hospitals strengthens the proposition that
petitioner was not wholly dependent on CDMC.

The rule is that where a person who works for another performs his job more
or less at his own pleasure, in the manner he sees fit, not subject to definite hours
or conditions of work, and is compensated according to the result of his efforts and
not the amount thereof, no employer-employee relationship exists. 

18. Fernandez vs Kalookan Slaughterhouse

Facts:

 Petitioner Fernandez was hired in 1994 as a butcher Kalookan

Slaughterhouse, a single proprietorship owned by respondent Cunanan. He
claimed that he worked from Monday to Sunday, from 6:30 P.M. to 7:30
A.M., with a daily wage of P700.00, which was later reduced to P500.00.
 Petitioner further claimed that on July 21, 2014, he suffered from a headache
and did not report for work. The next day, however, he was shocked when
he only received P200.00 due to his previous undertime and was informed
that he could no longer report for work due to his old age.

 On the other hand, Kalookan Slaughterhouse asserted that petitioner is an

independent butcher working under its Operation Supervisor, Cirilo Tablit
(Tablit). He received payment based on the number of hogs he butchered
and was only required to be in the slaughterhouse when customers brought
hogs to be slaughtered.

 Moreover, Kalookan Slaughterhouse alleged that petitioner violated the

policies and he misconstrued the disallowance to enter the slaughterhouse
as an act of dismissal.

 In 2014, petitioner filed the complaint for illegal dismissal before the LA.
After the exchange of pleadings, the LA ruled that petitioner was illegally
dismissed.

 Aggrieved, respondent appealed to the NLRC, which reversed the LA’s

decision. Petitioner questioned the NLRC decision to the CA through a
petition for certiorari but the petition was denied. Hence, this petition.

Issue: Whether or not there was an existence of the employer-employee

relationship between petitioner and the respondents

Rule:
Yes. It is settled that "[t]o determine the existence of an employer-employee
relationship, four elements generally need to be considered, namely: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employee's conduct. These
elements or indicators comprise the so-called 'four-fold' test of employment
relationship.

In order to prove that he was an employee of respondent, petitioner

presented log sheets for 3 days in Sept. 2012 showing that he reported for work, 3
gate passes and one identification card indicating that he was a butcher and a trip
ticket showing that petitioner was part of a group who went to Bataan.

Similar to the facts of this case, the Court in Masonic Contractor, Inc. v.
Madjos. (Masonic Contractor) ruled that the fact that the company provided
identification cards and uniforms and the vague affidavit of the purported employer
were sufficient evidence to prove the existence of employer-employee relationship
as it is common practice for companies to provide identification cards to
individuals not only as a security measure, but more importantly to identify the
bearers thereof as bona fide employees of the firm or institution that issued
them.||| 

While Tablit, an employee of the slaughterhouse for more or less 20 years,

claimed to be petitioner's employer, he also admitted that he did not exercise any
control over the means and methods of petitioner in rendering butchering services.
If he was indeed petitioner's employer, he should have control over petitioner's
means and methods for doing his job.|

It, however, appears on record that De Guzman, who is also an employee of

Kalookan Slaughterhouse, was the one who exercised control over petitioner's
means and methods as he reprimanded petitioner for his failure to properly store
his butchering knives, coming to Kalookan Slaughterhouse with dirty clothes,
reporting for work drunk, and not having an I.D. before going to the
slaughterhouse.||| 

All the foregoing show that Kalookan Slaughterhouse, through Tablit, was
the one who engaged petitioner, paid for his salaries, and in effect had the power
to dismiss him. Further, Kalookan Slaughterhouse exercised control over
petitioner's conduct through De Guzman. To the mind of the Court, Kalookan
Slaughterhouse was petitioner's employer and it exercised its rights as an
employer through Tablit and De Guzman, who were its employee.

Hence, the petition was granted.

 III. HIRING OF EMPLOYEE

1. PT&T vs NLRC

Facts:

 Grace de Guzman was initially hired by petitioner as a reliever, specifically

as a "Supernumerary Project Worker," for a fixed period. Under the Reliever
Agreement which she signed with petitioner company, her employment was
to be immediately terminated upon expiration of the agreed period.

 On September 2, 1991, private respondent was once more asked to join

petitioner company as a probationary employee, the probationary period to
cover 150 days. In the job application form that was furnished her to be
filled up for the purpose, she indicated in the portion for civil status therein
that she was single although she had contracted marriage a few months
earlier.

 When petitioner supposedly learned about the same, later, its branch
supervisor in Baguio City sent to private respondent a memorandum dated
January 15, 1992 requiring her to explain the discrepancy. In that
memorandum, she was reminded about the company's policy of not
accepting married women for employment.

 Private respondent stated that she was not aware of PT&T's policy regarding
married women at the time, and that all along she had not deliberately
hidden her true civil status. Petitioner nonetheless remained unconvinced by
her explanations. Private respondent was dismissed from the company,
which she readily contested by initiating a complaint for illegal dismissal,
coupled with a claim for non-payment of cost of living allowances (COLA),
before the Regional Arbitration Branch of the National Labor Relations
Commission in Baguio City.

 Labor Arbiter handed down a decision declaring that private respondent,

who had already gained the status of a regular employee, was illegally
dismissed by petitioner. On appeal to the NLRC, said public respondent
 upheld the labor arbiter and, in its decision affirmed the decision of the labor
arbiter, including the order for the reinstatement of private respondent in her
employment with PT&T.
.
Issue: Whether or not respondent was discriminated on account of her having
contracted marriage in violation of company rules

Ruling:

In the Labor Code, provisions governing the rights of women workers are
found in Articles 130 to 138 thereof. Article 130 involves the right against
particular kinds of night work while Article 132 ensures the right of women to be
provided with facilities and standards which the Secretary of Labor may establish
to ensure their health and safety. For purposes of labor and social legislation, a
woman working in a nightclub, cocktail lounge, massage clinic, bar or other
similar establishments shall be considered as an employee under Article 138.
Article 135, on the other hand, recognizes a woman' s right against discrimination
with respect to terms and conditions of employment on account simply of sex.
Finally, and this brings us to the issue at hand, Article 136 explicitly prohibits
discrimination merely by reason of the marriage of a female employee.

It is recognized that regulation of manpower by the company falls within the

so-called management prerogatives, which prescriptions encompass the matter of
hiring, supervision of workers, work assignments, working methods and
assignments, as well as regulations on the transfer of employees, lay-off of
workers, and the discipline, dismissal, and recall of employees. As put in a case, an
employer is free to regulate, according to his discretion and best business
judgment, all aspects of employment, "from hiring to firing," except in cases of
unlawful discrimination or those which may be provided by law.

In the case at bar, petitioner's policy of not accepting or considering as

disqualified from work any woman worker who contracts marriage runs afoul of
the test of, and the right against, discrimination, afforded all women workers by
our labor laws and by no less than the Constitution. The record discloses clearly
that her ties with the company were dissolved principally because of the company's
policy that married women are not qualified for employment in PT&T. That it was
so can easily be seen from the memorandum sent to private respondent by the
branch supervisor of the company, with the reminder, in the words of the latter,
that "you're fully aware that the company is not accepting married women
employee (sic), as it was verbally instructed to you."

Upon the other hand, a requirement that a woman employee must remain
unmarried could be justified as a "bona fide occupational qualification," or BFOQ,
where the particular requirements of the job would justify the same, but not on the
ground of a general principle, such as the desirability of spreading work in the
workplace. A requirement of that nature would be valid provided it reflects an
inherent quality reasonably necessary for satisfactory job performance. Thus, in
one case, a no-marriage rule applicable to both male and female flight attendants,
was regarded as unlawful since the restriction was not related to the job
performance of the flight attendants.

2. Duncan Association of Detailman- PTGWO vs Glaxo Wellcome Phils.

Facts:
 Tecson was hired by respondent Glaxo as medical representative on, after
Tecson had undergone training and orientation.

 Thereafter, Tecson signed a contract of employment which stipulates, among

others, that he agrees to study and abide by existing company rules; 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, to resign from the company.

 The Employee Code of Conduct of Glaxo similarly provides that an

employee is expected to inform management of any existing or future
relationship by consanguinity or affinity with co-employees or employees of
competing drug companies.

 Subsequently, Tecson entered into a romantic relationship with Bettsy, an

employee of Astra, a competitor of Glaxo. Bettsy was Astra’s Branch
Coordinator in Albay. She supervised the district managers and medical
representatives of her company and prepared marketing strategies for Astra
in that area.
  Even before they got married, Tecson received several reminders from his
District Manager regarding the conflict of interest which his relationship
with Bettsy might engender.

 Tecson’s superiors reminded him that he and Bettsy should decide which
one of them would resign from their jobs, although they told him that they
wanted to retain him as much as possible because he was performing his job
well.

 Tecson requested for time to comply with the company policy against
entering into a relationship with an employee of a competitor company. He
explained that Astra, Bettsy’s employer, was planning to merge with Zeneca,
another drug company; and Bettsy was planning to avail of the redundancy
package to be offered by Astra. With Bettsy’s separation from her company,
the potential conflict of interest would be eliminated.

 Tecson applied for a transfer in Glaxo’s milk division, thinking that since
Astra did not have a milk division, the potential conflict of interest would be
eliminated. His application was denied in view of Glaxo’s “least-movement-
possible” policy. Hence, Glaxo transferred Tecson to the Butuan City-
Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider
its decision, but his request was denied. Tecson defied the transfer order and
continued acting as medical representative in the Camarines Sur- Camarines
Norte sales area.

 During the pendency of the grievance proceedings, Tecson was paid his
salary, but was not issued samples of products which were competing with
similar products manufactured by Astra.
.
 Because the parties failed to resolve the issue at the grievance machinery
level, they submitted the matter for voluntary arbitration. Glaxo offered
Tecson a separation pay of one-half (1⁄2) month pay for every year of
service, or a total of P50,000.00 but he declined the offer

 The National Conciliation and Mediation Board (NCMB) rendered its

Decision declaring as valid Glaxo’s policy on relationships between its
employees and persons employed with competitor companies, and affirming
Glaxo’s right to transfer Tecson to another sales territory.
  Aggrieved, Tecson 􏰉led a Petition for Review with the Court of Appeals
assailing the NCMB Decision. The Court of Appeals promulgated its
Decision denying the Petition for Review on the ground that the NCMB did
not err in rendering its Decision

 Petitioners contend that Glaxo’s policy against employees marrying

employees of competitor companies violates the equal protection clause of
the Constitution because it creates invalid distinctions among employees on
account only of marriage. They claim that the policy restricts the employees’
right to marry.

 Glaxo argues that the company policy prohibiting its employees from having
a relationship with and/or marrying an employee of a competitor company is
a valid exercise of its management prerogatives and does not violate the
equal protection clause.

 Glaxo insists that as a company engaged in the promotion and sale of

pharmaceutical products, it has a genuine interest in ensuring that its
employees avoid any activity, relationship or interest that may conflict with
their responsibilities to the company. Thus, it expects its employees to avoid
having personal or family interests in any competitor company which may
influence their actions and decisions and consequently deprive Glaxo of
legitimate profits. The policy is also aimed at preventing a competitor
company from gaining access to its secrets, procedures and policies.

 It likewise asserts that the policy does not prohibit marriage per se but only
proscribes existing or future relationships with employees of competitor
companies, and is therefore not violative of the equal protection clause. It
maintains that considering the nature of its business, the prohibition is based
on valid grounds.

Issue: Whether or not the said policy was a valid exercise of management
prerogative

Ruling:
 No reversible error can be ascribed to the Court of Appeals when it ruled
that Glaxo’s policy prohibiting an employee from having a relationship with an
employee of a competitor company is a valid exercise of management prerogative.

Glaxo has a right to guard its trade secrets, manufacturing formulas,

marketing strategies and other confidential programs and information from
competitors, especially so that it and Astra are rival companies in the highly
competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of

competitor companies upon Glaxo’s employees is reasonable under the
circumstances because relationships of that nature might compromise the interests
of the company.

Indeed, while our laws endeavor to give life to the constitutional policy on
social justice and the protection of labor, it does not mean that every labor dispute
will be decided in favor of the workers. The law also recognizes that management
has rights which are also entitled to respect and enforcement in the interest of fair
play.

In any event, from the wordings of the contractual provision and the policy
in its employee handbook, it is clear that Glaxo does not impose an absolute
prohibition against relationships between its employees and those of competitor
companies. Its employees are free to cultivate relationships with and marry persons
of their own choosing. What the company merely seeks to avoid is a conflict of
interest between the employee and the company that may arise out of such
relationship

The Court of Appeals also correctly noted that the assailed company policy
which forms part of respondent’s Employee Code of Conduct and of its contracts
with its employees, such as that signed by Tecson, was made known to him prior to
his employment. Tecson, therefore, was aware of that restriction when he signed
his employment contract and when he entered into a relationship with Bettsy. 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.

IV. WAGES & WAGE RATIONALIZATION ACT

 IVA. VIOLATION OF WAGE ORDER

1. S.I.P. Food House et al., vs Batolina

Facts:
 GMPC wanted to operate a canteen in the new GSIS Building, but had no
capability and expertise in this area. Thus, it engaged the services of the
petitioner S.I.P. Food House (SIP), owned by the spouses Alejandro and
Esther Pablo, as concessionaire. The respondents Restituto Batolina and nine
(9) others (the respondents) worked as waiters and waitresses in the canteen.

 Later, GMPC terminated SIP's "contract as GMPC concessionaire," because

of GMPC's decision "to take direct investment in and management of the
GMPC canteen;" SIP's continued refusal to heed GMPC's directives for
service improvement; and the alleged interference of the Pablos' two sons
with the operation of the canteen. 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.

 The respondents alleged before the labor arbiter that they were SIP
employees, who were illegally dismissed sometime in February and March
2004. 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.

 To avoid liability, 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.

 It claimed that GMPC terminated its concession and prevented it from

having access to the canteen premises as GSIS personnel locked the place;
GMPC then operated the canteen on its own, absorbing the respondents for
the purpose and assigning them to the same positions they held with SIP. It
maintained that the respondents were not dismissed, but were merely
prevented by GMPC from performing their functions. For this reason, SIP
 posited that the legal obligations that would arise under the circumstances
have to be shouldered by GMPC.

 Labor Arbiter rendered a decision dismissing the complaint for lack of merit.
He found that the respondents were GMPC's employees, and not SIP's, as
there existed a labor-only contracting relationship between the two entities.

 The respondents brought their case, on appeal, to the National Labor

Relations Commission (NLRC). In its Decision, the NLRC found that SIP
was the respondents' employer, but it sustained the labor arbiter's ruling that
the employees were not illegally dismissed as the termination of SIP's
concession to operate the canteen constituted an authorized cause for the
severance of employer-employee.

 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 NLRC, however,
denied the employees' claim for overtime pay, holding that the respondents
failed to present evidence that they rendered two hours overtime work every
day of their employment with SIP.

 On appeal, the CA granted the petition in part. Finding substantial evidence

in the records supporting the NLRC conclusions, the CA brushed aside SIP's
argument that it could not have been the employer of the respondents
because it was a mere labor-only contractor of GMPC. It sustained the
NLRC's findings that SIP was the respondents' employer.

Issue: Whether or not the free board and lodging furnished by employees can be
considered facilities

Ruling:

The free board and lodging SIP furnished the employees cannot operate as a
set-off for the underpayment of their wages. We held in Mabeza v. National Labor
Relations Commission that the employer cannot simply deduct from the
employee's wages the value of the board and lodging without satisfying the
following requirements: (1) proof that such facilities are customarily furnished by
the trade; (2) voluntary acceptance in writing by the employees of the deductible
facilities; and (3) proof of the fair and reasonable value of the facilities charged

As the CA aptly noted, it is clear from the records that SIP failed to comply
with these requirements.

2. SLL International Cables Specialist vs NLRC

Facts:

 Sometime in 1996, and January 1997, private respondents, Lopez,

Cañete and Zuñiga respectively, were hired by petitioner Lagon as
apprentice or trainee cable/lineman. The three were paid the full
minimum wage and other benefits but since they were only trainees,
they did not report for work regularly but came in as substitutes to
the regular workers or in undertakings that needed extra workers to
expedite completion of work.

 After their training, Zuñiga, Cañete and Lopez were engaged as

project employees by the petitioners in their Islacom project in Bohol.
Private respondents started on March 15, 1997 until December 1997.
Upon the completion of their project, their employment was also
terminated.

 Sometime in March 1998, Zuñiga and Cañete were engaged again by

Lagon as project employees for its PLDT Antipolo, Rizal project,
which ended sometime in the late September 1998. As a
consequence, Zuñiga and Cañete's employment was terminated. For
this project, Zuñiga and Cañete received only the wage of P145.00
daily. The minimum prescribed wage for Rizal at that time was
P160.00.
 T
 Sometime in late November 1998, private respondents re-applied in
the Racitelcom project of Lagon in Bulacan. Zuñiga and Cañete were
re-employed. Lopez was also hired for the said specific project. For
this, private respondents received the wage of P145.00
 Face[d] with economic problem[s], Lagon was constrained to cut
down the overtime work of its worker[s][,] including private
respondents. Thus, when requested by private respondents on
February 28, 2000 to work overtime, Lagon refused and told private
respondents that if they insist, they would have to go home at their
own expense and that they would not be given anymore time nor
allowed to stay in the quarters. This prompted private respondents to
leave their work and went home to Cebu.

 Then, private respondents filed a complaint for illegal dismissal, non-

payment of wages, holiday pay, 13th month pay for 1997 and 1998
and service incentive leave pay as well as damages and attorney's
fees.

 In their answers, petitioners admit employment of private

respondents but claimed that the latter were only project employees[,]
for their services were merely engaged for a specific project or
undertaking and the same were covered by contracts duly signed by
private respondents.

 Petitioners further alleged that the food allowance of P63.00 per day
as well as private respondents allowance for lodging house,
transportation, electricity, water and snacks allowance should be
added to their basic pay. With these, petitioners claimed that private
respondents received higher wage rate than that prescribed in Rizal
and Manila.
  Labor Arbiter rendered his decision. The NLRC affirmed the findings
of the LA. The CA affirmed the decision of the NLRC.

Issue: Whether or not the value of the facilities should be included in the
computation of the “wages” received by private respondents.

Ruling:

Section 1 of DOLE Memorandum Circular No. 2 provides that an

employer may provide subsidized meals and snacks to his employees
provided that the subsidy shall not be less that 30% of the fair and
reasonable value of such facilities. In such cases, the employer may deduct
from the wages of the employees not more than 70% of the value of the
meals and snacks enjoyed by the latter, provided that such deduction is
with the written authorization of the employees concerned.

Moreover, before the value of facilities can be deducted from the

employees' wages, the following requisites must all be attendant: first,
proof must be shown that such facilities are customarily furnished by the
trade; second, the provision of deductible facilities must be voluntarily
accepted in writing by the employee; and finally, facilities must be charged
at reasonable value. Mere availment is not sufficient to allow deductions
from employees' wages.

These requirements, however, have not been met in this case. SLL
failed to present any company policy or guideline showing that provisions
for meals and lodging were part of the employee's salaries. It also failed to
provide proof of the employees' written authorization, much less show how
they arrived at their valuations. At any rate, it is not even clear whether
private respondents actually enjoyed said facilities.
 The Court, at this point, makes a distinction between "facilities" and
"supplements." It is of the view that the food and lodging, or the electricity
and water allegedly consumed by private respondents in this case were not
facilities but supplements.

In short, the benefit or privilege given to the employee which

constitutes an extra remuneration above and over his basic or ordinary
earning or wage is supplement; and when said benefit or privilege is part of
the laborers' basic wages, it is a facility. The distinction lies not so much in
the kind of benefit or item (food, lodging, bonus or sick leave) given, but in
the purpose for which it is given. In the case at bench, the items provided
were given freely by SLL for the purpose of maintaining the efficiency and
health of its workers while they were working at their respective projects.

Therefore, the petition was denied.

3. Vergara Jr, vs Coca Cola Bottlers Philippines, Inc.

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)

 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.

 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."

 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.

 The CA dismissed petitioner's case and denied his motion for

reconsideration two months thereafter.

 Hence, this present petition

Issue: Whether or not the SMI should be included in the computation of

petitioner’s retirement benefits on the ground of company practice

Ruling:

Generally, employees have a vested right over existing benefits voluntarily

granted to them by their employer. Thus, any benefit and supplement being
enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is actually
founded on the Constitutional mandate to protect the rights of workers, to promote
their welfare, and to afford them full protection.

There is diminution of benefis 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. Jurisprudence has not
laid down any hard-and-fast rule as to the length of time that company practice
should have been exercised in order to constitute voluntary employer practice. 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. 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.

We find no substantial evidence to prove that the grant of SMI to all retired
DSSs regardless of whether or not they qualify to the same had ripened into
company practice.

The only two pieces of evidence that he stubbornly presented throughout the
entirety of this case are the sworn statements of Renato C. Hidalgo (Hidalgo) and
Ramon V. Velazquez (Velasquez), former DSSs of respondent who retired in 2000
and 1998, respectively.

The respondent's isolated act of including the SMI in the retirement package
of Velazquez could hardly be classified as a company practice that may be
considered an enforceable obligation. To repeat, the principle against diminution of
benefits is applicable only if the grant or benefit is founded on an express policy or
has ripened into a practice over a long period of time which is consistent and
deliberate.

4. David/Yiels Hog Dealer vs Macasio

Facts:

 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.

 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
claims that Macasio was not his employee as he hired the latter on "pakyaw"
or task basis.

 The LA dismissed Macasio's complaint for lack of merit. The LA gave

credence to David's claim that he engaged Macasio on "pakyaw" or task
basis. The LA concluded that as Macasio was engaged on "pakyaw" or task
basis, he is not entitled to overtime, holiday, SIL and 13th month pay.

 The NLRC affirmed the LA ruling. The NLRC observed that David did not
require Macasio to observe an eight-hour work schedule to earn the fixed
P700.00 wage; and that Macasio had been performing a non-time work,
pointing out that Macasio was paid a fixed amount for the completion of the
assigned task, irrespective of the time consumed in its performance.

 The CA partly granted Macasio's certiorari petition and reversed the NLRC's
ruling for having been rendered with grave abuse of discretion.
While the CA agreed with the LA and the NLRC that Macasio was a task
basis employee, it nevertheless found Macasio entitled to his monetary
claims. The CA explained that as a task basis employee, Macasio is
excluded from the coverage of holiday, SIL and 13th month pay only if he is
likewise a “field personnel.”

Issue: Whether or not a worker engaged on pakyaw or task basis is entitled to

holiday pay, SIL pay, and 13th month pay.

Ruling:

Engagement on "pakyaw" or task basis does not characterize the relationship

that may exist between the parties, i.e., 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.

First, the LA and the NLRC denied Macasio's claim not because of the
absence of an employer-employee but because of its finding that since Macasio is
paid on pakyaw or task basis, then he is not entitled to SIL, holiday and 13th
month pay. Second, we consider it crucial, that in the separate illegal dismissal
case Macasio filed with the LA, the LA, the NLRC and the CA uniformly found
the existence of an employer-employee relationship.

A distinguishing characteristic of "pakyaw" or task basis engagement, as

opposed to straight-hour wage payment, is the non-consideration of the time spent
in working. In a task-basis work, the emphasis is on the task itself, in the sense that
payment is reckoned in terms of completion of the work, not in terms of the
number of time spent in the completion of work. Once the work or task is
completed, the worker receives a fixed amount as wage, without regard to the
standard measurements of time generally used in pay computation.

In Macasio's case, the established facts show that he would usually start his
work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the
workplace or of the total number of the hogs assigned to him for chopping,
Macasio would receive the 􏰐xed amount of P700.00 once he had completed his
task. Clearly, these circumstances show a "pakyaw" or task basis engagement that
all three tribunals uniformly found.

In short, the payment of an employee on task or pakyaw basis alone is

insufficient to exclude one from the coverage of SIL and holiday pay. They are
exempted from the coverage of Title I (including the holiday and SIL pay) only if
they qualify as "field personnel." The IRR therefore validly qualifies and limits the
general exclusion of "workers paid by results" found in Article 82 from the
coverage of holiday and SIL pay.

In short, in determining whether workers engaged on "pakyaw" or task

basis" is entitled to holiday and SIL pay, the presence (or absence) of employer
supervision as regards the worker's time and performance is the key: if the worker
is simply engaged on pakyaw or task basis, then the general rule is that he is
entitled to a holiday pay and SIL pay unless exempted from the exceptions
specifically provided under Article 94 (holiday pay) and Article 95 (SIL pay) of
the Labor Code. However, if the worker engaged on pakyaw or task basis also falls
within the meaning of "feld personnel" under the law, then he is not entitled to
these monetary benefits.

Not being a "feld personnel," we fnd the CA to be legally correct when it

reversed the NLRC's ruling dismissing Macasio's complaint for holiday and SIL
pay for having been rendered with grave abuse of discretion.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section
3 (e) of the Rules and Regulations Implementing PD No. 851 exempts employees
"paid on task basis" without any reference to "field personnel." This could only
mean that insofar as payment of the 13th month pay is concerned, the law did not
intend to qualify the exemption from its coverage with the requirement that the
task worker be a "field personnel" at the same time

5. Toyota Pasig, Inc. vs De Peralta

Facts:

 The instant case stemmed from a complaint for illegal dismissal, illegal
deduction, unpaid commission, annual profit sharing, damages, and
attorney's fees filed by respondent against petitioner and/or Severino C.
Lim, Jnalyn P. Lim, Jason Ian Yap, Jorge Tuason, Marissa Operaña, and
Arturo P. Lopez (Lim, et al.) before the NLRC.

 Respondent alleged that petitioner — a corporation engaged in the

business of car dealership, including service and sales of parts and
accessories of Toyota motor vehicles — initially hired her as a cashier in
March 1997.

 Eventually in 2004, she worked her way up to the position of Insurance

Sales Executive (ISE) which she held from 2007 to 2012 and where she
received various distinctions from petitioner, including "Best Insurance
Sales Executive" for the years 2007 and 2011.

 However, things turned sour when her husband, Romulo "Romper" De

Peralta, also petitioner's employee and the President of the Toyota Shaw-
Pasig Workers Union — Automotive Industry Workers Alliance (TSPWU-
AIWA), organized a collective bargaining unit through a certification
election.
  Petitioner allegedly started harassing respondent for her husband's active
involvement in TSPWU-AIWA, which resulted to the issuance of a Notice to
Explain dated January 3, 2012 accusing her of "having committed various
acts" relative to the processing of insurance of three (3) units as "outside
transactions" and claiming commissions therefor, instead of considering
the said transactions as "new business accounts" under the dealership's
marketing department.

 On February 3, 2012, respondent 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 and Lim, et al. maintained 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. 1

 They further averred that respondent's claims for commissions, tax

rebates, and other benefits were unfounded and without documentation
and validation.

 The Labor Arbiter (LA) dismissed the complaint for lack of merit. the NLRC
affirmed the LA ruling with modification finding petitioner liable to
respondent in the amount of P617,248.08. While, the CA dismissed the
consolidated petitions and, accordingly, affirmed the NLRC ruling in toto.

Issue: Whether or not the CA correctly upheld petitioner's liability to respondent in

the amount of P617,248.08 representing the latter's unpaid commissions, tax
rebate for achieved monthly targets, salary deductions, salary for the month of
January 2012, and success share/profit sharing
Ruling:

In this case, respondent'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 an ISE. Clearly, such claims fall within the ambit of
the general term "commissions" which in turn, fall within the definition of wages
pursuant to prevailing law and jurisprudence. Thus, respondent's allegation of
nonpayment of such monetary benefits places the burden on the employer, i.e.,
petitioner, to prove with a reasonable degree of certainty that it paid said benefits
and that the employee, i.e., respondent, actually received such payment or that
the employee was not entitled thereto.

In this case, petitioner simply dismissed respondent's claims for being

purely self-serving and unfounded, without even presenting any tinge of proof
showing that respondent was already paid of such benefits or that she was not
entitled thereto. In fact, during the proceedings before the LA, petitioner was even
given the opportunity to submit pertinent company records to rebut respondent's
claims but opted not to do so, thus, constraining the LA to direct respondent to
submit her own computations. It is well-settled that the failure of employers to
submit the necessary documents that are in their possession gives rise to the
presumption that the presentation thereof is prejudicial to its cause.

Indubitably, petitioner failed to discharge its afore-described burden. Hence, it is

bound to pay the monetary benefits claimed by respondent.

Hence, the petition was denied.

V. WAGE ENFORCEMENT RECOVERY

1. Tiger Construction and Development Corp. vs Albay et al.,

Facts:
  The 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. According to petitioner, the respondents
were engaged for four (4) months — from February to June 1998 — and
their tasks included loading, unloading and segregation of corrugated
boxes.

 Pursuant to a complaint filed by the respondents against the petitioner and

its President, Luz, for underpayment of wages, non-payment of premium
pay for worked rest, overtime pay and non-payment of salary, the
Department of Labor and Employment (DOLE) conducted an inspection of
the petitioner's premises and found several violations.

 An Order was issued by DOLE finding in favor of the respondents and

adopting the computation of the claims submitted. Petitioner and Luz were
ordered, among others, to pay respondents their total claims in the amount
of Eight Hundred Forty Thousand Four Hundred Sixty-Three Pesos and
38/100 (P840,463.38).

 They 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. The DOLE, however, denied its motion. Their appeal
to the Secretary of DOLE was dismissed. The CA affirmed the Secretary of
DOLE's orders.

 Hence, this petition.

Issue: Whether or not DOLE had the authority to make a finding of an employer-employee
relationship concomitant to its visitorial and enforcement power.

Ruling:

The DOLE clearly acted within its authority when it determined the
existence of an employer-employee relationship between the petitioner and
respondents as it falls within the purview of its visitorial and enforcement power
under Article 128 (b) of the Labor Code.
 In People's Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the
Department of Labor and Employment, the Court stated that it can be assumed
that the DOLE in the exercise of its visitorial and enforcement power somehow
has to make a determination of the existence of an employer-employee
relationship. Such determination, however, is merely preliminary, incidental and
collateral to the DOLE's primary function of enforcing labor standards provisions.

Therefore, the petition was denied.

VI. WAGE PROTECTION PROVISIONS AND PROHIBITIONS

REGARDING WAGES

1. SHS Perforated Materials, Inc. et al., vs Diaz

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.

 Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for

Business Development on probationary status.

 During meetings with the respondent, Hartmannshenn expressed his

dissatisfaction over respondent's poor performance. Respondent allegedly
failed to make any concrete business proposal or implement any specific
measure to improve the productivity of the SHS office and plant or deliver
sales except for a meagre P2,500.00 for a sample product.

 Hartmannshenn arrived in the Philippines from Germany, and on November

22 and 24, 2005, notified respondent of his arrival through electronic mail
 messages and advised him to get in touch with him. Respondent claimed
that he never received the messages.

 On November 29, 2005, Hartmannshenn instructed Taguiang not to release

respondent's salary. Respondent met with Hartmannshenn in Alabang. The
latter told him that he was extremely disappointed for the following
reasons: his poor work performance; his unauthorized leave and
malingering.

 Petitioners averred that respondent was unable to give a proper

explanation for his behavior. Hartmannshenn then accepted respondent's
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.

 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.

 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 attorney's
fees, costs of suit, and legal interest.

 The Labor Arbiter rendered his decision that the withholding of his salary was
contrary to Article 116 of the Labor Code. The NLRC reversed the decision of the
LA. CA reversed the decision of the NLRC.

Issue: Whether or not the temporary withholding of respondent's salary/wages by

petitioners was a valid exercise of management prerogative.

Ruling:

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:

1. 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;

2. 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
3. In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.

As correctly pointed out by the LA, "absent a showing that the withholding of
complainant's wages falls under the exceptions provided in Article 113, the
withholding thereof is thus unlawful.”

2. Nina Jewelry Manufacturing of Metal Arts Inc., vs Montecillo

Facts:

 Madeline Montecillo and Liza hereinafter referred to collectively as the

respondents, 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. Petitioner Elisea
Abella (Elisea) is Niña Jewelry's president and general manager.

 Niña Jewelry imposed a policy for goldsmiths requiring them to post cash
bonds or deposits in varying amounts but in no case exceeding 15% of the
latter's salaries per week. The deposits were intended to answer for any
 loss or damage which Niña Jewelry may sustain by reason of the
goldsmiths' fault or negligence in handling the gold entrusted to them. The
deposits shall be returned upon completion of the goldsmiths' work and
after an accounting of the gold received.

 The respondents claimed otherwise insisting that Niña Jewelry left the
goldsmiths with no option but to post the deposits. The respondents
alleged that they were constructively dismissed by Niña Jewelry as their
continued employments were made dependent on their readiness to post
the required deposits.

 Respondents fled against Niña Jewelry complaints for illegal dismissal

and for the award of separation pay.

 The Labor Arbiter dismissed the respondent’s complaints for lack of merit. NLRC
affirmed the LA’s dismissal of the amended complaints. The CA reversed the findings of
the LA and NLRC.

Issue: Whether or not the deductions were illegal

Ruling:

Article 113 of the Labor Code is clear that there are only three exceptions
to the general rule that no deductions from the employees' salaries can be made.
The exception which finds application in the instant petition is in cases where the
employer is authorized by law or regulations issued by the Secretary of Labor to
effect the deductions.

On the other hand, Article 114 states that generally, deposits for loss or
damages are not allowed except in cases where the employer is engaged in such
trades, occupations or business where the practice of making deposits is a
recognized one, or is necessary or desirable as determined by the Secretary of
Labor in appropriate rules or regulations.

While employers should generally be given leeways in their exercise of

management prerogatives, we agree with the respondents and the CA that in the
case at bar, the petitioners had failed to prove that their imposition of the new
policy upon the goldsmiths under Niña Jewelry's employ falls under the
exceptions specified in Articles 113 and 114 of the Labor Code. CD

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.

Facts:

 In February 2004, respondent Mekeni Food Corporation (Mekeni) — a

Philippine company engaged in food manufacturing and meat processing
— offered petitioner Antonio Locsin II the position of Regional Sales
Manager to oversee Mekeni's National Capital Region Supermarket/Food
Service and South Luzon operations. In addition to a compensation and
benefit package, Mekeni offered petitioner 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.

 To be able to effectively cover his appointed sales territory, Mekeni

furnished petitioner with a used Honda Civic car valued at P280,000.00,
which used to be the service vehicle of petitioner's immediate supervisor.
 Petitioner paid for his 50% share through salary deductions of P5,000.00
each month.

 Subsequently, Locsin resigned. 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. Mekeni supposedly put in an equivalent amount as
its share under the car plan. In his resignation letter, petitioner made an
offer to purchase his service vehicle by paying the outstanding balance
thereon.

 Petitioner made personal and written follow-ups regarding his unpaid

salaries, commissions, benefits, and offer to purchase his service vehicle.
Mekeni replied that the company car plan benefit applied only to
employees who have been with the company for five years; for this reason,
the balance that petitioner should pay on his service vehicle stood at
P116,380.00 if he opts to purchase the same.

 Petitioner filed against Mekeni and/or its President, Prudencio S. Garcia, a

Complaint for the recovery of monetary claims consisting of unpaid
salaries, commissions, sick/vacation leave benefits, and recovery of
monthly salary deductions which were earmarked for his cost-sharing in
the car plan.

 The Labor Arbiter rendered a decision directing respondents to turn-over to

complainant the subject vehicle. On appeal, the Labor Arbiter's Decision
was reversed. The CA modified the decision of the NLRC.

Issue: Whether petitioner is entitled to a refund of all the amounts applied to the
cost of the service vehicle under the car plan.

Ruling:

From the evidence on record, it is seen that the Mekeni car plan offered to
petitioner was subject to no other term or condition than that Mekeni shall cover
one-half of its value, and petitioner shall in turn pay the other half through
deductions from his monthly salary. Mekeni has not shown, by documentary
evidence or otherwise, that there are other terms and conditions governing its car
plan agreement with petitioner. There is no evidence to suggest that if petitioner
failed to completely cover one-half of the cost of the vehicle, then all the
deductions from his salary going to the cost of the vehicle will be treated as
rentals for his use thereof while working with Mekeni, and shall not be refunded.

It was made clear in the above pronouncement that installments made on

the car plan may be treated as rentals only when there is an express stipulation in
the car plan agreement to such effect. Indeed, the Court cannot allow that
payments made on the car plan should be forfeited by Mekeni and treated simply
as rentals for petitioner's use of the company service vehicle. Nor may they be
retained by it as purported loan payments.

Any benefit or privilege enjoyed by petitioner from using the service vehicle
was merely incidental and insignificant, because for the most part the vehicle
was under Mekeni's control and supervision. Free and complete disposal is given
to the petitioner only after the vehicle's cost is covered or paid in full. Until then,
the vehicle remains at the beck and call of Mekeni. Given the vast territory
petitioner had to cover to be able to perform his work effectively and generate
business for his employer, the service vehicle was an absolute necessity, or else
Mekeni's business would suffer adversely. Thus, it is clear that while petitioner
was paying for half of the vehicle's value, Mekeni was reaping the full benefits
from the use thereof.

Mekeni may not enrich itself by charging petitioner for the use of its vehicle
which is otherwise absolutely necessary to the full and effective promotion of its
business. It may not, under the claim that petitioner's payments constitute rents
for the use of the company vehicle, refuse to refund what petitioner had paid, for
the reasons that the car plan did not carry such a condition; the subject vehicle is
an old car that is substantially, if not fully, depreciated; the car plan arrangement
benefited Mekeni for the most part.

Conversely, petitioner cannot recover the monetary value of Mekeni's

counterpart contribution to the cost of the vehicle; that is not property or money
that belongs to him, nor was it intended to be given to him in lieu of the car plan.
In other words, Mekeni's share of the vehicle's cost was not part of petitioner's
compensation package. To start with, the vehicle is an asset that belonged to
Mekeni. Just as Mekeni is unjustly enriched by failing to refund petitioner's
payments, so should petitioner not be awarded the value of Mekeni's counterpart
contribution to the car plan, as this would unjustly enrich him at Mekeni's
expense.

4. TH Shopfitters Corp., et al., vs T&H Shopfitters Corp., Union

Facts:

 Respondents officers and/or members of THS-GQ union, filed their

Complaint for Unfair Labor Practice (ULP) by way of union busting, and
Illegal Lockout, with moral and exemplary damages and attorney's fees,
against T&H Shopfitters Corporation (T&H Shopfitters) and Gin Queen
Corporation.

 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, seventeen (17) employees were
barred from entering petitioners' factory premises and ordered to transfer
to T&H Shopfitters' warehouse at Subic Bay Freeport Zone (SBFZ)
purportedly because of its expansion.

 Respondents contended that the affected employees were not given

regular work assignments, while subcontractors were continuously hired to
perform their functions. This development prompted respondents to seek
the assistance of the National Conciliation and Mediation Board

 Petitioners agreed to give priority to regular employees in the distribution

of work assignments. Respondents averred, however, that petitioners
never complied with its commitment but instead hired contractual workers.

 Petitioner Ben Huang (Huang), Director for Gin Queen, informed its
employees of the expiration of the lease contract between Gin Queen and
its lessor in Castillejos, Zambales and announced the relocation of its
office and workers to Cabangan, Zambales.
  Some of the respondents, who visited the site in Cabangan, discovered
that it was a "talahiban" or grassland. Later, the said union officers and
members were made to work as grass cutters in Cabangan. Due to these
circumstances, the employees assigned in Cabangan did not report for
work.

 The following day, the employees were escorted from the field trip to the
polling center in Zambales to cast their votes. On October 13, 2004, the
remaining employees situated at the SBFZ plant cast their votes as well.
Due to the heavy pressure exerted by petitioners, the votes for "no union"
prevailed.

 Respondents averred that the following week after the certi􏰄cation

elections were held, petitioners retrenched THG-GQ Union o􏰁cers and
members assigned at the Zambales plant. Respondents claimed that the
work weeks of those employees in the SBFZ plant were drastically reduced
to only three (3) days in a month

 In its defense, Gin Queen, claiming that it is a corporation separate and

distinct from T&H Shopfitters, stressed that respondents were all
employees. Gin Queen claimed that due to the decrease in orders from its
customers, they had to resort to cost cutting measures to avoid
anticipated financial losses. Thus, it assigned work on a rotational basis.
addition, Gin Queen explained that its transfer from Castillejos, Zambales
to Cabangan, Zambales was a result of the expiration of its lease
agreement with Myra D. Lumibao(Myna), its lessor.

 The LA dismissed respondents' complaint and all their money claims for
lack of merit. NLRC reversed the LA decision and ruled in favor of
respondents. The CA sustained the NLRC ruling.

Issue: Whether unfair labor practice acts were committed by petitioners against respondent

Ruling:
 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.

The fact and peculiar timing of the field trip sponsored by petitioners for its
employees not affiliated with THS-GQ Union, although a positive enticement, was
undoubtedly extraneous influence designed to impede respondents in their quest
to be certified. This cannot be countenanced.

Not content with achieving a "no union" vote in the certi􏰄cation election,
petitioners launched a vindictive campaign against union members by assigning
work on a rotational basis while subcontractors performed the latter's functions
regularly. Worse, some of the respondents were made to work as grass cutters in
an effort to dissuade them from further collective action. Again, this cannot be
countenanced.

Anent the issue on the award of attorney's fees, the applicable law
concerning the grant thereof in labor cases is Article 111 of the Labor Code.
Pursuant thereto, the award of 10% attorney's fees is limited to cases of unlawful
withholding of wages. In this case, however, the Court cannot find any claim or
proof that petitioners unlawfully withheld the wages of respondents.

5. Wesleyan University-Phils., vs Wesleyan University-Phils Faculty & Staff Asso.,

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 brgaining agent of all rank-and-file faculty
and staff employees of petitioner. The parties signed a 5-year CBA.
  Petitioner, through its President, Atty. Guillermo T. Maglaya (Atty.
Maglaya), issued a Memorandum providing guidelines on the
implementation of vacation and sick leave credits as well as vacation leave
commutation.

 Respondent's President, Cynthia L. De Lara (De Lara) wrote a letter to Atty.

Maglaya informing him that respondent is not amenable to the unilateral
changes made by petitioner. De Lara questioned the guidelines for being
violative of existing practices and the CBA.

 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.

 During the hearing, respondent submitted affidavits to prove that there is

an established practice of giving two retirement benefits, one from the
Private Education Retirement Annuity Association (PERAA) Plan and
another from the CBA Retirement Plan.

 The Voluntary Arbitrator rendered a Decision declaring the one-retirement

policy contrary to law. The CA affirmed the decision.

Issue: Whether or not non-diminution of benefits is applicable in this case.

Ruling:

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 question of law." The error,
however, must be corrected immediately after its discovery; otherwise, the rule
on Non-Diminution of Benefits would still apply.

In this case, respondent was able to present substantial evidence in the

form of affidavits to support its claim that there are two retirement plans. Based
on the affidavits, petitioner has been giving two retirement benefits as early as
1997.

Moreover, petitioner's assertion that there is only one retirement plan as

the CBA Retirement Plan and the PERAA Plan are one and the same is not
supported by any evidence. There is nothing in Article XVI of the CBA to indicate
or even suggest that the "Plan" referred to in the CBA is the PERAA Plan. Besides,
any doubt in the interpretation of the provisions of the CBA should be resolved in
favor of respondent. In fact, petitioner's assertion is negated by the
announcement it made during the LMC Meeting on February 8, 2006 regarding its
plan of implementing a "one-retirement plan." For if it were true that petitioner
was already implementing a one-retirement policy, there would have been no
need for such announcement

6. Bluer Than Blue Joint Ventures Co., vs Esteban

Facts:

 Respondent Glyza Esteban (Esteban) was employed as Sales Clerk, and

assigned at Bluer Than Blue Joint Ventures Company's (petitioner) EGG
boutique, beginning the year 2006. Part of her primary tasks were
attending to all customer needs, ensuring efficient inventory, coordinating
orders from clients, cashiering and reporting to the accounting
department.
 In November 2006, the petitioner received a report that several employees
have access to its point-of-sale (POS) system through a universal
password given by Elmer Flores (Flores). Upon investigation, it was
discovered that it was Esteban who gave Flores the password.
  Esteban admitted that she used the universal password three times on the
same day in December 2005, after she learned of it from two other
employees who she saw browsing through the petitioner's sales inquiry.

 Esteban's preventive suspension was lifted, but at the same time, a notice
of termination was sent to her, finding her explanation unsatisfactory and
terminating her employment immediately on the ground of loss of trust
and confidence. Esteban was given her final pay, including benefits and
bonuses, less inventory variances incurred by the store amounting to
P8,304.93.

 Esteban filed a complaint for illegal dismissal, illegal suspension, holiday

pay, rest day and separation pay.

 The Labor Arbiter (LA) ruled in favor of Esteban and found that she was
illegally dismissed. NLRC reversed the decision of the LA and dismissed
the case for illegal dismissal. CA reinstated the LA decision.

Issue: Whether or not the wage deduction for the store’s negative variance was valid.

Ruling:

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.

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. The Court cannot accept the petitioner's
statement that it is the practice in the retail industry to deduct variances from an
employee's salary, without more.

In Niña Jewelry Manufacturing of Metal Arts, Inc. v. Montecillo, the Court

ruled that:
 [T]he petitioners should first establish that the making of deductions from the
salaries is authorized by law, or regulations issued by the Secretary of Labor. Further,
the posting of cash bonds should be proven as a recognized practice in the jewelry
manufacturing business, or alternatively, the petitioners should seek for the
determination by the Secretary of Labor through the issuance of appropriate rules and
regulations that the policy the former seeks to implement is necessary or desirable in
the conduct of business.

7. PLDT vs Estranero

Facts:

 Petitioner PLDT is a public utility corporation engaged in the business

of providing telecommunication services to the general public. On July
1, 1995, PLDT employed the respondent as an Auto-
Mechanic/Electrician Helper, Job Grade 3 with a monthly salary of
P15,000.00 at the time of his separation from the service in 2003.

 PLDT adopted a company-wide Manpower Reduction Program (MRP),

aimed at reducing its work force. To commence with its program, PLDT
offered the affected employees an attractive redundancy pay consisting
of 100% of their basic monthly salary for every year of service, in
addition to their retirement benefits, if entitled. For those who were not
qualified to the retirement benefits, they were offered separation or
redundancy package of 200% of their basic monthly salary for every
year of service.

 Attracted by the separation pay offered by the company, the respondent

expressed his conformity to his inclusion in the MRP. The respondent
declared that he has no objection to being included in the redundancy
program of PLDT.
  Thereafter, PLDT proceeded to compute the respondent's
redundancy/separation benefits. Thus, his aggregate redundancy pay
T

plus other earned benefits amounted to P267,028.37.

 However, the respondent had outstanding liabilities arising from

I

various loans he obtained from different entities, namely: the Home

Development Mutual Fund (HDMF), PLDT Employees Credit
Cooperative, Inc., PLDT Service Cooperative, Inc., Social Security
System (SSS), and the Manggagawa ng Komunikasyon sa Pilipinas,
which summed to P267,028.37. Thus, PLDT deducted the said amount
from the payment that the respondent was supposed to receive as his
redundancy pay.

 As a result, when the respondent was made to sign the Receipt, Release
and Quitclaim, it showed that his take home pay was in the amount of
"zero pesos." This prompted the respondent to retract his availment of
the separation pay package offered to him through a letter addressed
to the company dated May 8, 2003. Despite said retraction, however,
the respondent was no longer allowed to report for work.

 Respondent filed a complaint for illegal dismissal with reinstatement,

as well as moral and exemplary damages plus attorney's fees

 LA rendered a decision in favor of respondent. The NLRC affirmed the LA decision.

The CA affirmed the decision of the NLRC.

Issue: Whether or not the petitioners can validly deduct the respondent’s outstanding loan
obligation from his redundancy pay.

Ruling:
 It is clear in Article 113 of the Labor Code that no employer, in his own
behalf or in behalf of any person, shall make any deduction from the wages of his
employees, except in cases where the employer is authorized by law or
regulations issued by the Secretary of Labor and Employment, among others.
The Omnibus Rules Implementing the Labor Code, meanwhile, provides that
deductions from the wages of the employees may be made by the employer
when such deductions are authorized by law, or when the deductions are with the
written authorization of the employees for payment to a third person.

In this case, the deductions made to the respondent's redundancy pay do

not fall under any of the circumstances provided under Article 113, nor was it
established with certainty that the respondent has consented to the said
deductions or that the petitioners had authority to make such deductions.

As aptly stated by the CA, the matter would have been different if the
deductions refer to the respondent'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 the respondent's
outstanding loans from various entities.

Furthermore, the petitioners may not offset the outstanding loans of the
respondent against the latter's monetary benefits. The records expressly
revealed that the respondent has obtained various loans from different entities
and not with PLDT. Accordingly, set-off or legal compensation cannot take place
between PLDT and the respondent because they are not mutually creditor and
debtor of each other. Thus, there can be no valid set-off because the
respondent's creditor is not PLDT.

The petitioners cannot offset the outstanding balance of the respondent's

loan obligation with his redundancy pay because the balance on the loan does
not come within the scope of jurisdiction of the LA. The demand for payment of
the said loans is not a labor, but a civil dispute. It involves debtor-creditor
relations, rather than employee-employer relations. Evidently, the respondent's
unpaid balance on his loans cannot be offset against the redundancy pay due to
him.
 VII. PAYMENT OF WAGES

1. Congson vs NLRC