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LABOR LAW REVIEW

CASE DOCTRINES

LABOR LAW REVIEW


CASE DOCTRINES
CASE NO. 1 TO 107

PART ONE: INTRODUCTION

I. FUNDAMENTAL PRINCIPLES AND POLICIES

A. BALANCING OF INTERESTS
1. Milan v NLRC and Solid Mills Inc. (G.R. No. 202961, February 04, 2015)
 Our laws provide for a clear preference for labor. The preferential treatment
given by our law to labor, however, is not a license for abuse. It is not a signal
to commit acts of unfairness that will unreasonably infringe on the property
rights of the company. Both labor and employer have social utility, and the law
is not so biased that it does not find a middle ground to give each their due.
 The management has the right to withhold wages for a debt (which includes
property accountabilities) due from the employee pursuant to Article 1706 of the
Civil Code. The return of the property’s possession became an obligation or
liability on the part of the employees when the employer-employee relationship
ceased. Hence, the employees are required to return their property
accountabilities to the employer before they can demand for their last claims.
2. Fuji Television Network, Inc. vs. Espiritu (G.R. No. 204944-45, December 3, 2014)
 In contracts of employment, the employer and the employee are not on equal
footing. Thus, it is subject to regulatory review by the labor tribunals and courts
of law. The law serves to equalize the unequal. The labor force is a special class
that is constitutionally protected because of the inequality between capital and
labor. This presupposes that the labor force is weak. However, the level of
protection to labor should vary from case to case; otherwise, the state might
appear to be too paternalistic in affording protection to labor. The level of
protection to labor must be determined on the basis of the nature of the work,
qualifications of the employee, and other relevant circumstances. Hence, the
ruling in Brent applies in cases where it appears that the employer and
employee are on equal footing.
3. GMA Network, Inc., vs. Pabriga, et.al. (G.R. No. 176419, November 27, 2013)
 While it is management’s prerogative to device a method to deal with the issue
on providing substitutes for employees who are absent or on leave, such
prerogative is not absolute and is limited to systems wherein employees are not
ingeniously and methodically deprived of their constitutionally protected right to
security of tenure.
 Here, the Court is not convinced that a big corporation such as petitioner cannot
device a system wherein a sufficient number of technicians can be hired with a
regular status who can take over when their colleagues are absent or on leave,
especially when it appears from the records that petitioner hires so-called pinch-
hitters regularly every month.
4. Philippine Span Asia Carriers Corporation vs. Pelayo (G.R. No. 212003, February 28,
2018)
 While adopted with a view "to give maximum aid and protection to labor," labor
laws are not to be applied in a manner that undermines valid exercise of
management prerogative.
 Except as limited by special laws, an employer is free to regulate, according to
his own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place and manner of work, tools to
be used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of work.
 An employer who conducts investigations following the discovery of misdeeds by
its employees is not being abusive when it seeks information from an employee
involved in the workflow which occasioned the misdeed.
5. Oxales, vs. United Laboratories, Inc. (G.R. No. 152991, July 21, 2008)
 In protecting the rights of the laborer, the law authorizes neither oppression nor
self-destruction of the employer. While the Constitution is committed to the
policy of social justice and the protection of the working class, management also
has its own rights, which are entitled to respect and enforcement in the interest
of fair play.
 Indeed, while there is nothing wrong in the act of Oxales in joining a rival
company after his retirement, justice and fair play would dictate that by doing
so, he cannot now legally demand the continuance of his medical benefits from
UNILAB. To rule otherwise would result in an absurd situation where Oxales
would continue to receive medical benefits from UNILAB while working in a rival
company.

B. CONSTRUCTION IN FAVOR OF LABOR


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CASE DOCTRINES

1. Centro Project Manpower Services Corporation , vs. Naluis and CA (G.R. No. 160123,
June 17, 2015)
 It is fundamental that in the interpretation of contracts of employment, doubts
are generally resolved in favor of the worker.
 Here, it is clear that the term of the contract was 12 months. The Authorization
for Entry could not be used as a valid cause for pre-terminating the employment
of Naluis. His repatriation was clearly a breach of the contract of employment for
which he should be compensated for damages.
2. Fuji Television Network, Inc. vs. Arlene S. Espiritu (G.R. No. 204944-45, December 3,
2014)
 Contracts of employment are different and have a higher level of regulation
because they are impressed with public interest.
 In determining the employment status of Arlene, the court analyzed Arlene’s
fixed-term contract and determine whether it supports her argument that she
was a regular employee, or the argument of Fuji that she was an independent
contractor. The burden of proving that she was an independent contractor lies
with Fuji.
 Here, Fuji’s argument that Arlene was an independent contractor under a fixed-
term contract is contradictory. Employees under fixed-term contracts cannot be
independent contractors because in fixed-term contracts, an employer-employee
relationship exists. On the other hand, circumstances show that Arlene’s work
as a stinger or news producer was necessary and desirable to Fuji. Hence,
Arlene is presumed to be a regular employee although she signed a fixed term
contract which was renewed several times.
 Further, an employee can be a regular employee with a fixed-term contract. The
law does not preclude the possibility that a regular employee may opt to have a
fixed-term contract for valid reasons (see the case of Brent).
3. GMA Network, Inc., vs. Pabriga, et.al. (G.R. No. 176419, November 27, 2013)
 The nature of the employment is determined by law, regardless of any contract
expressing otherwise. The supremacy of the law over the nomenclature of the
contract and the stipulations contained therein is to bring to life the policy
enshrined in the Constitution to afford full protection to labor. Labor contracts,
being imbued with public interest, are placed on a higher plane than ordinary
contracts and are subject to the police power of the State.
 The duties of the respondents which include the manning of the operations
center to air commercials, acting as transmitter/VTR men, maintaining the
equipment, and acting as cameramen are not undertakings separate or distinct
from the business of a broadcasting company. Hence, the respondents have
already attained the status of regular employment even though their contracts,
which were repeatedly renewed, state that they are employed on fixed-term.

C. CONSTITUTIONAL AND CIVIL CODE PROVISIONS RELATING TO LABOR LAW

D. MANAGEMENT PREROGATIVE, STATUTORY LIMITATION; BONAFIDE OCCUPATIONAL


QUALIFICATION
1. Philippine Span Asia Carriers Corporation vs. Pelayo (G.R. No. 212003, February 28,
2018)
 Except as limited by special laws, an employer is free to regulate, according to
his own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place and manner of work, tools to
be used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers and the discipline,
dismissal and recall of work.
 An employer who conducts investigations following the discovery of misdeeds by
its employees is not being abusive when it seeks information from an employee
involved in the workflow which occasioned the misdeed. It was ascertained that
there were several anomalies regarding disbursement vouchers in petitioner's
Davao branch. It made sense for petitioner to investigate these anomalies. It also
made sense for respondent to be involved in the investigation since she is the
accounting clerk in the said branch.
2. Industrial & Transport Equipment,Inc. vs. Tugade (G.R. No. 158539, January 15, 2009)
 Petitioners were clearly acting within their rights in suspending respondents.
The respondents defied the order of the petitioner not to release the car of Mr.
Cabel.
3. Marsman & Company, Inc.,, v. Sta. Rita (G.R. No. 194765, April 23, 2018)
 The hiring, firing, transfer, demotion, and promotion of employees have been
traditionally identified as a management prerogative subject to limitations found
in the law, a collective bargaining agreement, or in general principles of fair play
and justice.
 The Court has upheld the transfer/absorption of employees from one company
to another, as successor employer, as long as the transferor was not in bad faith
and the employees absorbed by a successor-employer enjoy the continuity of
their employment status and their rights and privileges with their former
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CASE DOCTRINES

employer. To assert that Marsman remained as Sta. Rita's employer even after
the corporate spin-off disregards the separate personality of Marsman and
CPDSI.
4. Divine Word College of Laoag, vs. Mina (G.R. No. 195155, April 13, 2016) – Invalid
exercise of management prerogative
 The right of employees to security of tenure does not give the employees vested
rights to their positions to the extent of depriving management of its prerogative
to change their assignments or to transfer them.
 In cases of transfer of an employee, the employer is charged with the burden of
proving that its conduct and action are for valid and legitimate grounds such as
genuine business necessity and that the transfer is not unreasonable,
inconvenient or prejudicial to the employee. If the employer cannot overcome
this burden of proof, the employee's transfer shall be tantamount to unlawful
constructive dismissal.
 In this case, Mina's transfer clearly amounted to a constructive dismissal. From
being an educator, he was appointed as a college laboratory custodian, which is
a clear relegation from his previous position. Mina's appointment as laboratory
custodian was a demotion. His appointment even became contractual in nature
and was subject to automatic termination after one year "without any further
notification."
5. Rural Bank of Cantilan, Inc., vs. Julve (G.R. No. 169750, February 27, 2007)
 The only limitations to the exercise of this prerogative are those imposed by
labor laws and the principles of equity and substantial justice.
 Here, the exercise to management prerogative to transfer the respondent from
Planning and Marketing Officer to Bookkeeper I and Assistant Branch Head did
not result to demotion. The bookkeeper and assistant branch head is not only
charged with preparing financial reports and monthly bank reconciliations, he is
also the head of the Accounting Department of a branch. Under any standard,
these are supervisory and administrative tasks which entail great responsibility.
Moreover, respondent’s transfer did not decrease his pay.
6. Danilo Leonardo, vs. NLRC et. al (G.R. Nos. 125303 And 126937, June 16, 2000)
 An employer acts well within its rights in transferring an employee as it sees fit
provided that there is no demotion in rank or diminution in pay. Management
prerogatives encompass the right of employers to demote an employee. An
employer is entitled to impose productivity standards for its workers, and in
fact, non-compliance may be visited with a penalty even more severe than
demotion.
 Thus, it is legal for a marketing company to impose a policy wherein employees
are required to comply with a monthly sales quota. This scheme is intended to
foster competition among its employees.
7. Mega Magazine Publications, Inc., et al v. Defensor (G.R. No. 162021, June 16, 2014)
 The grant of a bonus or special incentive, being a management prerogative, is
not a demandable and enforceable obligation, except when the bonus or special
incentive is made part of the wage, salary or compensation of the employee, or is
promised by the employer and expressly agreed upon by the parties.
 Here, the management already exercised its prerogative to grant the bonus or
special incentive. Hence, once the gross revenue quota is reached (as stated in
the memorandum), employees will be entitled to the commissions and the
incentive bonus.
8. Lepanto Ceramics, Inc., vs. Lepanto Ceramics Employees Association (G.R. No. 180866,
March 2, 2010)
 Generally, a bonus is not a demandable and enforceable obligation (the giving of
a bonus is a management prerogative). For a bonus to be enforceable, it must
have been promised by the employer and expressly agreed upon by the parties.
 Given that the bonus in this case is integrated in the CBA, the same partakes
the nature of a demandable obligation. There were no conditions specified in the
CBA for the grant of said benefit contrary to the claim of petitioner that the same
is justified only when there are profits earned by the company. Hence, petitioner
is obliged to give the Christmas bonus claimed.

9. Coca-Cola Bottlers Philippines, Inc. vs. Iloilo Coca-Cola Plant Employees Labor Union
(ICCPELU) (G.R. No. 195297, December 05, 2018)
 The phrase "schedule work on Saturdays based on operational necessity," by
itself, is union recognition that there are times when exigencies of the business
will arise requiring a manning complement to suffer work for four additional
hours per week. As such, the provisions' tenor and plain meaning give company
management the right to compel its employees to suffer work on Saturdays. This
necessarily includes the prerogative not to schedule work. Whether or not work
will be scheduled on a given Saturday is made to depend on operational
necessity. The CBA therefore gives CCBPI the management prerogative to
provide its employees with Saturday work depending on the exigencies of the
business.
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10. Sime Darby Pilipinas, Inc. Vs. NLRC, (G.R. No. 119205, April 15, 1998)
 Management retains the prerogative, whenever exigencies of the service so
require, to change the working hours of its employees. So long as such
prerogative is exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, the Court will uphold
such exercise.
 Here, the new work schedule fully complies with the daily work period of eight
(8) hours without violating the Labor Code. Petitioner, as the employer, cites as
reason for the adjustment the efficient conduct of its business operations and its
improved production. It rationalizes that while the old work schedule included a
30-minute paid lunch break, the employees could be called upon to do jobs
during that period as they were "on call." Since the employees are no longer
required to work during this one-hour lunch break, there is no more need for
them to be compensated for this period.
11. Star Paper Corporation, Et.Al. vs. Simbol, et.al., (G.R. No. 164774, April 12, 2006) –
Bona fide Occupational Qualification
 Here, the policy of the employer banning spouses from working in the same
company violates the rights of the employee under the Constitution and the
Labor Code. It is an invalid exercise of management prerogative.
 There must be a compelling business necessity for which no alternative exists
other than the discriminatory practice. To justify a bona fide occupational
qualification, the employer must prove two factors: (i) that the employment
qualification is reasonably related to the essential operation of the job involved;
and (ii) that there is a factual basis for believing that all or substantially all
persons meeting the qualification would be unable to properly perform the
duties of the job.
 Petitioners’ sole contention that "the company did not just want to have two (2)
or more of its employees related between the third degree by affinity and/or
consanguinity" is lame. The petitioner failed to show that marriage of Simbol (a
Sheeting Machine Operator) with his wife (an employee of the Repacking Section)
and Comia (a Production Helper) with her husband (a helper in the cutter-
machine) could be detrimental to its business operations. The policy is premised
on the mere fear that employees married to each other will be less efficient.
12. Duncan Association of Detailman-PTGWO vs. Glaxo Wellcome Philippines, Inc., (G.R.
No. 162994, September 17, 2004) - Bona fide Occupational Qualification
 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. In laying down the assailed company policy, Glaxo
only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures. What the company
merely seeks to avoid is a conflict of interest between the employee and the
company that may arise out of such relationships.
 Thus, a pharmaceutical company may validly impose a policy prohibiting its
employees from marrying employees of any competitor company.
13. Century Properties, Inc., vs. Babiano (G.R. No. 220978, July 5, 2016)
 The rule is that where the language of a contract is plain and unambiguous, its
meaning should be determined without reference to extrinsic facts or aids.
Verily, the “Confidentiality of Documents and Non-Compete Clause” is not only
clear and unambiguous in stating that Babiano is barred to “work for
whatsoever capacity with any person whose business is in direct competition
with CPI while he is employed for a period of one year from the date of his
resignation or termination from the company,” it also expressly provided in no
certain terms that should Babiano “breach any term of the employment
contract, forms of compensation including commissions and incentives will be
forfeited.”
 Thus, Babiano is not anymore entitled to his commissions when CPI found out
that he provided a competitor with information regarding CPIs marketing
strategies, spread false information regarding CPI and its projects, recruited
CPI's personnel to join the competitor, and for being absent without official leave
(AWOL) for five (5) days.
14. Tiu vs. Platinum Plans Phil., Inc. (G.R. No. 163512, February 28, 2007)
 A non-involvement clause is not necessarily void for being in restraint of trade
as long as there are reasonable limitations as to time, trade, and place. In this
case, the non-involvement clause has a time limit: two years from the time
petitioner’s employment with respondent ends. It is also limited as to trade,
since it only prohibits petitioner from engaging in any pre-need business akin to
respondent’s
 To allow her to engage in a rival business soon after she leaves would make
respondent’s trade secrets vulnerable especially in a highly competitive
marketing environment. Thus, the court found the non-involvement clause not
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contrary to public welfare and not greater than is necessary to afford a fair and
reasonable protection to respondent.
15. Rivera vs. Solidbank Corporation (G.R. No. 163269, April 19, 2006)
 A restriction in the contract which does not preclude the employee from
engaging in competitive activity, but simply provides for the loss of rights or
privileges if he does so is not in restraint of trade.
 A post-retirement competitive employment restriction is designed to protect the
employer against competition by former employees who may retire and obtain
retirement or pension benefits and, at the same time, engage in competitive
employment.
 In this case, the Undertaking and the Release, Waiver and Quitclaim do not
provide for the automatic forfeiture of the benefits petitioner received under the
SRP upon his breach of said deeds. However, the terms of the Undertaking
clearly state that any breach by petitioner of his promise would entitle
respondent to a cause of action for protection in the courts of law. Hence, if the
respondent bank can produce the necessary evidence, then restitution of the
retirement benefit will follow.
16. Isabela-I Electric Coop., Inc., vs. Del Rosario (G.R. No. 226369, July 17, 2019)
 While it is true that an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, layoff of workers and the discipline,
dismissal and recall of workers, and this right to transfer employees forms part
of management prerogatives, the employee's transfer should not be
unreasonable, nor inconvenient, nor prejudicial to him. It should not involve a
demotion in rank or diminution of his salaries, benefits and other privileges, as
to constitute constructive dismissal.
 Here, the respondent was demoted without sufficient cause. Even if there was no
diminution in salary, there has still been a demotion in terms of respondent's
rank, responsibilities, and status. There is demotion when an employee is
appointed to a position resulting to a diminution in duties, responsibilities,
status or rank which may or may not involve a reduction in salary.
17. Holcim Philippines, Inc., vs. Obra (G.R. No. 220998, August 08, 2016)
 the employer has the inherent right to discipline, including that of dismissing its
employees for just causes. However, the penalty must commensurate with the
act, conduct or omission imputed to the employee.
 Here, the respondent's misconduct is not so gross as to deserve the penalty of
dismissal from service. Respondent took a piece of wire from petitioner's La
Union Plant and tried to bring it outside the company premises, he did so in the
belief that the same was already for disposal. Petitioner did not suffer any
damage given that after being asked to submit himself and his bag for
inspection, respondent had a change of heart and decided to just return the wire
to the Packhouse Office.
18. J.A.T. General Services vs NLRC (G.R. No. 148340, January 26, 2004)
 Article 283 of the Labor Code is clear that an employer may close or cease his
business operations or undertaking even if he is not suffering from serious
business losses or financial reverses, as long as he pays his employees their
termination pay in the amount corresponding to their length of service. It would,
indeed, be stretching the intent and spirit of the law if we were to unjustly
interfere in management’s prerogative to close or cease its business operations
just because said business operation or undertaking is not suffering from any
loss.
 Here, the closure of business operation by petitioners is not tainted with bad
faith or other circumstance that arouses undue suspicion of malicious intent.
The decision to permanently close business operations was arrived at after a
suspension of operation for several months precipitated by a slowdown in sales
without any prospects of improving. Nevertheless, in this case, we must stress
that the closure of business operation is allowed under the Labor Code, provided
separation pay be paid to the terminated employee.

II. HRD
A. APPRENTICES AND LEARNERS
1. Century Canning Corporation Vs CA and Palad (G.R. No. 152894, August 17, 2007)
 Prior approval by the Department of Labor and Employment of the proposed
apprenticeship program is a condition sine qua non before an apprenticeship
agreement can be validly entered into.
 Here, the apprenticeship agreement was enforced even before the TESDA
approved petitioner’s apprenticeship program. Thus, the apprenticeship
agreement is void because it lacked prior approval from the TESDA.
2. Atlanta Industries, Inc. v Sebolino, Et.Al., (G.R. No. 187320, January 26, 2011)
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 Even if we recognize the company's need to train its employees through


apprenticeship, we can only consider the first apprenticeship agreement for the
purpose. With the expiration of the first agreement and the retention of the
employees, Atlanta had, to all intents and purposes, recognized the completion
of their training and their acquisition of a regular employee status. To foist upon
them the second apprenticeship agreement for a second skill which was not
even mentioned in the agreement itself, is a violation of the Labor Code's
implementing rules and is an act manifestly unfair to the employees, to say the
least.

III. PRE-EMPLOYMENT
A. RECRUITMENT FOR LOCAL EMPLOYMENT

B. RECRUITMENT FOR OVERSEAS: EMPLOYMENT


1. The Executive Secretary, Etc. Vs. CA (G.R. No. 131719, May 25, 2004)
 Section 6 of RA 8042 was previously upheld as valid. It provides that employees
of recruitment agencies may be criminally liable for illegal recruitment.
 Penalizing unlicensed and licensed recruitment agencies for illegal recruitment
and imposing life imprisonment for those who commit large scale illegal
recruitment is not offensive to the Constitution. The accused may be convicted
of illegal recruitment and large scale illegal recruitment only if, after trial, the
prosecution is able to prove all the elements of the crime charged.
 The respondent merely speculated and surmised that licensed and registered
recruitment agencies would close shop and stop business operations because of
the assailed penal provisions of the law. A writ of preliminary injunction to
enjoin the enforcement of penal laws cannot be based on such conjectures or
speculations.
 The respondent even failed to adduce any evidence to prove irreparable injury
because of the enforcement of Section 10(1)(2) of Rep. Act No. 8042. Its fear or
apprehension that, because of time constraints, its members would have to
defend foreign employees in cases before the Labor Arbiter is based on
speculations. Even if true, such inconvenience or difficulty is hardly irreparable
injury.
2. Sameer Overseas Placement Agency, Inc., vs. Cabiles (G.R. No. 131719, August 5, 2014)
 The clause “or for three (3) months for every year of the unexpired term,
whichever is less” under Section 10 or RA 8042 as amended is unconstitutional
for violating the equal protection clause and substantive due process.
 When a law or a provision of law is null because it is inconsistent with the
Constitution, the nullity cannot be cured by reincorporation or reenactment of
the same or a similar law or provision. A law or provision of law that was already
declared unconstitutional remains as such unless circumstances have so
changed as to warrant a reverse conclusion. (Note: The clause in Sec. 10, RA
8042 which was declared unconstitutional in the case of Serrano v Gallant
Maritime Services, Inc. on March 24, 2009 is reenacted in RA 10022 which was
promulgated on March 8, 2010)
 the reinstated clause violates due process rights. It is arbitrary as it deprives
overseas workers of their monetary claims without any discernable valid
purpose.

3. Trans Action Overseas Corporation vs. The Honorable Secretary of Labor, Et.Al. (G.R.
No. 170139, September 5, 1997)
 The POEA does not have the exclusive and original jurisdiction to hear and
decide illegal recruitment cases, including the authority to cancel recruitment
licenses. The power to suspend or cancel any license or authority to recruit
employees for overseas employment is vested upon the Secretary of Labor and
Employment under Art.35 of the Labor Code as amended.
 The Secretary of Labor has also the authority conferred by Section 36, not only
to restrict and regulate the recruitment and placement of activities of all
agencies, but also to promulgate rules and regulations to carry out the
objectives and implement the provisions governing said activities.
4. Atci Overseas Corporation, et. al. vs. Echin, (G.R. No. 109583, October 11, 2010)
 A private recruitment agency cannot evade responsibility for the money claims of
OFWs which it deploys abroad by the mere expediency of claiming that its
foreign principal is a government agency clothed with immunity from suit.
 The solidary liability of private recruitment agencies with their foreign principals
under RA 8042 affords the OFWs with a recourse and assures them of
immediate and sufficient payment of what is due them.
 The obligations covenanted in the recruitment agreement entered into by and
between the local agent and its foreign principal are not coterminous with the
term of such agreement. Thus, even if either or both parties decide to end their
agreement, their obligations to the contracted employees will not be affected.
Their obligations to the contracted employees extends up to and until the
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expiration of the employment contracts of the employees recruited and employed


pursuant to the said recruitment agreement.
 If the recruitment/placement agency is a juridical being, the corporate officers
and directors and partners as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership for the money claims or
damages under Section 10 of RA 8042.
5. Sunace International Management Services, Inc. vs. NLRC (G.R. No. 178551, January
25, 2006)
 The knowledge of the principal-foreign employer cannot be imputed to its agent,
Sunace. The theory of imputed knowledge cannot be applied in this case. The
theory of imputed knowledge ascribes the knowledge of the agent, Sunace, to the
principal, employer Xiong, not the other way around.
 there was an implied revocation of its agency relationship with its foreign
principal when, after the termination of the original employment contract, the
foreign principal directly negotiated with the OFW (Divina) and entered into a
new and separate employment contract in Taiwan. Article 1924 of the New Civil
Code reads: The agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons.
6. Asian International Manpower Services, Inc., vs. DOLE (G.R. No. 161757, April 06,
2016)
 Due process is satisfied when a person is notified of the charge against him and
given an opportunity to explain or defend himself. The observance of fairness in
the conduct of an investigation is at the very heart of procedural due process. As
long as he is given the opportunity to defend his interests in due course, he is
not denied due process. In administrative proceedings, the filing of charges and
giving reasonable opportunity to the person charged to answer the accusations
against him constitute the minimum requirements of due process.
 Here, the surveillance report dated February 21, 2007 which was the basis of
the ruling of POEA was not attached to the Show Cause Order issued to AIMS.
Thus, AIMS cannot be expected to second-guess what charges and issues it
needed to clarify or rebut in order to clear itself.
7. Princess Joy Placement and General Services, Inc., vs. Binalla, (G.R. No. 210308, June
04, 2014)
 Under Article 34 (i) of the Labor Code on prohibited practices, “it shall be
unlawful for any individual, entity, licensee, or holder of authority to substitute
or alter employment contracts approved and verified by the Department of Labor
and Employment from the time of actual signing thereof by the parties up to and
including the periods of expiration of the same without the approval of the
Secretary of Labor.” Further, contract substitution constitutes “illegal
recruitment” under Article 38 (I) of the Code.
 Here, Binalla was a victim of contract substitution. He worked under an
employment contract whose terms were inferior to the terms certified by the
POEA. Under the four-year contract he signed and implemented by his
employer, Al Adwani, he was paid only SR1500.00 or US$400 a month; whereas,
under the POEA-certified two-year contract, he was to be paid $550.00. Clearly,
the four-year contract signed by Binalla substituted for the POEA-certified
contract.

8. People vs. Hu, (G.R. No. 197005, October 06, 2008)


 Illegal recruitment is committed when two elements concur, namely: (1) the
offender has no valid license or authority required by law to enable him to
lawfully engage in the recruitment and placement of workers; and (2) he
undertakes any activity within the meaning of "recruitment and placement"
defined under Article 13(b) of the Labor Code.
 The crime becomes Illegal Recruitment in Large Scale when the foregoing two
elements concur, with the addition of a third element - the recruiter committed
the same against three or more persons, individually or as group.
 Here, illegal recruitment was committed against only one person; that is, against
Garcia alone. Illegal recruitment cannot successfully attach to the allegations of
Panguelo, Abril and Orillano, since they testified that they accomplished their
pre-employment requirements through Brighturn from June 2001 up to October
of the same year, a period wherein Brighturn's license to engage in recruitment
and placement was still in full force and effect.
9. People vs. Gallo, (G.R. No. 182232, March 18, 2010)
 To commit syndicated illegal recruitment, three elements must be established:
(1) the offender undertakes either any activity within the meaning of
“recruitment and placement” defined under Article 13(b), or any of the
prohibited practices enumerated under Art. 34 of the Labor Code; (2) he has no
valid license or authority required by law to enable one to lawfully engage in
recruitment and placement of workers; and (3) the illegal recruitment is
committed by a group of three (3) or more persons conspiring or confederating
with one another.
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 Here, the evidence readily reveals that MPM Agency was never licensed by the
POEA to recruit workers for overseas employment.
 Even with a license, however, illegal recruitment could still be committed under
Section 6 of Republic Act No. 8042
 In the instant case, accused-appellant committed the acts enumerated in Sec. 6
of R.A. 8042. Testimonial evidence presented by the prosecution clearly shows
that, in consideration of a promise of foreign employment, accused-appellant
received the amount of Php 45,000.00 from Dela Caza. When accused-appellant
made misrepresentations concerning the agency’s purported power and
authority to recruit for overseas employment, and in the process, collected
money in the guise of placement fees, the former clearly committed acts
constitutive of illegal recruitment.
10. People vs. Chua, (G.R. No. 185277, March 10, 2010)
 It is clear that any recruitment activities to be undertaken by non-licensee or
non-holder of contracts, or as in the present case, an agency with an expired
license, shall be deemed illegal and punishable under Article 39 of the Labor
Code of the Philippines. And illegal recruitment is deemed committed in large
scale if committed against three or more persons individually or as a group.
 Illegal recruitment is malum prohibitum, while estafa is malum in se. In the
first, the criminal intent of the accused is not necessary for conviction. In the
second, such an intent is imperative.
11. People vs. Ocden, (G.R. No. 184058, June 1, 2011)
 It is well-settled that to prove illegal recruitment, it must be shown that
appellant gave complainants the distinct impression that he had the power or
ability to send complainants abroad for work such that the latter were convinced
to part with their money in order to be employed.
 It is not necessary for the prosecution to present a certification that Ocden is a
non-licensee or non-holder of authority to lawfully engage in the recruitment
and placement of workers. Section 6 of Republic Act No. 8042 enumerates
particular acts which would constitute illegal recruitment “whether committed
by any person, whether a non-licensee, non-holder, licensee or holder of
authority.” Among such acts, under Section 6(m) of Republic Act No. 8042, is
the “[f]ailure to reimburse expenses incurred by the worker in connection with
his documentation and processing for purposes of deployment, in cases where
the deployment does not actually take place without the worker’s fault.”
 Ocden committed illegal recruitment as described in said provision by receiving
placement fees from Mana-a, Ferrer, and Golidan’s two sons, Jeffries and
Howard, evidenced by receipts Ocden herself issued; and failing to
reimburse/refund to Mana-a, Ferrer, and Golidan’s two sons the amounts they
had paid when they were not able to leave for Italy, through no fault of their
own.

12. People vs. Ordono, (G.R. No. 173198, July 10, 2000)
 Recruitment includes the act of referral or the act of passing along or forwarding
of an applicant for employment after initial interview of a selected applicant for
employment to a selected employer, placement officer, or bureau.
 Accused-appellant admitted that she referred complainants to a certain Joy
Mejia so that they could find employment abroad. Having no license to engage in
recruitment, accused-appellant is convicted for illegal recruitment.
13. Skippers United Pacific, Inc. v Doza, Et.Al., (G.R. No. 161757, February 8, 2012)
 The Migrant Workers Act provides that salaries for the unexpired portion of the
employment contract or three (3) months for every year of the unexpired term,
whichever is less, shall be awarded to the overseas Filipino worker, in cases of
illegal dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime
Services and Marlow Navigation Co. Inc., the Court, in an En Banc Decision,
declared unconstitutional the clause "or for three months for every year of the
unexpired term, whichever is less" and awarded the entire unexpired portion of
the employment contract to the overseas Filipino worker.
 Thus, the Court granted to D e Gracia, et al. salaries representing the unexpired
portion of their contracts, instead of salaries for three (3) months.
14. Virgen Shipping Corporation vs. Barraquio, (G.R. No. 175558, April 16, 2009)
 The entitlement to compensation and benefits for injury or illness requiring
medical and/or dental treatment in a foreign port under Section 20 (B) [2] of the
Standard Employment Contract of the POEA must be read in conjunction with
Section 20 (B) [3] which requires the repatriated OFW to submit himself to a
post-medical employment examination by a company designated physician
within three working days from arrival.
 Here, Barraquio did not comply with the 3-day requirement to seek the services
of a company-designated physician for purposes of post-employment medical
examination. Hence, he cannot claim entitlement to the benefits under the
Standard Employment Contract of the POEA.
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15. Philippine National Bank, vs. Cabansag, (G.R. No. 178127, June 21, 2005)
 Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:
"Section 1. Venue – (a) All cases which Labor Arbiters have authority to
hear and decide may be filed in the Regional Arbitration Branch having
jurisdiction over the workplace of the complainant/petitioner; Provided,
however that cases of Overseas Filipino Worker (OFW) shall be filed
before the Regional Arbitration Branch where the complainant resides or
where the principal office of the respondent/employer is situated, at the
option of the complainant.
 As such, it is the option of the OFW to choose the venue of her Complaint
against petitioner for illegal dismissal. The law gives her two choices: (1) at the
Regional Arbitration Branch (RAB) where she resides or (2) at the RAB where the
principal office of her employer is situated.
16. People vs. Tolentino (G.R. No. 109583, July 1, 2015)
 Difference of Labor Code and RA 8042 on Illegal recruitment: Except for the last
two acts [(l) and (m)] on the list under Article 6 of RA8042, the first eleven acts
or practices are also listed in Article 34 of the Labor Code under the heading
"Prohibited practices." But such acts or practices do not constitute illegal
recruitment when undertaken by a licensee or holder of authority, ONLY if
committed by a non-licensee or non-holder of authority, liable for illegal
recruitment-Article 38(A) of the Labor Code. RA 8042 broadened the definition of
illegal recruitment whether committed by licensee or holder of authority; non-
licensee or non-holder of authority.
 Illegal recruitment, as defined under Article 38 of the Labor Code, encompasses
recruitment activities for both local and overseas employment. However, illegal
recruitment under this article is limited to recruitment activities undertaken by
non-licensees or non-holders of authority. Thus, under the Labor Code, to
constitute illegal recruitment in large scale, three elements must concur:
i. The accused undertook any recruitment activity defined under Art. 13 (b)
or any prohibited practice enumerated under Art. 34 of the Labor Code.
ii. He did not have the license or the authority to lawfully engage in the
recruitment and placement of workers.
iii. He committed the same against three or more persons, individually or as
a group.

17. Hon. Patricia A. Sto. Tomas, et al. vs. Salac Et.al. [ G.R. No. 152710]/ [G.R. No.
167590]/ [G.R. Nos. 182978-79]/ [G.R. Nos. 184298-99], (G.R. No. 208686, November
13, 2012)
 Section 6 of RA 8042 as amended is not unconstitutional. “Illegal recruitment"
as defined in Section 6 is clear and unambiguous. It makes a distinction
between licensed and non-licensed recruiters. By its terms, persons who engage
in "canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers" without the appropriate government license or authority are
guilty of illegal recruitment whether or not they commit the wrongful acts
enumerated in that section. On the other hand, recruiters who engage in the
canvassing, enlisting, etc. of OFWs, although with the appropriate government
license or authority, are guilty of illegal recruitment only if they commit any of
the wrongful acts enumerated in Section 6.
 Section 7 of RA 8042 as amended cannot be held unconstitutional on the
ground that its sweeping application of the penalties failed to make any
distinction as to the seriousness of the act committed for the application of the
penalty imposed on such violation. In fixing uniform penalties for each of the
enumerated acts under Section 6, Congress was within its prerogative to
determine what individual acts are equally reprehensible, consistent with the
State policy of according full protection to labor, and deserving of the same
penalties. It is not within the power of the Court to question the wisdom of this
kind of choice.
 Section 9 of RA 8042 cannot be invalidated on the ground that it allows the
offended parties to file the criminal case in their place of residence. It does not
negate the general rule on venue of criminal cases which is the place where the
crime or any of its essential elements were committed. There is nothing arbitrary
or unconstitutional in Congress fixing an alternative venue for violations of
Section 6 of R.A. 8042 that differs from the venue established by the Rules on
Criminal Procedure. Indeed, Section 15(a), Rule 110 of the latter Rules allows
exceptions provided by laws. Section 9 of R.A. 8042, as an exception to the rule
on venue of criminal action is, consistent with that law’s declared policy of
providing a criminal justice system that protects and serves the best interest of
the victims of illegal recruitment.
 The second paragraph of Section 10 of R.A. 8042, which holds the corporate
directors, officers, and partners of recruitment and placement agencies jointly
and soldarily liable for money claims and damages that may be adjudged against
the latter agencies, is not unconstitutional. However, the liability of corporate
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directors and officers is not automatic. To make them jointly and solidarily liable
with their company, there must be a showing that they were remiss in directing
the affairs of that company, such as sponsoring or tolerating the conduct of
illegal activities.

C. EMPLOYMENT OF NON-RESIDENT ALIENS


1. Dreamland Hotel Resort vs. Johnson (G.R.No. 191455, March 12, 2014)
 A permanent foreign resident is exempted from the requirement of securing an
Alien Employment Permit (AEP) as expressed under Department Order No. 75-
06 of the Department of Labor and Employment (DOLE).
 Here, the respondent is exempted from such a requirement as evidenced by the
Certification of Exemption issued by the DOLE Regional Office III.
2. WPP Marketing Communications, Inc., Et.Al. vs. Galera / Galera vs. WPP Marketing
Communications, Inc., Et.Al, (G.R. No. 169239 /G.R. No. 169207, March 25, 2010)
 An alien who worked in the Philippines without a proper work permit cannot
claim employee’s benefits under Philippine labor laws so as not to violate the
Philippine labor laws requiring aliens to secure work permits before their
employment.
 Thus, Galera cannot come to this Court with unclean hands. To grant Galera’s
prayer is to sanction the violation of the Philippine labor laws requiring aliens to
secure work permits before their employment. This ruling, however, does not bar
Galera from seeking relief from other jurisdictions.
3. Andrew James Mcburnie, vs. Ganzon Et. Al. (G.R. Nos. 178034 & 178117 G R. Nos.
186984-85, October 17, 2013)
 Considering that McBurnie, an Australian, alleged illegal dismissal and sought
to claim under our labor laws, it was necessary for him to establish, first and
foremost, that he was qualified and duly authorized to obtain employment
within our jurisdiction. A requirement for foreigners who intend to work within
the country is an employment permit, as provided under Article 40, Title II of the
Labor Code
 In WPP Marketing Communications, Inc. v. Galera, we held that a foreign
national’s failure to seek an employment permit prior to employment poses a
serious problem in seeking relief from the Court. Thus, although the respondent
therein appeared to have been illegally dismissed from employment she cannot
seek employee benefits under the Philippine laws.
 The law and the rules are consistent in stating that the employment permit
must be acquired prior to employment.

PART TWO: LABOR STANDARDS

I. THE EMPLOYER-EMPLOYEE RELATIONSHIP


1. Kawachi vs. Del Quero (G.R. No. 163768, March 27, 2007)
 Under the "reasonable causal connection rule," if there is a reasonable causal
connection between the claim asserted and the employer-employee relations, then
the case is within the jurisdiction of our labor courts. In the absence of such nexus,
it is the regular courts that have jurisdiction.
 Petitioners' reaction culminated in private respondent's dismissal from work in the
very same incident. The incident on 10 August 2002 alleged in the complaint for
damages was similarly narrated in private respondent's Affidavit-Complaint
supporting her action for illegal dismissal before the NLRC. Clearly, the alleged
injury is directly related to the employer-employee relations of the parties.
 For a single cause of action, the dismissed employee cannot be allowed to sue in two
forums: one, before the labor arbiter for reinstatement and recovery of back wages
or for separation pay, upon the theory that the dismissal was illegal; and two, before
a court of justice for recovery of moral and other damages, upon the theory that the
manner of dismissal was unduly injurious or tortious. Suing in the manner
described is known as "splitting a cause of action," a practice engendering
multiplicity of actions. It is considered procedurally unsound and obnoxious to the
orderly administration of justice.
2. San Miguel Corporation vs. Etcuban, Et.Al. (G.R. No. 127639, December 3, 1999)
 The current trend, and still is, to refer worker-employer controversies to labor
courts, unless unmistakably provided by the law to be otherwise. Because of the
trend, the Court noted further, jurisprudence has developed the "reasonable causal
connection rule."
 The employees' claim for damages was intertwined with their having been separated
from their employment without just cause and, consequently, had a reasonable
causal connection with their employer-employee relations with petitioner.
Accordingly, it cannot be denied that respondents' claim falls under the jurisdiction
of the labor arbiter as provided in paragraph 4 of Article 217.

II. TESTS
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1. Expedition Construction Corporation, Et.Al. vs. Africa, Et.Al. (G.R. No. 228671, December
14, 2017)
 the question of whether or not respondents were employees of Expedition is a
factual issue.
 four-fold test in determining the existence of an employer-employee relationship, 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'".
 A person cannot be said to be an independent contractor nor project employees if:
i. They have no substantial capital or investment and that they were
performing activities which were not directly related to employer's business
to be qualified as independent contractors.
ii. no written contract that can prove that respondents were project employees
and that the duration and scope of such employment were specified at the
time respondents were engaged
 presumption of regular employment under Art. 280: employees who have rendered
at least one year of service, whether such service is continuous or broken x x x shall
be considered [as] regular employees with respect to the activity in which they are
employed and their employment shall continue while such activity exists."
 Here, respondents who were engaged/hired by Expedition as garbage truck drivers
were performing activities which were directly related to the business of Expedition.
This confirms the conclusion that respondents were indeed regular employees
 Financial assistance even if no illegal dismissal: financial assistance may be allowed
as a measure of social justice [under] exceptional circumstances, and as an
equitable concession. In Eastern Shipping Lines, Inc. v. Sedan,41 had this to say: x
x x We are not unmindful of the rule that financial assistance is allowed only in
instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character.

2. Fuji Television Network, Inc. vs. Espiritu (G.R. No. 204944-45, December 3, 2014)
 Applying the fourfold test, Arlene should be considered as a regular employee with a
fixed term contract. The elements of the four-fold test are the following: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the power of control, which is the most important element. The
"power of control" was defined as the right to control not only the end to be achieved
but also the means to be used in reaching such end.
 The test for determining regular employment is whether there is a reasonable
connection between the employee’s activities and the usual business of the
employer. Article 280 provides that the nature of work must be "necessary or
desirable in the usual business or trade of the employer" as the test for determining
regular employment. Here, Fuji is engaged in the business of broadcasting,
including news programming. It is based in Japan and has overseas offices to cover
international news. Arlene was engaged by Fuji as a stinger or news producer for its
Manila Bureau. She was hired for the primary purpose of news gathering and
reporting to the television network’s headquarters. Espiritu was not contracted on
account of any peculiar ability or special talent and skill that she may possess
which the network desires to make use of. She also had to report for work in Fuji’s
office in Manila from Mondays to Fridays, eight (8) hours per day. She had no
equipment and had to use the facilities of Fuji to accomplish her tasks.
 an employee can be a regular employee with a fixed-term contract. The law does not
preclude the possibility that a regular employee may opt to have a fixed-term
contract for valid reasons. This was recognized in Brent: For as long as it was the
employee who requested, or bargained, that the contract have a "definite date of
termination," or that the fixed-term contract be freely entered into by the employer
and the employee, then the validity of the fixed-term contract will be upheld.

3. Calamba Medical Center, Inc. vs. NLRC (G.R. No. 176484, November 25, 2008)
 In the "control test," an employment relationship exists between a physician and a
hospital if the hospital controls both the means and the details of the process by
which the physician is to accomplish his task.
 Here, control exists because (1) the private respondents maintained specific work-
schedules, as determined by petitioner through its medical director, which consisted
of 24-hour shifts totaling forty-eight hours each week and which were strictly to be
observed under pain of administrative sanctions, and (2) without the approval or
consent of petitioner or its medical director, no operations can be undertaken in
emergency rooms, operating rooms and wards
 For control test to apply, it is not essential for the employer to actually supervise the
performance of duties of the employee, it being enough that it has the right to wield
the power
 Under Section 15, Rule X of Book III of the Implementing Rules of the Labor Code,
an employer-employee relationship exists between the resident physicians and the
training hospitals, unless there is a training agreement between them, and the
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training program is duly accredited or approved by the appropriate government


agency.
 With respect to respondents' sharing in some hospital fees, this scheme does not
sever the employment tie between them and petitioner as this merely mirrors
additional form or another form of compensation or incentive similar to what
commission-based employees receive as contemplated in Article 97 (f) of the Labor
Code, thus: "Wage" paid to any employee shall mean the remuneration or earning,
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.
4. Valeroso vs. Skycable Corporation (G.R. No. 202015, July 13, 2016)
 Guidelines indicative of labor law 'control' do not merely relate to the mutually
desirable result intended by the contractual relationship; they must have the nature
of dictating the means and methods to be employed in attaining the result.
 Here, the act of regularly updating petitioners of new promos, new price listings,
meetings and trainings of new account executives; imposing quotas and penalties;
and giving commendations for meritorious performance do not pertain to the means
and methods of how petitioners were to perform and accomplish their task of
soliciting cable subscriptions. At most, these indicate that respondent regularly
monitors the result of petitioners' work but in no way dictate upon them the manner
in which they should perform their duties.
 The two-tiered test in order to determine the true relationship between the
employer and employee (Francisco v. NLRC):
i. 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
ii. the underlying economic realities of the activity or relationship, has been
made especially appropriate in cases where there is no written agreement to
base the relationship on and where the various tasks performed by the
worker brings complexity to the relationship with the employer
 In the present case, there is a written contract
 Indeed, "[t]he presence of [the] power of control is indicative of an employment
relationship while the absence thereof is indicative of independent contractorship."
 Article 280 is not the yardstick for determining the existence of an employment
relationship because it merely distinguishes between two kinds of employees, i.e.,
regular employees and casual employees, for purposes of determining [their rights]
to certain benefits, [such as] to join or form a union, or to security of tenure. Article
280 does not apply where the existence of an employment relationship is in
dispute," as in this case.

III. PROBATIONARY EMPLOYMENT


1. De La Salle Araneta University, Inc. vs. Magdurulang (G.R. No. 224319, November 20,
2017)
 A probationary employee or probationer is one who is on trial for an employer,
during which the latter determines whether or not the former is qualified for
permanent employment.
 "probationary" implies the purpose of such term or period, and not necessarily its
length.
 GR: Article 296. [281] Probationary Employment. - Probationary employment shall
not exceed six (6) months from the date the employee started working, unless it is
covered by an apprenticeship agreement stipulating a longer period. The services of
an employee who has been engaged on a probationary basis may be terminated for a
just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of
his engagement. An employee who is allowed to work after a probationary period
shall be considered a regular employee.
 XPN: case law has provided that the probationary period of employment of academic
personnel such as professors, instructors, and teachers - including the
determination as to whether they have attained regular or permanent status - shall
not be governed by the Labor Code but by the standards established by the
Department of Education and the Commission on Higher Education, as the case
may be. In this regard, Section 92 of the 1992 Revised Manual of Regulations for
Private Schools (8th Edition) explicitly provides that: (a) for those in elementary and
secondary levels, the probationary period shall not be more than three (3)
consecutive years of satisfactory service; and (b) for those in the tertiary level, such
period shall be six (6) consecutive semesters or nine (9) consecutive trimesters, as
the case may be.
 Thus, for an academic personnel to acquire a regular and permanent employment
status, it is required that:
i. he is considered a full-time employee;
ii. he has completed the required probationary period; and
iii. his service must have been satisfactory.
 However, it must be emphasized that mere completion of the probationary
period does not, ipso facto, make the employee a permanent employee of the
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educational institution, as he could only qualify as such upon fulfilling the


reasonable standards for permanent employment as faculty member.
 Here, the second requisite is absent. For SY 2007 to 2008, she was only part-time;
2009-2010, she has no teaching load and was relieved as administrative function as
BSBA Program Coordinator. She would only have a total of five (5) consecutive
semesters as a full-time professor, and thus, would not have made her eligible for
regular and permanent appointment.
 While the period of probation may be reduced if the employer voluntarily extends a
permanent appointment even before the end of such period, it must be pointed out
that absent circumstances which unmistakably show that an abbreviated
probationary period has been agreed upon, the default probationary term still
governs, as in this case.
 As a probationary employee, respondent still enjoys limited security of tenure during
the period of her probation-that is, she cannot be terminated except for just or
authorized causes, or if she fails to qualify in accordance with reasonable standards
prescribed by Petitioner for the acquisition of permanent status of its teaching
personnel.
 Here, the unjustified acts of depriving her of teaching loads, as well as her functions
as BSBA Program Coordinator during the pendency of her appointment for both
semesters of SY 2010-2011, constitute constructive dismissal
 It is important that the contract of probationary employment specify the period or
term of its effectivity. The failure to stipulate its precise duration could lead to the
inference that the contract is binding for the full three-year probationary period.
 respondent's probationary employment with petitioner lasting five (5) semesters was
split into three (3) separate fixed-term contracts
 Since respondent's constructive dismissal occurred during the effectivity of her last
contract, she is entitled only to the benefits arising from such. Consequently,
petitioner cannot be made to pay her benefits corresponding to respondent's last
semester of probationary employment as there is simply no contract covering the
same.
2. Magis Young Achievers' Learning Center vs. Manalo (G.R. No. 178835, February 13, 2009)

 A probationary employee or probationer is one who is on trial for an employer,


during which the latter determines whether or not he is qualified for permanent
employment.
 For "academic personnel" in private schools, colleges and universities, probationary
employment is governed by Section 92 of the 1992 Manual of Regulations for Private
Schools (Manual), which reads:
Section 92. Probationary Period. – Subject in all instances to compliance with
the Department and school requirements, the probationary period for academic
personnel shall not be more than three (3) consecutive years of satisfactory
service for those in the elementary and secondary levels, six (6) consecutive
regular semesters of satisfactory service for those in the tertiary level, and nine
(9) consecutive trimesters of satisfactory service for those in the tertiary level
where collegiate courses are offered on a trimester basis.
 whether or not one has indeed attained permanent status in one’s employment,
before the passage of three (3) years, is a matter of proof.
 It is important that the contract of probationary employment specify the period or
term of its effectivity. The failure to stipulate its precise duration could lead to the
inference that the contract is binding for the full three-year probationary period
 Be that as it may, teachers on probationary employment enjoy security of tenure.
They cannot be removed except for cause as provided by law, or if at the end of
every yearly contract during the three-year period, the employee does not meet the
reasonable standards set by the employer at the time of engagement. But this
guarantee of security of tenure applies only during the period of probation. Once
that period expires, the constitutional protection can no longer be invoked.
 Here, respondent had rendered service as such only from April 18, 2002 until
March 31, 2003. She has not completed the requisite three-year period of
probationary employment, as provided in the Manual. She cannot, by right, claim
permanent status.

3. Mercado, Et.Al. vs. AMA Computer College-Parañaque City, Inc. (G.R. No. 183572, April 13,
2010)
 Section 92 of the Manual of Regulations for Private Schools provides:
Section 92. Probationary Period. Subject in all instances to compliance with the
Department and school requirements, the probationary period for academic
personnel shall not be more than three (3) consecutive years of satisfactory
service for those in the elementary and secondary levels, six (6) consecutive
regular semesters of satisfactory service for those in the tertiary level, and nine
(9) consecutive trimesters of satisfactory service for those in the tertiary level
where collegiate courses are offered on a trimester basis. [Emphasis supplied]
 The common practice is for the employer and the teacher to enter into a contract,
effective for one school year. The parties may opt to renew or not to renew the
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contract. For the entire duration of this three-year period, the teacher remains
under probation. Upon the expiration of his contract of employment, being simply
on probation, he cannot automatically claim security of tenure and compel the
employer to renew his employment contract. It is when the yearly contract is
renewed for the third time that Section 93 of the Manual becomes operative, and the
teacher then is entitled to regular or permanent employment status.
 The fixed-term character of employment essentially refers to the period agreed upon
between the employer and the employee; employment exists only for the duration of
the term and ends on its own when the term expires. In a sense, employment on
probationary status also refers to a period because of the technical meaning
"probation" carries in Philippine labor law - a maximum period of six months, or in
the academe, a period of three years for those engaged in teaching jobs. Their
similarity ends there, however, because of the overriding meaning that being "on
probation" connotes, i.e., a process of testing and observing the character or
abilities of a person who is new to a role or job.
 Under the given facts where the school year is divided into trimesters, the school
apparently utilizes its fixed-term contracts as a convenient arrangement dictated by
the trimestral system and not because the workplace parties really intended to limit
the period of their relationship to any fixed term and to finish this relationship at
the end of that term. If we pierce the veil, so to speak, of the parties' so-called fixed-
term employment contracts, what undeniably comes out at the core is a fixed-term
contract conveniently used by the school to define and regulate its relations with its
teachers during their probationary period.
 There is nothing is illegitimate in defining the school-teacher relationship in this
manner. The school, however, cannot forget that its system of fixed-term contract is
a system that operates during the probationary period and for this reason is subject
to the terms of Article 281 of the Labor Code. Unless this reconciliation is made, the
requirements of this Article on probationary status would be fully negated as the
school may freely choose not to renew contracts simply because their terms have
expired. The inevitable effect of course is to wreck the scheme that the Constitution
and the Labor Code established to balance relationships between labor and
management. Article 281 should assume primacy and the fixed-period character of
the contract must give way

IV. KINDS OF EMPLOYMENT: REGULAR EMPLOYMENT/ PROJECT EMPLOYMENT/ SEASONAL


EMPLOYMENT/ CASUAL EMPLOYMENT/ FIXED TERM EMPLOYMENT
1. Innodata Knowledge Services, Inc. vs. Inting, Et.Al. (G.R. No. 211892, December 06, 2017)
 KINDS OF EMPLOYEES (First four is from Art 295; last one is from jurisprudence)
 regular employees or those who have been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of
the employer;
 project employees or those whose employment has been fixed for a specific
project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee;
 seasonal employees or those who work or perform services which are
seasonal in nature, and the employment is for the duration of the season;
and
 casual employees or those who are not regular, project, or seasonal
employees.
 Jurisprudence later added a fifth (5th) kind, the fixed-term employee.
 Based on Article 295, the law determines the nature of the employment, regardless
of any agreement expressing otherwise. The supremacy of the law over the
nomenclature of the contract and its pacts and conditions is to bring life to the
policy enshrined in the Constitution to afford full protection to labor. Thus, labor
contracts are placed on a higher plane than ordinary contracts since these are
imbued with public interest and, therefore, subject to the police power of the State.
 By entering into a project employment contract, an employee is deemed to
understand that his employment is coterminous with the project.
 The project for which project employees are hired would ordinarily have some
relationship to the usual business of the employer. There should be no difficulty in
distinguishing the employees for a certain project from ordinary or regular
employees, as long as the duration and scope of the project were determined or
specified at the time of engagement of said project employees.
 employers claiming that their workers are project employees have the burden of
showing that:
a) the duration and scope of the employment was specified at the time they
were engaged; and
b) there was indeed a project.
 LITMUS TEST for determining whether particular employees are properly
characterized as project employees, as distinguished from regular employees, is
whether or not the employees were assigned to carry out a specific project or
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undertaking, the duration and scope of which were specified at the time the
employees were engaged for that project.
 Here, while IKSI was able to show the presence of a specific project, the ACT Project,
in the contract and the alleged duration of the same, it failed to prove, however, that
respondents were in reality made to work only for that specific project indicated in
their employment documents and that it adequately informed them of the duration
and scope of said project at the time their services were engaged. It is well settled
that a party alleging a critical fact must support his allegation with substantial
evidence, as allegation is not evidence. The fact is IKSI actually hired respondents to
work, not only on the ACT Project, but on other similar projects such as the
Bloomberg. When respondents were required to work on the Bloomberg project,
without signing a new contract for that purpose, it was already outside of the scope
of the particular undertaking for which they were hired; it was beyond the scope of
their employment contracts. The fact that the same happened only once is
inconsequential. What matters is that IKSI required respondents to work on a
project which was separate and distinct from the one they had signed up for. This
act by IKSI indubitably brought respondents outside the realm of the project
employees category.
 Project employment and fixed-term employment are not the same. While the former
requires a particular project, the duration of a fixed-term employment agreed upon
by the parties may be any day certain, which is understood to be "that which must
necessarily come although it may not be known when." The decisive determinant in
fixed-term employment is not the activity that the employee is called upon to
perform but the day certain agreed upon by the parties for the commencement and
termination of the employment relationship.
 fixed-term employment is more of an exception rather than the general rule
 where from the circumstances it is apparent that the periods have been imposed to
preclude acquisition of tenurial security by the employee, they should be struck
down as contrary to public policy or morals.

2. D.M. Consunji,Inc. vs. Gobres, Et.Al. (G.R. No. 169170, August 8, 2010)
 As project employees, respondents' termination is governed by Section 1 (c) and
Section 2 (III), Rule XXIII (Termination of Employment), Book V of the Omnibus
Rules Implementing the Labor Code:
(c) In cases of project employment or employment covered by legitimate
contracting or sub-contracting arrangements, no employee shall be dismissed
prior to the completion of the project or phase thereof for which the employee
was engaged, or prior to the expiration of the contract between the principal and
contractor, unless the dismissal is for just or authorized cause subject to the
requirements of due process or prior notice, or is brought about by the
completion of the phase of the project or contract for which the employee was
engaged.
 Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor
Code provides:
III. If the termination is brought about by the completion of the contract or
phase thereof, no prior notice is required. If the termination is brought about by
the failure of an employee to meet the standards of the employer in the case of
probationary employment, it shall be sufficient that a written notice is served
the employee within a reasonable time from the effective date of termination.
 This is because completion of the work or project automatically terminates
the employment, in which case, the employer is, under the law, only obliged
to render a report to the DOLE on the termination of the employment.
 Here, respondents were dismissed after the expiration of their respective project
employment contracts, and due to the completion of the phases of work respondents
were engaged for. Prior or advance notice of termination is not part of procedural
due process if the termination is brought about by the completion of the contract or
phase thereof for which the employee was engaged. Petitioner, therefore, did not
violate any requirement of procedural due process by failing to give respondents
advance notice of their termination; thus, there is no basis for the payment of
nominal damages.

3. Paz vs. Northern Tobacco Redrying Co., Inc. (G.R. No. 199554, February 18, 2015)
 Test laid down in De Leon v. National Labor Relations Commission4for determining
regular employment status: whether the worked performed is usually necessary or
desirable in the usual business or trade of the employer.
 The connection can be determined by considering the nature of the work performed
and its relation to the scheme of the particular business or trade in its entirety
 Also, if the employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business.
 the employment is considered regular, but only with respect to such activity, and
while such activity exists.
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 Thus, the nature of one’s employment does not depend solely on the will or word of
the employer. Nor on the procedure for hiring and the manner of designating the
employee, but on the nature of the activities to be performed by the employee,
considering the employer's nature of business and the duration and scope of work
to be done.
 seasonal workers who are called to work from time to time and are temporarily laid
off during off-season are not separated from service in said period, but are merely
considered on leave until re-employed.
 Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General
Trade: For respondents to be excluded from those classified as regular employees, it
is not enough that they perform work or services that are seasonal in nature. They
must have also been employed only for the duration of one season. . . . Evidently,
petitioners employed respondents for more than one season. Therefore, the general
rule of regular employment is applicable.

4. Benares vs. Pancho, Et.Al. (G.R. No. 151827, April 29, 2005)
 Mercado v. NLRC - seasonal workers do not become regular employees by the mere
fact that they have rendered at least one year of service, whether continuous or
broken, because the proviso in the second paragraph of Article 280 demarcates as
"casual" employees, all other employees who do not fall under the definition of the
preceding paragraph. It deems as regular employees those "casual" employees who
have rendered at least one year of service regardless of the fact that such service
may be continuous or broken.
o The factual circumstances obtaining in the Mercado case, however, are
peculiar. In that case, the workers were engaged to do a particular phase of
agricultural work necessary for rice and/or sugarcane production, after
which they would be free to render services to other farm workers who need
their services.
 In Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General
Trade, respondents performed the same tasks for petitioners every season for
several years. Thus, they were considered the latter's regular employees for their
respective tasks. The fact that they do not work continuously for one whole year but
only for the duration of the season does not detract from considering them in
regular employment since in a litany of cases this Court has already settled that
seasonal workers who are called to work from time to time and are temporarily laid
off during off-season are not separated from service in that period, but merely
considered on leave until re-employed.
 primary standard for determining regular employment is the reasonable connection
between the particular activity performed by the employee vis - Ã -vis the usual
trade or business of the employer
5. Poseidon Fishing/Terry De Jesus vs NLRC (G.R. No. 168052, February 20, 2006)
 Purpose of Art 280: to prevent circumvention of the employee's right to be secure in
his tenure, the clause in said article indiscriminately and completely ruling out all
written or oral agreements conflicting with the concept of regular employment as
defined therein should be construed to refer to the substantive evil that the Code
itself has singled out: agreements entered into precisely to circumvent security of
tenure.
 ART 280 is not applicable in cases where a fixed period of employment was agreed
upon knowingly and voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter.
 in Brent, the acid test in considering fixed-term contracts as valid is: if from the
circumstances it is apparent that periods have been imposed to preclude acquisition
of tenurial security by the employee, they should be disregarded for being contrary
to public policy.
 Here, in a span of 12 years, private respondent worked for petitioner company first
as a Chief Mate, then Boat Captain, and later as Radio Operator. His job was
directly related to the deep-sea fishing business of petitioner Poseidon. His work
was, therefore, necessary and important to the business of his employer. Such being
the scenario involved, private respondent is considered a regular employee of
petitioner under Article 280 of the Labor Code. The terms of employment of private
respondent as provided in the Kasunduan was not only vague, it also failed to
provide an actual or specific date or period for the contract.
 the act of hiring and re-hiring in various capacities is a mere gambit employed by
petitioner to thwart the tenurial protection of private respondent. Such pattern of
re-hiring and the recurring need for his services are testament to the necessity and
indispensability of such services to petitioners' business or trade.
6. Pier 8 Arrastre & Stevedoring Services, Inc. vs. Boclot (G.R. No. 173849, September 28,
2007)
 A regular employee is one who is either (1) engaged to perform activities that are
necessary or desirable in the usual trade or business of the employer except for
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project or seasonal employees; or (2) a casual employee who has rendered at least
one year of service, whether continuous or broken, with respect to the activity in
which he is employed. Additionally, Article 281 of the Labor Code further considers
a regular employee as one who is allowed to work after a probationary period.
 although performing activities that are necessary or desirable in the usual trade or
business of the employer, an employee such as a project or seasonal employee is not
necessarily a regular employee. The situation of respondent is similar to that of a
project or seasonal employee, albeit on a daily basis.
 De Leon v. National Labor Relations Commission: The primary standard of
determining a regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or
trade of the employer.
 Here, no doubt, serving as a stevedore, respondent performs tasks necessary or
desirable to the usual business of petitioners. However, it should be deemed part of
the nature of his work that he can only work as a stevedore in the absence of the
employee regularly employed for the very same function. Bearing in mind that
respondent performed services from September 1999 until June 2003 for a period of
only 228.5 days in 36 months, or roughly an average of 6.34 days a month; while a
regular stevedore working for petitioners, on the other hand, renders service for an
average of 16 days a month, demonstrates that respondent's employment is subject
to the availability of work, depending on the absences of the regular stevedores.
 a casual employee can be considered as regular employee if said casual employee
has rendered at least one year of service regardless of the fact that such service may
be continuous or broken.
 Section 3, Rule V, Book II of the Implementing Rules and Regulations of the Labor
Code clearly defines the term "at least one year of service" to mean service within 12
months, whether continuous or broken, reckoned from the date the employee
started working, including authorized absences and paid regular holidays, unless
the working days in the establishment as a matter of practice or policy, or that
provided in the employment contract, is less than 12 months, in which case said
period shall be considered one year.
 Here, respondent, who has performed actual stevedoring services for petitioners
only for an accumulated period of 228.5 days does not fall under the classification
of a casual turned regular employee after rendering at least one year of service,
whether continuous or intermittent.

7. De Leon vs. NLRC and La Tondeña Inc. (G.R. No. 70705, August 21, 1989)
 An employment is deemed regular when the activities performed by the employee
are usually necessary or desirable in the usual business or trade of the employer.
Not considered regular are the so-called "project employment" the completion or
termination of which is more or less determinable at the time of employment, such
as those employed in connection with a particular construction project, and
seasonal employment which by its nature is only desirable for a limited period of
time. However, any employee who has rendered at least one year of service, whether
continuous or intermittent, is deemed regular with respect to the activity he
performed and while such activity actually exists.
 The primary standard, therefore, of determining a regular employment is the
reasonable connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. The test is whether the
former is usually necessary or desirable in the usual business or trade of the
employer. The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its
entirety. Also, if the employee has been performing the job for at least one year, even
if the performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business. Hence, the
employment is also considered regular, but only with respect to such activity and
while such activity exists.
 What determines whether a certain employment is regular or casual is not the will
and word of the employer, to which the desperate worker often accedes, much less
the procedure of hiring the employee or the manner of paying his salary. It is the
nature of the activities performed in relation to the particular business or trade
considering all circumstances, and in some cases the length of time of its
performance and its continued existence.
 Here, it is not tenable to argue that the painting and maintenance work of petitioner
are not necessary in respondent’s business of manufacturing liquors and wines, just
as it cannot be said that only those who are directly involved in the process of
producing wines and liquors may be considered as necessary employees
 Furthermore, the petitioner performed his work of painting and maintenance
activities during his employment in respondent’s business which lasted for more
than one year, until early January, 1983 when he demanded to be regularized and
was subsequently dismissed. Certainly, by this fact alone he is entitled by law to be
considered a regular employee
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8. GMA Network, Inc. vs. Pabriga, Et.Al. (G.R. No. 176419, November 27, 2013)
 Article 280 speaks of the four out of five types of employment. Employees
performing activities which are usually necessary or desirable in the employer’s
usual business or trade can either be regular, project or seasonal employees, while,
as a general rule, those performing activities not usually necessary or desirable in
the employer’s usual business or trade are casual employees. The fifth class is the
fixed term employment mentioned in Brent School, Inc. v. Zamora
 The principal test for determining whether particular employees are properly
characterized as "project employees" as distinguished from "regular employees," is
whether or not the "project employees" were assigned to carry out a "specific project
or undertaking," the duration (and scope) of which were specified at the time the
employees were engaged for that project.
 For project employees, the project could either be (1) a particular job or undertaking
that is within the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings of the
company (like a construction company; same routine, different projects); or (2) a
particular job or undertaking that is not within the regular business of the
corporation.
 If the particular job or undertaking is within the regular or usual business of the
employer company and it is not identifiably distinct or separate from the other
undertakings of the company, there is clearly a constant necessity for the
performance of the task in question, and therefore said job or undertaking should
not be considered a project.
 Here, there is no denying that the manning of the operations center to air
commercials, acting as transmitter/VTR men, maintaining the equipment, and
acting as cameramen are not undertakings separate or distinct from the business of
a broadcasting company. Also, nowhere in the records is there any showing that
petitioner reported the completion of its projects and the dismissal of private
respondents in its finished projects to the nearest Public Employment Office as per
Policy Instruction No. 20. Jurisprudence abounds with the consistent rule that the
failure of an employer to report to the nearest Public Employment Office the
termination of its workers’ services everytime a project or a phase thereof is
completed indicates that said workers are not project employees.
 a project employee may also attain the status of a regular employee if there is a
continuous rehiring of project employees after the stoppage of a project; and the
activities performed are usual [and] customary to the business or trade of the
employer. The Supreme Court ruled that a project employee or a member of a work
pool may acquire the status of a regular employee when the following concur:
i. There is a continuous rehiring of project employees even after cessation of a
project; and
ii. The tasks performed by the alleged project employee are vital, necessary and
indispensable to the usual business or trade of the employer.
 Petitioner interchangeably characterizes respondents’ service as project and fixed
term employment. These types of employment, however, are not the same. While the
former requires a project as restrictively defined above, the duration of a fixed-term
employment agreed upon by the parties may be any day certain, which is
understood to be "that which must necessarily come although it may not be known
when." The decisive determinant in fixed-term employment is not the activity that
the employee is called upon to perform but the day certain agreed upon by the
parties for the commencement and termination of the employment relationship.
 The following are the indications or criteria under which "term employment" cannot
be said to be in circumvention of the law on security of tenure, namely:
i. The fixed period of employment was knowingly and voluntarily agreed upon
by the parties without any force, duress, or improper pressure being brought
to bear upon the employee and absent any other circumstances vitiating his
consent; or
ii. It satisfactorily appears that the employer and the employee dealt with each
other on more or less equal terms with no moral dominance exercised by the
former or the latter.

V. JOB CONTRACTING AND LABOR-ONLY CONTRACTING


1. Allied Banking Corporation vs. Calumpang (January 17, 2018, January 17, 2018)
 There is labor-only contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed
by such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed by
him.
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 permissible job contracting or subcontracting refers to an arrangement whereby a


principal agrees to put out or farm out to a contractor or subcontractor the
performance or completion of a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work or service is to be
performed or completed within or outside the premises of the principal, while labor-
only contracting, on the other hand, pertains to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to perform a
job, work or service for a principal.
 A finding that a contractor is a labor-only contractor, as opposed to permissible job
contracting, is equivalent to declaring that there is an employer-employee
relationship between the principal and the employees of the supposed contractor,
and the labor-only contractor is considered as a mere agent of the principal, the real
employer.
 In this case, RCI is a not legitimate labor contractor as contemplated under the
Labor Code. Except for the bare allegation of petitioner that RCI had substantial
capitalization, it presented no supporting evidence to show the same. Petitioner
bank is the principal employer and RCI is the labor-only contractor. Accordingly,
petitioner and RCI are solidarily liable for the rightful claims of respondent.
2. Quintanar, Et.Al. vs. Coca-Cola Bottlers, Philippines, Inc. (G.R. No. 210565, June 28, 2016)
 In determining whether an employment should be considered regular or non-
regular, the applicable test is the reasonable connection between the particular
activity performed by the employee in relation to the usual business or trade of the
employer.
 The repeated rehiring of respondent workers and the continuing need for their
services clearly attest to the necessity or desirability of their services in the regular
conduct of the business or trade of petitioner company.
 The contractor, not the employee, has the burden of proof that it has the substantial
capital, investment, and tool to engage in job contracting.
 the Court determined the existence of an employer-employee relationship between
the parties therein considering that the contract of service between Coca-Cola and
Interserve showed that the former indeed exercised the power of control over the
complainants therein

VI. LABOR STANDARDS: STATUTORY BENEFITS


1. San Miguel Corporation, Et.Al. vs. Layoc Et.Al. (G.R. No. 149640, October 19, 2007)
 Article 8213 of the Labor Code states that the provisions of the Labor Code on
working conditions and rest periods shall not apply to managerial employees. The
other provisions in the Title include normal hours of work (Article 83), hours worked
(Article 84), meal periods (Article 85), night shift differential (Article 86), overtime
work (Article 87), undertime not offset by overtime (Article 88), emergency overtime
work (Article 89), and computation of additional compensation (Article 90). It is thus
clear that, generally, managerial employees such as respondents are not entitled to
overtime pay for services rendered in excess of eight hours a day.
 Here, respondents are supervising security guards (thus, managerial employees) on
the Beer Division. They failed to show that the circumstances of the present case
constitute an exception to this general rule. First, respondents assert that Article
100 of the Labor Code prohibits the elimination or diminution of benefits. However,
contrary to the nature of benefits, petitioners did not freely give the payment for
overtime work to respondents. Petitioners paid respondents overtime pay as
compensation for services rendered in addition to the regular work hours. The
requirement of rendering additional service differentiates overtime pay from benefits
such as thirteenth month pay or yearly merit increase. These benefits do not require
any additional service from their beneficiaries. Thus, overtime pay does not fall
within the definition of benefits under Article 100 of the Labor Code. Second,
respondents allege that petitioners discriminated against them vis-a-vis supervising
security guards in other SMC divisions. However, the court agreed with petitioners’
position that given the discretion granted to the various divisions of SMC in the
management and operation of their respective businesses and in the formulation
and implementation of policies affecting their operations and their personnel, the
"no time card policy" affecting all of the supervisory employees of the Beer Division
is a valid exercise of management prerogative.

2. David vs. Macasio (G.R. No. 195466, July 2, 2014)


 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. The existence of employment relationship between the parties is
determined by applying the “four-fold” test; engagement on “pakyaw” or task basis
does not determine the parties’ relationship as it is simply a method of pay
computation. Accordingly, Macasio is David’s employee, albeit engaged on “pakyaw”
or task basis.
 Entitlement of an employee engaged in “pakyaw” or task basis to service incentive
leave (SIL) and holiday pay.
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 The general rule is that holiday and SIL pay provisions cover all employees.
Under the IRR, exemption from the coverage of holiday and SIL pay refer to
“field personnel and other employees whose time and performance is
unsupervised by the employer including those who are engaged on task or
contract basis.” Note that unlike Article 82 of the Labor Code, the IRR on
holiday and SIL pay do not exclude employees “engaged on task basis” as a
separate and distinct category from employees classified as “field personnel.”
Rather, these employees are altogether merged into one classification of
exempted employees.
 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 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.
This is the only reasonable interpretation since the determination of
excluded workers who are paid by results from the coverage of Title I is
“determined by the Secretary of Labor in appropriate regulations.”
 According to the Implementing Rules, Service Incentive Leave shall not apply
to employees classified as “field personnel.” The phrase “other employees
whose performance is unsupervised by the employer” must not be
understood as a separate classification of employees to which service
incentive leave shall not be granted. Rather, it serves as an amplification of
the interpretation of the definition of field personnel under the Labor Code as
those “whose actual hours of work in the field cannot be determined with
reasonable certainty.”
 The same is true with respect to the phrase “those who are engaged on task
or contract basis, purely commission basis.” Said phrase should be related
with “field personnel,” applying the rule on ejusdem generis that general and
unlimited terms are restrained and limited by the particular terms that they
follow.
 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 “field personnel” under the law,
then he is not entitled to these monetary benefits.
 Here, Macasio is not a field personnel. Macasio regularly performed his
duties at David’s principal place of business; second, his actual hours of
work could be determined with reasonable certainty; and, third, David
supervised his time and performance of duties. Since Macasio cannot be
considered a “field personnel,” then he is not exempted from the grant of
holiday, SIL pay even as he was engaged on “pakyaw” or task basis. Thus,
Macasio is entitled to holiday and SIL pay
 Entitlement of an employee engaged in “pakyaw” or task basis to 13th month pay
 Section 3 of the Rules and Regulations Implementing P.D. No. 851
enumerates the exemptions from the coverage of 13th month pay benefits.
Under Section 3(e), “employers of those who are paid on xxx task basis, and
those who are paid a fixed amount for performing a specific work,
irrespective of the time consumed in the performance thereof” are exempted.
 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.”
 Hence, Macasio who was paid on task basis is not entitled to 13 th month
pay.
3. Bisig Manggagawa Sa Tryco Et.Al. vs. NLRC (G.R. No. 151309, October 15, 2008)
 Management's prerogative of transferring and reassigning employees from one area
of operation to another in order to meet the requirements of the business is
generally not constitutive of constructive dismissal.
 When the transfer is not unreasonable, or inconvenient, or prejudicial to the
employee, and it does not involve a demotion in rank or diminution of salaries,
benefits, and other privileges, the employee may not complain that it amounts to a
constructive dismissal.
 Here, petitioners anchor their objection solely on the ground that it would cause
them great inconvenience since they are all residents of Metro Manila and they
would incur additional expenses to travel daily from Manila to Bulacan. The Court
has previously declared that mere incidental inconvenience is not sufficient to
warrant a claim of constructive dismissal.
 D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits
that the employees will derive from the adoption of a compressed workweek scheme.
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Here, the MOA complied with the conditions set by the DOLE, under D.O. No. 21, to
protect the interest of the employees in the implementation of a compressed
workweek scheme: The MOA specifically stated that the employee waives the right to
claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday
to Friday considering that the compressed workweek schedule is adopted in lieu of
the regular workweek schedule which also consists of 46 hours. However, should an
employee be permitted or required to work beyond 6:12 p.m., such employee shall
be entitled to overtime pay.
 PESALA v. NLRC is not applicable in this case. In that case, an employment
contract provided that the workday consists of 12 hours and the employee will be
paid a fixed monthly salary rate that was above the legal minimum wage. The
employment contract in that case was silent on whether overtime pay was included
in the payment of the fixed monthly salary. Here, the MOA clearly states that the
employee waives the payment of overtime pay in exchange of a five-day workweek,
there is no room for interpretation and its terms should be implemented as they are
written.
4. Javier vs. Fly Ace Corporation (G.R. No. 192558, February 15, 2012)
 payment by the piece is just a method of compensation and does not define the
essence of the relation.” Payment on a piece-rate basis does not negate regular
employment. “The term ‘wage’ is broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of money whether
fixed or ascertained on a time, task, piece or commission basis. Payment by the
piece is just a method of compensation and does not define the essence of the
relations. Nor does the fact that the petitioner is not covered by the SSS affect the
employer-employee relationship. However, in determining whether the relationship
is that of employer and employee or one of an independent contractor, each case
must be determined on its own facts and all the features of the relationship are to
be considered.”
 In an illegal dismissal case, the onus probandi rests on the employer to prove that
its dismissal of an employee was for a valid cause. However, before a case for illegal
dismissal can prosper, an employer-employee relationship must first be established.
 Here, Javier could not submit competent proof that Fly Ace engaged his services as
a regular employee.
5. Sugue vs. Triumph International (Phils.), Inc. Triumph International (Phils.), Inc. vs. Sugue
(G.R. No. 164784 / G.R. No. 164804, January 30, 2009)
 In the grant of vacation and sick leave privileges to an employee, the employer is
given leeway to impose conditions on the entitlement to the same as the grant of
vacation and sick leave is not a standard of law, but a prerogative of management. It
is a mere concession or act of grace of the employer and not a matter of right on the
part of the employee. Thus, it is well within the power and authority of an employer
to deny an employee’s application for leave and the same cannot be perceived as
discriminatory or harassment.
 There is no reason to ascribe bad faith or malice to Triumph for charging to the
leave credits of Sugue and Valderrama the half-day that they spent in attending the
preliminary conference of the case they instituted against Triumph. It is fair and
reasonable for Triumph to do so considering that Sugue and Valderrama did not
perform work for one-half day on June 19, 2000.
 In case of strikes, and according to the CIR even if the strike is legal, strikers may
not collect their wages during the days they did not go to work, for the same reasons
if not more, laborers who voluntarily absent themselves from work to attend the
hearing of a case in which they seek to prove and establish their demands against
the company, the legality and propriety of which demands is not yet known, should
lose their pay during the period of such absence from work. The age-old rule
governing the relation between labor and capital or management and employee is
that a "fair day's wage for a fair day's labor."
 it cannot be deemed unreasonable or in bad faith for the employer to require its
employee to complete her assignments on time or before taking a vacation leave.
6. Our Haus Realty Development Corporation vs. Parian, Et.Al. (G.R. No. 204651, August 06,
2014)
 deduction and charging both operate to lessen the actual take-home pay of an
employee.
 requirements for the deductibility of a facility:
i. proof must be shown that such facilities are customarily furnished by the
trade;
ii. the provision of deductible facilities must be voluntarily accepted in writing
by the employee; and
iii. The facilities must be charged at fair and reasonable value.
 First requirement. Our Haus failed to prove that the facility (board and lodging) is
customarily furnished by the trade. One of the badges to show that a facility is
customarily furnished by the trade is the existence of a company policy or guideline
showing that provisions for a facility were designated as part of the employees’
salaries. Here, the sinumpaang salaysay did not state whether these benefits had
been consistently enjoyed by the rest of Our Haus’ employees. Moreover, the records
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reveal that the board and lodging were given on a per project basis. Our Haus did
not show if these benefits were also provided in its other construction projects, thus
negating its claimed customary nature.
 Apart from company policy, the employer may also prove compliance with
the first requirement by showing the existence of an industry-wide practice
of furnishing the benefits in question among enterprises engaged in the
same line of business. If it were customary among construction companies to
provide board and lodging to their workers and treat their values as part of
their wages, we would have more reason to conclude that these benefits were
really facilities. However, in Our Haus case, it cannot be expected to prove
the practice because they are mandated by law (DO No. 13) to provide
“suitable living accommodation for workers, and as may be applicable, for
their families”.
 Moreover, DOLE DO No. 56, series of 2005, which sets out the guidelines for
the implementation of DOLE DO No. 13, mandates that the cost of the
implementation of the requirements for the construction safety and health of
workers, shall be integrated to the overall project cost. As part of the project
cost that construction companies already charge to their clients, the value of
the housing of their workers cannot be charged again to their employees’
salaries. Our Haus cannot pass the burden of the OSH costs of its
construction projects to its employees by deducting it as facilities. This is
Our Haus’ obligation under the law.
 even if a benefit is customarily provided by the trade, it must still pass the
purpose test set by jurisprudence. Under this test, if a benefit or privilege
granted to the employee is clearly for the employer’s convenience, it will not
be considered as a facility but a supplement. Here, careful consideration is
given to the nature of the employer’s business in relation to the work
performed by the employee. This test is used to address inequitable
situations wherein employers consider a benefit deductible from the wages
even if the factual circumstances show that it clearly redounds to the
employers’ greater advantage.
 only the value of the facilities may be deducted from the employees’ wages
but not the value of supplements. Facilities include articles or services for
the benefit of the employee or his family but exclude tools of the trade or
articles or services primarily for the benefit of the employer or necessary to
the conduct of the employer’s business
 The law also prescribes that the computation of wages shall exclude
whatever benefits, supplements or allowances given to employees.
Supplements are paid to employees on top of their basic pay and are free of
charge. Since it does not form part of the wage, a supplement’s value may
not be included in the determination of whether an employer complied with
the prescribed minimum wage rates.
 “Supplements”, therefore, constitute extra remuneration or special privileges
or benefits given to or received by the laborers over and above their ordinary
earnings or wages. “Facilities”, on the other hand, are items of expense
necessary for the laborer's and his family's existence and subsistence so that
by express provision of law (Sec. 2[g]), they form part of the wage and when
furnished by the employer are deductible therefrom, since if they are not so
furnished, the laborer would spend and pay for them just the same.
 the real difference lies not on the kind of the benefit but on the purpose why
it was given by the employer. If it is primarily for the employee’s gain, then
the benefit is a facility; if its provision is mainly for the employer’s advantage,
then it is a supplement.
 In the present case, the board and lodging provided by Our Haus cannot be
categorized as facilities but as supplements. Our Haus is engaged in the
construction business, a labor-intensive enterprise. The success of its
projects is largely a function of the physical strength, vitality and efficiency
of its laborers. Its business will be jeopardized if its workers are weak, sickly,
and lack the required energy to perform strenuous physical activities. Thus,
by ensuring that the workers are adequately and well fed, the employer is
actually investing on its business.
 Second requirement. A facility may only be deducted from the wage if the employer
was authorized in writing by the concerned employee. As it diminishes the take-
home pay of an employee, the deduction must be with his express consent. Here,
the kasunduans are belatedly submitted by Our Haus to NLRC. The kasunduans
were also undated, making us wonder if they had really been executed when
respondents first assumed their jobs.
 Third requirement. In the present case, it appears that the total meal expense per
week for each person is P529.40, making Our Haus’ P290.00 deduction within the
70% ceiling prescribed by the rules.
 The valuation of a facility must be supported by relevant documents such as
receipts and company records for it to be considered as fair and reasonable.
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Here, Our Haus never explained how it came up with the values it assigned
for the benefits it provided; it merely listed its supposed expenses without
any supporting document.

7. SLL International Cables Specialist vs. NLRC Et.Al. (G.R. No. 172161, March 2, 2011)
 whether the value of the facilities should be included in the computation of the
"wages" received by private respondents, 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.
 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 valuation
 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.
8. Mabeza vs. NLRC and Hotel Supreme (G.R. No. 118506, April 18, 1997)
 Labor Arbiter Pati accepted hook, line and sinker the private respondent’s bare
claim that the reason the monetary benefits received by petitioner between 1981 to
1987 were less than minimum wage was because petitioner did not factor in the
meals, lodging, electric consumption and water she received during the period in
her computations. Granting that meals and lodging were provided and indeed
constituted facilities, such facilities could not be deducted without the employer
complying first with certain legal requirements. Without satisfying these
requirements, the employer simply cannot deduct the value from the employee’s
wages. 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. Finally, facilities must be charged at fair and reasonable
value. These requirements were not met in the instant case. More significantly, the
food and lodging, or the electricity and water consumed by the petitioner were not
facilities but supplements. A benefit or privilege granted to an employee for the
convenience of the employer is not a facility. The criterion in making a distinction
between the two not so much lies in the kind (food, lodging) but the purpose.
Considering., therefore, that hotel workers are required to work different shifts and
are expected to be available at various odd hours. their ready availability is a
necessary matter in the operations of a small hotel, such as the private respondent’s
hotel.
9. Bankard Employees Union-Workers Alliance Trade Unions vs NLRC and Bankard, Inc.,
(G.R. No. 140689, February 17, 2004)
 Upon the enactment of R.A. No. 6727 (WAGE RATIONALIZATION ACT, amending,
among others, Article 124 of the Labor Code) on June 9, 1989, the term wage
distortion was explicitly defined as:
... a situation where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional quantitative differences in wage
or salary rates between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure based on
skills, length of service, or other logical bases of differentiation
 Prubankers Association v. Prudential Bank and Trust Company laid down the four
elements of wage distortion, to wit: (1.) An existing hierarchy of positions with
corresponding salary rates; (2) A significant change in the salary rate of a lower pay
class without a concomitant increase in the salary rate of a higher one; (3) The
elimination of the distinction between the two levels; and (4) The existence of the
distortion in the same region of the country.
 In a problem dealing with wage distortion, the basic assumption is that there exists
a grouping or classification of employees that establishes distinctions among them
on some relevant or legitimate bases. Involved in the classification of employees are
various factors such as the degrees of responsibility, the skills and knowledge
required, the complexity of the job, or other logical basis of differentiation. The
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differing wage rate for each of the existing classes of employees reflects this
classification.
 While seniority may be a factor in determining the wages of employees, it cannot be
made the sole basis in cases where the nature of their work differs.
 the formulation of a wage structure through the classification of employees is a
matter of management judgment and discretion.
 Here, the classification under the wage structure is based on the rank of an
employee, not on seniority. For this reason, wage distortion does not appear to exist.
 Article 124. Standards/Criteria for Minimum Wage Fixing. Where the application of
any prescribed wage increase by virtue of a law or Wage Order issued by any
Regional Board results in distortions of the wage structure within an establishment,
the employer and the union shall negotiate to correct the distortions
 petitioner cannot legally obligate Bankard to correct the alleged wage distortion as
the increase in the wages and salaries of the newly-hired was not due to a
prescribed law or wage order.
10. Prubankers Association vs. Prudential Bank & Trust Company (G.R. No. 131247, January
25, 1999)
 Wage distortion presupposes a classification of positions and ranking of these
positions at various levels. One visualizes a hierarchy of positions with
corresponding ranks basically in terms of wages and other emoluments. Where a
significant change occurs at the lowest level of positions in terms of basic wage
without a corresponding change in the other level in the hierarchy of positions,
negating as a result thereof the distinction between one level of position from the
next higher level, and resulting in a parity between the lowest level and the next
higher level or rank, between new entrants and old hires, there exists a wage
distortion.
 Wage distortion involves four elements:
i. An existing hierarchy of positions with corresponding salary rates
ii. A significant change in the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one
iii. The elimination of the distinction between the two levels
iv. The existence of the distortion in the same region of the country
 In the present case, it is clear that no wage distortion resulted when respondent
implemented the subject Wage Orders in the covered branches. In the said
branches, there was an increase in the salary rates of all pay classes. Furthermore,
the hierarchy of positions based on skills, length of service and other logical bases of
differentiation was preserved. In other words, the quantitative difference in
compensation between different pay classes remained the same in all branches in
the affected region. Put differently, the distinction between Pay Class 1 and Pay
Class 2, for example, was not eliminated as a result of the implementation of the
two Wage Orders in the said region. Hence, it cannot be said that there was a wage
distortion.
 a disparity in wages between employees with similar positions in different regions is
necessarily expected. In insisting that the employees of the same pay class in
different regions should receive the same compensation, petitioner has apparently
misunderstood both the meaning of wage distortion and the intent of the law to
regionalize wage rates.
 Petitioner also insists that the Bank has adopted a uniform wage policy, which has
attained the status of an established management practice; thus, it is estopped from
implementing a wage order for a specific region only. We are not persuaded. Said
nationwide uniform wage policy of the Bank had been adopted prior to the
enactment of RA 6727. After the passage of said law, the Bank was mandated to
regionalize its wage structure. Although the Bank implemented Wage Order Nos.
NCR-01 and NCR-02 nationwide instead of regionally even after the effectivity of RA
6727, the Bank at the time was still uncertain about how to follow the new law. In
any event, that single instance cannot be constitutive of "management practice."

11. NWPC and RTWPB-NCR vs. The Alliance of Progressive Labor (APL) and the Tunay Na
Nagkakaisang Manggagawa Sa Royal (TNMR-APL) (G.R. No. 150326, March 12, 2014)
 NWPC had the authority to prescribe the rules and guidelines for the determination
of the minimum wage and productivity measures, and the RTWPB–NCR had the
power to issue wage orders.
 RTWPB–NCR had the authority to provide additional exemptions from the minimum
wage adjustments embodied in Wage Order No. NCR–07
 the RTWPBs investigate and study all the pertinent facts to ascertain the conditions
in their respective regions. Hence, they are logically vested with the competence to
determine the applicable minimum wages to be imposed as well as the industries
and sectors to exempt from the coverage of their wage orders.
12. Mindanao Steel Corporation vs. Minsteel Free Workers Organization (MinFreWo-NFL)
Cagayan De Oro (G.R. No. 130693, March 4, 2004)
 the terms and conditions of a collective bargaining contract constitute the law
between the parties. Those who are entitled to its benefits can invoke its provisions
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 Here, the June 29, 1990 CBA provides: It is hereby agreed that these salary
increases shall be exclusive of any wage increase that may be provided by law as a
result of any economic change. This provision is clear that the salary increases,
such as the P20.00 provided under the CBA, shall not include any wage increase
that may be provided by law as a result of any economic change. Hence, aside from
the P20.00 CBA wage increase, respondents members are also entitled to the
ECOLA under the Interim Wage Order.
 the P20.00 daily wage increase granted by petitioner to its employees under the CBA
cannot be considered as creditable benefit or compliance with the Interim Wage
Order because such was intended as a CBA or negotiated wage increase and not
because of, or in anticipation of the fuel price hikes on December 5, 1990
13. Coca-Cola Bottlers Philippines, Inc. vs. Iloilo Coca-Cola Plant Employees Labor Union
(ICCPELU) (G.R. No. 195297, December 05, 2018)
 it is not Saturday work per se which constitutes a benefit to the company's
employees. Rather, the benefit involved in this case is the premium which the
company pays its employees above and beyond the minimum requirements set by
law.
 The term "benefits" mentioned in the non-diminution rule refers to monetary
benefits or privileges given to the employee with monetary equivalents.
 In order for there to be proscribed diminution of benefits that prejudiced the
affected employees, CCBPI should have unilaterally withdrawn the 50% premium
pay without abolishing Saturday work. These are not the facts of the case at bar.
CCBPI withdrew the Saturday work itself, pursuant, as already held, to its
management prerogative. In fact, this management prerogative highlights the fact
that the scheduling of the Saturday work was actually made subject to a condition,
i.e., the prerogative to provide the company's employees with Saturday work based
on the existence of operational necessity.
 Here, the CBA between CCBPI and the respondent has no analogous provision
which grants that the 50% premium pay would have to be paid regardless of the
occurrence of Saturday work. Thus, the non-payment of the same would not
constitute a violation of the diminution of benefits rule.
 if Saturday work and its corresponding premium pay were granted to CCBPI's
employees without qualification (i.e., the existence of operational necessity), then
the company's policy of permitting its employees to suffer work on Saturdays could
have perhaps ripened into company practice protected by the non-diminution rule.
 since the affected employees are daily-paid employees, they should be given their
wages and corresponding premiums for Saturday work only if they are permitted to
suffer work. Invoking the time-honored rule of "a fair day's work for a fair day's pay,"
the CCBPI argues that the CA's ruling that such unworked Saturdays should be
compensated is contrary to law and the evidence on record.
14. TSPIC Corporation vs. TSPIC Employees Union (FFW) (G.R. No. 163419, February 13, 2008)
 Diminution of benefits is the unilateral withdrawal by the employer of benefits
already enjoyed by the employees. There is diminution of benefits when it is shown
that: (1) the grant or benefit is founded on a policy or has ripened into a practice
over a long period; (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
 Here, the overpayment of its employees was a result of an error. This error was
immediately rectified by TSPIC upon its discovery. Absent clear administrative
guidelines, Petitioner Corporation cannot be faulted for erroneous application of the
law. Payment may be said to have been made by reason of a mistake in the
construction or application of a "doubtful or difficult question of law". (Article 2155,
in relation to Article 2154 of the Civil Code). Since it is a past error that is being
corrected, no vested right may be said to have arisen nor any diminution of benefit
under Article 100 of the Labor Code may be said to have resulted by virtue of the
correction.
15. Arco Metal Products, Co., Inc., vs. Samahan Ng Mga Manggagawa Sa Arco Metal-NAFLU
(SAMARM-NAFLU) (G.R. No. 170734, May 14, 2008)
 where an employer had freely and continuously included in the computation of the
13th month pay those items that were expressly excluded by the law, we held that
the act which was favorable to the employees though not conforming to law had
thus ripened into a practice and could not be withdrawn, reduced, diminished,
discontinued or eliminated.
 Here, in the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted
a policy of freely, voluntarily and consistently granting full benefits to its employees
regardless of the length of service rendered. True, there were only a total of seven
employees who benefited from such a practice, but it was an established practice
nonetheless. Jurisprudence has not laid down any rule specifying a minimum
number of years within which a company practice must be exercised in order to
constitute voluntary company practice.
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 Indeed, if petitioner wants to prove that it merely erred in giving full benefits, it
could have easily presented other proofs, such as the names of other employees who
did not fully serve for one year and thus were given prorated benefits.
16. The Provincial Bus Operators Association of The Philippines (PBOAP) Et. Al. vs DOLE and
LTFRB (G.R. No. 202275, July 17, 2018)
 Department Order No. 118-12 does not violate the equal protection clause.
 the State can deprive persons of life, liberty and property, provided there is
due process of law; and persons may be classified into classes and groups,
provided everyone is given the equal protection of the law. The test or
standard, as always, is reason. The police power legislation must be firmly
grounded on public interest and welfare, and a reasonable relation must
exist between purposes and means. And if distinction and classification
ha[ve] been made, there must be a reasonable basis for said distinction.[151]
 Department Order No. 118-12 and Memorandum Circular No. 2012-001
were issued in the exercise of quasi-legislative powers of the DOLE and the
LTFRB, respectively. As such, notice and hearing are not required for their
validity.
 Neither are Department Order No. 118-12 and Memorandum Circular No.
2012-001 offensive of substantive due process. Department Order No. 118-
12 and Memorandum Circular No. 2012-001 are reasonable and are valid
police power issuances. The pressing need for Department Order No. 118-12
is obvious considering petitioners' admission that the payment schemes
prior to the Order's promulgation consisted of the "payment by results," the
"commission basis," or the boundary system. These payment schemes do not
guarantee the payment of minimum wages to bus drivers and conductors.
There is also no mention of payment of social welfare benefits to bus drivers
and conductors under these payment schemes which have allegedly been in
effect since "time immemorial."
 There can be no meaningful implementation of Department Order No. 118-
12 if violating it has no consequence. As such, the LTFRB was not
unreasonable when it required bus operators to comply with the part-fixed-
part-performance-based payment scheme under pain of revocation of their
certificates of public convenience. The LTFRB has required applicants or
current holders of franchises to comply with labor standards as regards their
employees, and bus operators must be reminded that certificates of public
convenience are not property. Certificates of public convenience are
franchises always subject to amendment, repeal, or cancellation. Additional
requirements may be added for their issuance, and there can be no violation
of due process when a franchise is cancelled for non-compliance with the
new requirement.
 Department Order No. 118-12 and Memorandum Circular No. 2012-001 are
in the nature of social legislations to enhance the economic status of bus
drivers and conductors, and to promote the general welfare of the riding
public. They are reasonable and are not violative of due process.
 Department Order No. 118-12 is not violative to the bus operators’ right to non-
impairment of obligations of contracts. Petitioners claim that Department Order No.
118-12 and Memorandum Circular No. 2012-001 violate bus operators' right to
non-impairment of obligation of contracts because these issuances force them to
abandon their "time-honored" employment contracts or arrangements with their
drivers and conductors. Further, these issuances violate the terms of the franchise
of bus operators by imposing additional requirements after the franchise has been
validly issued.
 Petitioners' arguments deserve scant consideration. For one, the relations
between capital and labor are not merely contractual as provided in Article
1700 of the Civil Code. By statutory declaration, labor contracts are
impressed with public interest and, therefore, must yield to the common
good. Labor contracts are subject to special laws on wages, working
conditions, hours of labor, and similar subjects. In other words, labor
contracts are subject to the police power of the State.
 The initial implementation of Department Order No. 118-12 is not violative of the
equal protection clause. Petitioners' sole claim on their equal protection argument is
that the initial implementation of Department Order No. 118-12 in Metro Manila "is
not only discriminatory but is also prejudicial to petitioners.
 The difference in the traffic conditions in Metro Manila and in other parts of
the country presented a substantial distinction.
17. Bluer Than Blue Joint Ventures Company vs Esteban (G.R. No. 192582, April 7, 2014)
 Sales negative variances as wage deductions to cashiers: 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
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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.
18. Asian Transmission Corporation vs CA (G.R. No. 144664, March 15, 2004)
 Holiday pay is a legislated benefit enacted as part of the Constitutional imperative
that the State shall afford protection to labor. Its purpose is not merely to prevent
diminution of the monthly income of the workers on account of work interruptions.
 Unlike a bonus, which is a management prerogative, holiday pay is a statutory
benefit demandable under the law. Since a worker is entitled to the enjoyment of ten
paid regular holidays, the fact that two holidays fall on the same date should not
operate to reduce to nine the ten holiday pay benefits a worker is entitled to receive.
 Only an employee who works on the day immediately preceding or after a regular
holiday shall be entitled to the holiday pay.
 A paid legal holiday occurring during the scheduled vacation leave will result in
holiday payment in addition to normal vacation pay but will not entitle the employee
to another vacation leave.
19. San Miguel Corporation vs. CA (G. R. No. 146775, January 30, 2002)
 Article 3(3) of Presidential Decree No. 1083 provides that "(t)he provisions of this
Code shall be applicable only to Muslims x x x." However, there should be no
distinction between Muslims and non-Muslims as regards payment of benefits for
Muslim holidays
 wages and other emoluments granted by law to the working man are determined on
the basis of the criteria laid down by laws and certainly not on the basis of the
worker’s faith or religion.
20. Rodriguez vs. Park N Ride Inc. Nicest (Phils) Inc. (G.R. No. 222980, March 20, 2017)
 Article 95 of the Labor Code provides that every employee who has rendered at least
one year of service shall be entitled to a yearly service incentive leave pay of five
days with pay, subject to exceptions (i.e.: when the employee is already enjoying
vacation leave with pay of at least five days; and when the employee is employed in
an establishment regularly employing less than ten employees).
 Here, it was not shown here that petitioner Rodriguez was enjoying vacation leave
with pay of at least five days while being employed by private respondents Spouses
Javier; it was not shown that private respondents Spouses Javier were merely
employing less than 10 employees (on the contrary, private respondent spouses
Javier stated that they were employing less than 15 employees). Hence, the award of
service incentive leave pay to petitioner Rodriguez was proper.
 service incentive leave is a curious animal in relation to other benefits granted by
the law to every employee. In the case of service incentive leave, the employee may
choose to either use his leave credits or commute it to its monetary equivalent if not
exhausted at the end of the year. Furthermore, if the employee entitled to service
incentive leave does not use or commute the same, he is entitled upon his
resignation or separation from work to the commutation of his accrued service
incentive leave.
 Applying Article 291 of the Labor Code in light of this peculiarity of the service
incentive leave, we can conclude that the three (3)-year prescriptive period
commences, not at the end of the year when the employee becomes entitled to the
commutation of his service incentive leave, but from the time when the employer
refuses to pay its monetary equivalent after demand of commutation or upon
termination of the employee's services, as the case may be.
21. Auto Bus Transport Systems, Inc. vs. Bautista (G.R. No. 156367, May 16, 2005)
 According to the Implementing Rules, Service Incentive Leave shall not apply to
employees classified as "field personnel." The phrase "other employees whose
performance is unsupervised by the employer" must not be understood as a
separate classification of employees to which service incentive leave shall not be
granted. Rather, it serves as an amplification of the interpretation of the definition of
field personnel under the Labor Code as those "whose actual hours of work in the
field cannot be determined with reasonable certainty
 the definition of a "field personnel" is not merely concerned with the location where
the employee regularly performs his duties but also with the fact that the employee's
performance is unsupervised by the employer. As discussed above, field personnel
are those who regularly perform their duties away from the principal place of
business of the employer and whose actual hours of work in the field cannot be
determined with reasonable certainty. Thus, in order to conclude whether an
employee is a field employee, it is also necessary to ascertain if actual hours of work
in the field can be determined with reasonable certainty by the employer. In so
doing, an inquiry must be made as to whether or not the employee's time and
performance are constantly supervised by the employer.
 The driver, the complainant herein, was therefore under constant supervision while
in the performance of this work. He cannot be considered a field personnel. Bus
companies have their inspectors, mandatory once-a-week car barn or shop day, and
dispatchers. The bus drivers must be at specific place as specified time, as they
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CASE DOCTRINES

generally observe prompt departure and arrival from their point of origin to their
point of destination.
 respondent is not a field personnel but a regular employee who performs tasks
usually necessary and desirable to the usual trade of petitioner's business.
Accordingly, respondent is entitled to the grant of service incentive leave.
22. National Union of Workers In Hotel Restaurant And Allied Industries (NUWHRAIN-APL-
IUF), Philippine Plaza Chapter vs. Philippine Plaza Holdings, Inc. (G.R. No. 177524, July
23, 2014)
 Last paragraph of Art. 96. Service Charges: In case the service charge is abolished,
the share of the covered employees shall be considered integrated in their wages.
This last paragraph of Article 96 of the Labor Code presumes the practice of
collecting service charges and the employer’s termination of this practice. When this
happens, Article 96 requires the employer to incorporate the amount that the
employees had been receiving as share of the collected service charges into their
wages. In cases where no service charges had previously been collected (as where
the employer never had any policy providing for collection of service charges or had
never imposed the collection of service charges on certain specified transactions),
Article 96 will not operate.
 In this case, the CA found that the PPHI had not in fact been collecting services
charges on the specified entries/transactions that we pointed out as either falling
under "negotiated contracts" and/or "special rates" or did not involve a "sale of food,
beverage, etc." Accordingly, Article 96 of the Labor Code finds no application in this
case; the PPHI did not abolish or terminate the implementation of any company
policy providing for the collection of service charges on specified
entries/transactions that could have otherwise rendered it liable to pay an amount
representing the covered employees’ share in the alleged abolished service charges.
 the Union’s written extrajudicial demand through its 1st audit report and the
successive negotiation meetings between the Union and the PPHI interrupts the
running of the three-year prescriptive period under Article 291 of the Labor Code
23. Ace Navigation Co., Inc. vs CA (G.R. No. 140364, August 15, 2000)
 Tip is more frequently used to indicate additional compensation, and in this sense
"tip" is defined as meaning a gratuity; a gift; a present; a fee; money given, as to a
servant to secure better or more prompt service.
 Here, the contract of employment between petitioners and Orlando is categorical
that the monthly salary of Orlando is US$450.00 flat rate. This already included his
overtime pay which is integrated in his 12 hours of work. The words "plus tips of
US$2.00 per passenger per day" were written at the line for overtime. Since payment
for overtime was included in the monthly salary of Orlando, the supposed tips
mentioned in the contract should be deemed included thereat.
 Furthermore, it is presumed that the parties were aware of the plain, ordinary and
common meaning of the word "tip." As a bartender, Orlando cannot feign ignorance
on the practice of tipping and that tips are normally paid by customers and not by
the employer.

24. Central Azucarera De Tarlac vs. Central Azucarera De Tarlac Labor Union-NLU (G.R. No.
188949, July 26, 2010)
 The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an
additional income based on wage but not part of the wage. It is equivalent to one-
twelfth (1/12) of the total basic salary earned by an employee within a calendar
year. All rank-and-file employees, regardless of their designation or employment
status and irrespective of the method by which their wages are paid, are entitled to
this benefit, provided that they have worked for at least one month during the
calendar year. If the employee worked for only a portion of the year, the 13th-month
pay is computed pro rata.
 the term "basic salary" of an employee for the purpose of computing the 13th-month
pay was interpreted to include all remuneration or earnings paid by the employer for
services rendered, but does not include allowances and monetary benefits which are
not integrated as part of the regular or basic salary, such as the cash equivalent of
unused vacation and sick leave credits, overtime, premium, night differential and
holiday pay, and cost-of-living allowances. However, these salary-related benefits
should be included as part of the basic salary in the computation of the 13th-month
pay if, by individual or collective agreement, company practice or policy, the same
are treated as part of the basic salary of the employees.
 the practice of petitioner in giving 13th-month pay based on the employees' gross
annual earnings which included the basic monthly salary, premium pay for work on
rest days and special holidays, night shift differential pay and holiday pay continued
for almost thirty (30) years and has ripened into a company policy or practice which
cannot be unilaterally withdrawn.
 The rule against diminution of benefits applies if it is shown that the grant of the
benefit is based on an express policy or has ripened into a practice over a long
period of time and that the practice is consistent and deliberate. Nevertheless, the
rule will not apply if the practice is due to error in the construction or application of
LABOR LAW REVIEW
CASE DOCTRINES

a doubtful or difficult question of law. But even in cases of error, it should be shown
that the correction is done soon after discovery of the error.
 Here, Petitioner only changed the formula in the computation of the 13th-month
pay after almost 30 years and only after the dispute between the management and
employees erupted. This act of petitioner in changing the formula at this time
cannot be sanctioned, as it indicates a badge of bad faith.
 petitioner cannot use the argument that it is suffering from financial losses to claim
exemption from the coverage of the law on 13th-month pay, or to spare it from its
erroneous unilateral computation of the 13th-month pay of its employees. Under
Section 7 of the Rules and Regulations Implementing P.D. No. 851, distressed
employers shall qualify for exemption from the requirement of the Decree only upon
prior authorization by the Secretary of Labor. In this case, no such prior
authorization has been obtained by petitioner; thus, it is not entitled to claim such
exemption.
25. Panaligan Et. Al. vs. Phyvita Enterprises Corporation (G.R. No. 202086, June 21, 2017)
 Taking into consideration the fact that the DOLE-NCR conducted an inspection of
the respondent's premises on April 13, 2005 as a result of the labor complaint filed
by PANALIGAN, et al., on April 4, 2005 and PANALIGAN, et al., were implicated in
the alleged January 25, 2005 theft incident only thereafter, a reasonable inference
can be made that PANALIGAN, et al.'s, termination of employment may have been
indeed a retaliatory measure designed to coerce them into withdrawing their
complaint for underpayment of wages and nonpayment of other labor standard
benefits. Such an act is proscribed by Article 118 of the Labor Code which states:
Art. 118. Retaliatory Measures - It shall be unlawful for an employer to refuse to
pay or reduce the wages and benefits, discharge or in any manner discriminate
against any employee who has filed any complaint or instituted any proceeding
under this title or has testified or is about to testify in such proceedings.

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