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LABOR LAW CASES Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of
MEANING OF LABOR LAW/LEGISLATION
SOCIAL LEGISLATION
(1)
ORO ENTERPRISES, INC., vs.
NATIONAL LABOR RELATIONS COMMISSION and LORETO L. CECILIO
G.R. No. 110861
November 14, 1994
FACTS:
For 41 years, since 1949, private respondent was an employee of Oro Enterprises. On 3 September 1990 she
gave notice of her intention to retire from work by filing with petitioner a “Claim for Retirement Pay.”
Petitioner replied, informing her that there was no retirement benefit apart from the retirement pay from the
Social Security System (“SSS”). She was offered a house and lot located in San Jose, del Monte, Bulacan, in
accordance with a “plan” which did not materialize, nor any of the proposed company plan for retirees.
On 26 September 1990, private respondent filed her complaint with the Office of the Labor Arbiter.
On 4 October 1990, petitioner Oro Enterprises filed its own position paper stating that private respondent Was
not dismissed but voluntarily stopped working on September 15 1990. It has no collective bargaining agreement
except that which is required by SSS that Oro has not agreed, whether expressly or impliedly to pay any
retirement benefits. It also relied from a ruling on Llora Motors vs Drilon denying payment of retirement benefits
in the absence of a CBA or other contractual basis
On 11 February 1991, Labor Arbiter Edilberto J. Pangan to whom the case was assigned, rendered a decision for
Oro Enterprises to pay half a month for every year of service in the amount of P63,000.00 plus 10 % for
attorney;s fees. Petitioner appealed to the NLRC.
On January 7,1993, during the pendency of the appeal, the Philippine Retirement Pay Law, Republic Act No.
7641 took effect, which provided the following:
Art. 287. Retirement. — Any employee may be retired upon reaching the retirement age established in the
collective bargaining agreement or other applicable employment contract.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty five (65)
years which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term “one half (1/2) month salary” shall mean fifteen (15)
days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of
service incentive leaves.
this Code.
On 22 March 1993, NLRC rendered its decision awarding to private respondent a retirement pay on the basis of
Republic Act 7641, granting the retirement pay of P61,500 but disallowing the 10% attorney’s fees.
Petitioner argues that the law, which became effective only on 07 January 1993, cannot be given any such
retroactive effect as to cover private respondent who, at the age of 65 years, retired from employment with
petitioner on 03 September 1990.
Art 287 of the Labor Code states:
An employee maybe retired upon reaching the retirement age established in the CBA or tp pther emplyment
contract.
In case or retirement, the employee shall be entitled to receive such benefits as he may have earned under
existing laws and any collective bargaining agreement or other agreement.
Rule 1, Book VI of the Implementing Rules of the Labor Code states:
In the absence of any collective bargaining agreement or other applicable agreement concerning terms and
conditions of employment which provides for retirement at an older age, an employee may be retired upon
reaching the age of sixty (60) years.
An employee who is retired pursuant to a bonafide retirement plan or in accordance with the applicable
individual or collective agreement or established employer policy shall be entitled to all the retirement benefits
provided therein or to termination pay equivalent at least to one-half month salary for every year of service,
whichever is higher, a fraction of at least sic (6) months being considered as one whole year.
ISSUE:
Whether or not R.A. 7641 can favorably apply to private respondent’s case.
RULING:
RA 7641 is definitely a social legislation. The law has been enacted as a labor protection measure and as a
curative statute that — absent a retirement plan devised by, an agreement with, or a voluntary grant from, an
employer — can respond, in part at least, to the financial security and well-being of workers after their years of
toil and sacrifice soon following their life of labor. The law can apply to labor contracts  still existing at the time
the statute has taken effect, and that its benefits can be reckoned not only from the date of the law’s enactment
but retroactively to the time said employment contracts have started.
One can look back at the well-settled principle that police power legislation intended to promote public welfare
applies to existing contracts. Petitioner’s assumption that invoking RA 7641 should not be given a retroactive
effect is misplaced.
The contracts of employment were entered into at a time when there was no law granting the workers said
right. Such being the case, it was then contended that the application as to them of the subsequent enactment
would amount to an impairment of contractual obligations.

But the contention was made clear in the opinion that “constitutional guaranty of non-impairment . . . is limited
by the exercise of the police power of the State, in the interest of public health, safety, morals and general
welfare.”
PETITION for Certiorari is DISMISSED and the decision of the NLRC is AFFIRMED.
STATE POLICY TOWARDS LABOR
I. SOCIAL JUSTICE
SOCIAL JUSTICE JUSTICE TRAMPLES NOT THE RIGHTS OF OTHERS; INVOKING SOCIAL JUSTICE WITH CLEAN
HANDS
(2)
Gelos v. CA
G.R. No. 86186
May 8, 1992
FACTS:
Rafael Gelos was employed by Ernesto Alzona and his parents as their laborer on a 25,000-sq. m farmland. They
executed a written contract which stipulated that as hired laborer Gelos would receive a daily wage of P5.00.
Three years later, Gelos was informed of the termination of his services and was asked to vacate the property.
Gelos refused and continued working on the land. Alzona filed a complaint for illegal detainer. The lower court
found Gelos as tenant of the property and entitled to remain thereon as such. The decision was reversed by the
Court of Appeals.   
ISSUE:
Whether or not Gelos is a tenant.
RULING:
Gelos is not a tenant but a hired laborer. It was clear that the petitioner was not a tenant but a hired laborer as
shown in the contract they entered into. In tenancy relationship, it is the landowner who is the lessor, and the
tenant is the lessee of agricultural land. The agricultural worker works for the farm employer and for his labor be
receives a salary or wage regardless of whether the employer makes a profit.
Here, the private respondent, instead of receiving payment of rentals or sharing in the produce of the land, paid
the petitioner lump sums for specific kinds of work on the subject lot or gave him vales, or advance payment of
his wages as laborer thereon.
II. PROTECTION TO LABOR CLAUSE VIS-A-VIS PRINCIPLE OF LIBERAL CONSTRUCTION IN FAVOR OF LABOR
Page |2
EXTENT AND LIMITS OF THE PROTECTION
1. MANAGEMENT RIGHTS
(3)
Soriano v. Offshore Shipping
G.R. No. 78409
September 14, 1989
FACTS:
In search for better opportunities and higher income, petitioner Norberto Soriano, a licensed Second Marine
Engineer, sought employment and was hired by private respondent Knut Knutsen O.A.S. through its authorized
shipping agent in the Philippines, Offshore Shipping and Manning Corporation. As evidenced by the Crew
Agreement, petitioner was hired to work as Third Marine Engineer on board Knut Provider" with a salary of
US$800.00 a month on a conduction basis for a period of fifteen (15) days. He admitted that the term of the
contract was extended to six (6) months by mutual agreement on the promise of the employer to the petitioner
that he will be promoted to Second Engineer. Thus, while it appears that petitioner joined the aforesaid vessel
on July 23, 1985 he signed off on November 27, 1985 due to the alleged failure of private respondent-employer
to fulfill its promise to promote petitioner to the position of Second Engineer and for the unilateral decision to
reduce petitioner's basic salary from US$800.00 to US$560.00. Petitioner was made to shoulder his return
airfare to Manila.
Soriano lodged a complaint against Offshore Shipping, and morevover contended that private respondent
unilaterally altered the employment contract by reducing his salary of US$800.00 per month to US$560.00,
causing him to request for his repatriation to the Philippines.
ISSUE:
Did the employer alter the contract?
HELD:
No.
The annotations in the contract are not alterations of the original employment contract but only a clarification
thereof which by no stretch of the imagination can be considered a violation of Article 34 of the Labor Code.
Under similar circumstances, this Court ruled that as a general proposition, exceptions from the coverage of a
statute are strictly construed. But such construction nevertheless must be at all times reasonable, sensible and
fair. Hence, to rule out from the exemption amendments set forth, although they did not materially change the
terms and conditions of the original letter of credit, was held to be unreasonable and unjust, and not in accord
with the declared purpose of the Margin Law. 
To reiterate, the alleged amendment served to clarify what was agreed upon by the parties and approved by the
Department of Labor. To rule otherwise would go beyond the bounds of reason and justice.
(4)

Central Azucarera de Bais vs Heirs of Zuelo Apostol
G.R. No.215314
March 14, 2018
FACTS:
On March 1, 1982, Zuelo Apostol was hired by CAB as Motor Pool Over-all Repairs Supervisor, who was put in-
charge of repairing company vehicles including responsibilities of assigning the personnel and equipment for
each and every repair job and taking custody of all equipment and materials owned by CAB. As one of the perks
of the job, he was given the privilege of living in the company house so long as he remains a CAB employee.
On February 2, 2002, an inspection of one of the security guards showed that respondent was using the
company house and other company equipment to repair privately-owned vehicles, also witnessing that one of
the hired automotive mechanic was the one actually doing the repair work on a car. Thereafter, the resident
manager, Roberto Y. de la Rosa issued a memorandum stating Rule 9 of CAB’s Rules of discipline as violated by
respondent, requesting for an explanation in writing while putting him effective immediately on suspension.
On February 9, 2002, respondent received a copy of a termination letter signed by the CAB’s president,
petitioner Antonio Steven L. Tan.
On February 12, 2002, respondent filed a Complaint before the Sub-Regional Arbitration Branch No. VII of
Dumaguete City for constructive dismissal, illegal suspension, unfair labor practice, underpayment of overtime
pay, premium pay for holiday, separation pay, service incentive leave vacation/sick leave, recovery of actual,
moral, and exemplary damages, and attorney's fees.
On May 30, 2002, the Labor Arbiter dismissed the respondent’s submissions on the following grounds:
(1) the allegations of unfair labor practice was not discussed in the respondent's position paper,
let alone substantiated;
(2) CAB was well within its rights to impose preventive suspension upon the respondent;
(3) on the substantive aspect, CAB has reasonably shown that the complainant violated company
rules for utilizing company-owned materials and equipment; and
(4) on the procedural aspect, CAB complied with the twin requirements of notice.
The Complaint dated February 12, 2002 was dismissed for lack of merit.
Respondent subsequently appealed the Labor Arbiter decision to the NLRC which ruled that:
(1) the respondent should have been given the opportunity to be heard and to defend himself
through a hearing;[14]
(2) the respondent did not commit serious misconduct because his "contrite and remorseful
explanation belies any willfulness and wrongful intent to violate the rules;" [15] and
(3) while the respondent did indeed violate the company rules, the ultimate penalty of dismissal
should not have been meted out to him, setting aside the Labor Arbiter’s decision and ordering CAB the
payment to repondent of backwages and separation pay.
Page |3
Petitioner elevated the case to the CA which claimed that respondent’s “violation cannot be considered as so
grave as to be characterized as either serious misconduct or could lead to a loss of trust and confidence” and
later denied the petition and affirmed the NLRC’s decision.
ISSUES:
(1) whether or not procedural and substantive due process was observed in the termination of the respondent's
employment with CAB;
(2) whether or not the penalty meted out was commensurate to the violation; and consequently,
(3) whether or not the respondent is entitled to the payment of backwages and separation pay
RULING:
As can be perused from the antecedent facts, the labor Arbiter, the NLRC and the CA came up with conflicting
findings of facts that the Court is justified or compelled to issue its own assessment.
On the matter of procedural due process, the Labor Arbiter and the CA were in unison in admitting that CAB
complied with the twin requirements of due process with a notice apprising the complainant of the particular
acts for which his dismissal is sought and a subsequent notice informing the complainant of the decision to
dismiss him. The confluence of these facts, in the Court’s opinion, sufficiently complies with the repondent’s
right to be accorded ample opportunity to be heard.
Formulated in Perez vs. PT&T, “ample opportunity to be heard” means any meaningful opportunity (verbal or
written) given to the employee to answer the charges against him and submit evidence in support of his defense,
whether in a hearing, conference or some other fair, just and reasonable way.
On the matter of substantive due process, Labor Arbiter, NLRC and the CA are in common posture that the
respondent did indeed violate company rules and regulations when he used company equipment and materials
to work on foreign-owned vehicles.
Art 297(c) of the Labor Code provides that:
“an employer may terminate the services of an employee for fraud or willful breach of the trust reposed to him”.
This situation holds where a person, in the case of supervisors or personnel occupying positions of responsibility
and entrusted with confidence on delicate matters such as the custody, handling or care and protection of the
employer’s property. A review of the entirety of records would reveal that all the requirements for the valid
dismissal of the respondent existed.
The petitioner had therefore validly dismissed an erring employee who as such forfeited and is not entitiled to
both backwages and separation pay.
The decisions of NLRC and the CA are reversed and set-aside while that of the Labor Arbiter is reinstated.
(5)
Marsman & Company, INC vs. Rodil C. Sta. Rita
G.R. No. 194765
 Page |4

April 23, 2018
FACTS:
Marsman is engaged in the business of distribution/sale of pharmaceutical and consumer products. Marsman
purchased Metro Drug Distribution, which is now named Consumer Products Distribution Services Inc. (CPDSI).
The transition from Marsman to CPDSI brought confusion as to who the employer of Rodil at the time of his
dismissal.
To assert that Marsman remained as Rodil’s employer even after the corporate spin-off disregards the separate
personality of Marsman and CPDSI. A corporation has a personality that is separate and distinct from that
composing it as well as from any other legal entity to which it may be related.
Rodil failed to support his claim that Marsman and CPDSI were managed and operated by the same persons or
that Marsman had complete control over CPDSI’s operations. The existence of interlocking directors, corporate
officers and shareholders, without more, is not enough to pierce the veil of corporate fiction. No bad faith can be
imputed to Marsman since the MOA guaranteed the tenure of employees, honored the CBA signed in 1995 and
maintain the salaries and benefits of the affected employees.

Marsman hired Rodil (under a contract) as a warehouse helper in 1993. After his contract expired in 1994, Rodil also failed to satisfy the four-fold test which determines the existence of E-ER, the elements of which are:
Marsman rehired him on a probationary status, and he eventually became a regular employee. Rodil joined 1) selection and engagement of employees; 2) payment of wages; 3) power of dismissal; and 4) power to control
Marsman Employees Union. In 1995, Marsman purchased Metro Drug Distribution, which is engaged in the the employee’s conduct.
same business. This led to the integration of their employees as formalized in a Memorandum of Agreement
There is nothing in the MOA which negate CPDSI’s power to select its employees and when to engage them.
(MOA) dated June 1996. Marsman became the holding company while Metro Drug became the operating
Rodil also failed to submit pay slips, salary vouchers, payrolls, certificate of withholding tax on compensation
company. In 1997, Metro Drug changed its corporate name to CPDSI. CPDSI entered into a contract with EAC
income, SSS records (not just ID) or testimonies from witnesses to prove the element of payment of wages. As to
wherein the former would provide warehousemen to the latter in its Libis Warehouse. Marsman appointed Rodil
the power of dismissal, it was evident in the notice of termination that CPDSI, and not Marsman terminated
as one of the warehousemen for EAC-Libis Warehouse stating that the transfer is part of its cross-training
Rodil’s services by reason of redundancy. The power of control over his employment at the time of his dismissal
Program. EAC’s use of the Libis Warehouse is dependent on its lease contract with Valiant Distribution (Valiant).
was also not proven.
When Valiant terminated EAC’s lease contract, CPDSI likewise terminated the employees assigned at EAC-Libis
Warehouse, including Rodil on the ground of redundancy. Thus, there being no E-ER between Marsman and Rodil, the latter’s complaint must be dismissed for lack of
Rodil filed an illegal dismissal complaint against Marsman. The Labor Arbiter found Marsman guilty of illegally jurisdiction on the part of the Labor Arbiter.
dismissal. On appeal, Marsman argued that the Labor Arbiter has no jurisdiction over the complaint alleging that
there is no employer-employee relationship (E-ER) between it and Rodil. The NLRC ruled that there is no E-ER
between Marsman and Rodil. In a petition for certiorari, the Court of Appeals reversed the NLRC Decision.

ISSUE:
(6)
Whether or not an employer-employee relationship existed between Marsman and Rodil at the time of his
dismissal. Leonardo v. NLRC
G.R. No. 125303; June 16, 2000
RULING: Fuerte and Leonardo v. NLRC
G.R. No. 126937; June 16, 2000
NO, Rodil was not able to prove that there is an E-ER between him and Marsman.

In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee
FACTS: 
was for a valid cause. However, before a case for illegal dismissal can prosper, an E-ER must first be established.
It is incumbent upon Rodil as the complainant to prove the E-ER by substantial evidence, which he failed to do. Petitioner was a mechanic employed by Reynaldo’s Marketing Corporation. He was transferred to another plant
of the company, and his supervisor’s allowance correspondingly withdrawn, allegedly due to his failure to meet
This is a case of a corporate spin-off, which brought about the integration and transfer of employees from
his sales quota. He then filed a complaint for illegal dismissal, alleging constructive dismissal. Reynaldo’s denied
Marsman to CPDSI. Under the MOA, Marsman’s function was limited to a holding company and made CPDSI as
the charge; it was simply carrying out a policy designed to encourage work efficiency and competitiveness by
the main operating company. A corporate spin-off occurs when a department, division or portions of the
giving out extra allowances and choice assignments to employees who meet the required quota. Failure to
corporate business enterprise is sold-off or assigned to a new corporation that will arise by the process which
maintain such quota simply means loss of the assignment and extra allowances.
may constitute it into a subsidiary of the original corporation.
With regard to Leonardo, private respondent likewise insists that it never severed the former's employment. On
The spin-off and the attendant transfer of employees are legitimate business interests of Marsman. The transfer
the contrary, the company claims that it was LEONARDO who abandoned his post following an investigation
of employees through the MOA was proper and did not violate any existing law or jurisprudence. The Court has
wherein he was asked to explain an incident of alleged "sideline" work which occurred on April 22, 1991. It
upheld the transfer/absorption of employees from one company to another, as successor employer, as long as
would appear that late in the evening of the day in question, the driver of a red Corolla arrived at the shop
the transferor was not in bad faith and the employees absorbed by a successor-employer enjoy the continuity of
looking for LEONARDO. The driver said that, as prearranged, he was to pick up LEONARDO who would perform a
their employment status and rights and privileges with their former employer.
private service on the vehicle. When reports of the "sideline" work reached management, it confronted

LEONARDO and asked for an explanation. According to private respondent, LEONARDO gave contradictory
excuses, eventually claiming that the unauthorized service was for an aunt. When pressed to present his aunt, it
was then that LEONARDO stopped reporting for work, filing his complaint for illegal dismissal some ten months
after his alleged termination.
ISSUE:  required in labor adjudication. Moreover, whenever the evidence presented by the employer and that by the
Whether or not petitioner was constructively dismissed.
RULING:  memorandum was made in the course of the performance of her official tasks as a traffic clerk of MMPI. In her
Constructive dismissal is an involuntary resignation resorted to by an employee when his continued employment
becomes impossible, unreasonable, or unlikely or when there is demotion in rank or diminution in pay, or when
a clear determination, insensibility or disdain by the employer becomes unbearable.
In the case at bar, there was a demotion and corresponding decrease in pay, but it was for cause (failure to meet
the required quota). The right to demote falls within the employer’s prerogative, since an employer may set
employment standards and appropriate sanctions for failure to meet the latter. On Leonardo’s part, there was
no illegal dismissal because Leonardo was not dismissed but instead, he abandoned his employment.
(7)
Mega Magazine v. Defensor
G.R. No. 162021
June 16, 201
FACTS:
Contested here is only the schedule of the rates and the revenues of the Company that would entitle Yap of
commission and bonus. In her initial memorandum of February 25, 1999, the respondent had suggested the
following schedule, namely: (a) 0.05% outright commission on total revenue of P28-P29 million; (b) 0.075% on
P30-P34 million; (c) 0.1% on P35-P38 million; (d) 0.1% on P39-P41 million pesos; and (f) 0.1% on P41 million or
higher, but Yap had countered by revising the schedule to start at 0.1% as outright commissions on a total
revenue of P35-P38 million, and the special incentive bonus to start at revenues of P35-P38 million.  Accordingly,
should Mega Magazine’s revenue reach P35M, Yap would then be entitled to commission and bonus as agreed.
ISSUE:
Is respondent entitled to her 0.05% outright commissions and to the special incentive bonus of P8,500.00 based
on MMPI having reached the minimum target of P35 million in gross revenues?
HELD:
Yes.
The degree of proof required in labor cases is not as stringent as in other types of cases. This liberal approach
affords to the employee every opportunity to level the playing field in which her employer is pitted against her.
Page |5
Here, on the one hand, were Tabingo’s memorandum and affidavit indicating that MMPI’s revenues in 1999
totaled P36,216,624.07, and, on the other, the audit report showing MMPI’s gross revenues amounting to only
P31,947,677.00 in the same year. That the audit report was rendered by the auditing firm of Punongbayan &
Araullo did not make it weightier than Tabingo’s memorandum and affidavit, for only substantial evidence – that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion  - was
employee are in equipoise, the scales of justice must tilt in favor of the latter.  For purposes of determining
whether or not the petitioners’ gross revenue reached the minimum target of P35 million, therefore, Tabingo’s
memorandum and affidavit sufficed to positively establish that it did, particularly considering that Tabingo’s
affidavit, too, Tabingo asserted that her issuance of the memorandum was pursuant to MMPI’s year-end
procedures, an assertion that the petitioners did not refute. In any event, Tabingo’s categorical declaration in
her affidavit that “[because] of that achievement, as part of the Sales and Traffic Team of MMPI, in addition to
my other bonuses that year, I received P8,500.00 in gift certificates as my share in the Group Incentive for the
Sales and Traffic Team for gross advertising revenue of P35 to P38 million xxx,” aside from the petitioners not
refuting it, was corroborated by the 1999 Advertising Target sent by the respondent to Yap on December 2,
1999, in which the respondent reported a gross revenue of P36,216,624.07 as of December 1, 1999.
(8)
G.R. No. 163269             April 19, 2006  
ROLANDO C. RIVERA, Petitioner, vs. SOLIDBANK CORPORATION, Respondent.
FACTS: 
Petitioner had been working for Solidbank Corporation since July 1, 1977. He was initially employed as an Audit
Clerk, then as Credit Investigator, Senior Clerk, Assistant Accountant, and Assistant Manager. Prior to his
retirement, he became the Manager of the Credit Investigation and Appraisal Division of the Consumer’s
Banking Group. In the meantime, Rivera and his brother-in-law put up a poultry business in Cavite.
Solidbank offered a retirement program which Rivera accepted. Rivera was entitled to receive the net amount
of P963,619.28, which he received.
(THE RELEASE WAIVER AND QUITCLAIM)
Subsequently, Solidbank required Rivera to sign an undated Release, Waiver and Quitclaim, which was
notarized on March 1, 1995. Rivera acknowledged receipt of the net proceeds of his separation and retirement
benefits and promised that “[he] would not, at any time, in any manner whatsoever, directly or indirectly
engage in any unlawful activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary
companies, their stockholders, officers, directors, agents or employees, and their successors-in-interest and
will not disclose any information concerning the business of Solidbank, its manner or operation, its plans,
processes, or data of any kind.”
Aside from acknowledging that he had no cause of action against Solidbank or its affiliate companies, Rivera
agreed that the bank may bring any action to seek an award for damages resulting from his breach of the

Release, Waiver and Quitclaim, and that such award would include the return of whatever sums paid to him by
virtue of his retirement.
(THE SEPARATE UN-NOTARIZED UNDERTAKING)
Rivera was likewise required to sign an undated Undertaking as a supplement to the Release, Waiver and
Quitclaim in favor of Solidbank in which he declared that he received in full his entitlement under the law
(salaries, benefits, bonuses and other emoluments), including his separation pay in accordance with the SRP. In
this Undertaking, he promised that “[he] will not seek employment with a competitor bank or financial
institution within one (1) year from February 28, 1995, and that any breach of the Undertaking or the
provisions of the Release, Waiver and Quitclaim would entitle Solidbank to a cause of action against him
before the appropriate courts of law. Unlike the Release, Waiver and Quitclaim, the Undertaking was not
notarized.
On May 1, 1995, the Equitable Banking Corporation (Equitable) employed Rivera as Manager of its Credit
Investigation and Appraisal Division of its Consumers’ Banking Group. Solidbank then, through a letter,
demanded the return of the all the monetary benefits he received in consideration of the SRP within five (5) days
from receipt; otherwise, appropriate legal action would be taken against him. Rivera refused.
RTC: Solidbank filed a complaint for Sum of Money with Prayer for Writ of Preliminary Attachment. SOLIDBANK
alleged therein that in accepting employment with a competitor bank for the same position he held in Solidbank
before his retirement, Rivera violated his Undertaking under the SRP. Considering that Rivera accepted
employment with Equitable barely three months after executing the Undertaking, it was clear that he had no
intention of honoring his commitment under said deed.
In his Answer with Affirmative Defenses and Counterclaim, Rivera admitted that he received the net amount
ofP963,619.28 as separation pay. However, the employment ban provision in the Undertaking was never
conveyed to him until he was made to sign it on February 28, 1995. He emphasized that, prior to said date,
Solidbank never disclosed any condition to the retirement scheme, nor did it impose such employment ban on
the bank officers and employees who had previously availed of the SRP. He alleged that the undertaking not to
“seek employment with any competitor bank or financial institution within one (1) year from February 28, 1995”
was void for being contrary to the Constitution, the law and public policy, that it was unreasonable, arbitrary,
oppressive, discriminatory, cruel, unjust, inhuman, and violative of his human rights. He further claimed that the
Undertaking was a contract of adhesion because it was prepared solely by Solidbank without his participation;
considering his moral and economic disadvantage, it must be liberally construed in his favor and strictly against
the bank.
BANK filed motion for summary judgment for lack of a genuine issue. Rivera opposed.
RTC ORDERED RIVERA TO PAY back to solidbank all his received benefits. The trial court declared that there was
no genuine issue as to a matter of fact in the case since Rivera voluntarily executed the Release, Waiver and
Quitclaim, and the Undertaking. He had a choice not to retire, but opted to do so under the SRP, and, in fact,
received the benefits under it.
According to the RTC, the prohibition incorporated in the Undertaking was not unreasonable. To allow Rivera to
be excused from his undertakings in said deed and, at the same time, benefit therefrom would be to allow him
Page |6
to enrich himself at the expense of Solidbank. The RTC ruled that Rivera had to return the P963,619.28 he
received from Solidbank, plus interest of 12% per annum from May 23, 1998 until fully paid.
The CA declared that there was no genuine issue regarding any material fact except as to the amount of
damages. It ratiocinated that the agreement between Rivera and Solidbank was the law between them, and that
the interpretation of the stipulations therein could not be left upon the whims of Rivera. According to the CA,
Rivera never denied signing the Release, Waiver, and Quitclaim, including the Undertaking regarding the
employment prohibition. He even admitted joining Equitable as an employee within the proscribed one-year
period. The alleged defenses of Rivera, the CA declared, could not prevail over the admissions in his
pleadings.1avvphil.netMoreover, Rivera’s justification for taking the job with Equitable, “dire necessity,” was not
an acceptable ground for annulling the Undertaking since there were no earmarks of coercion, undue influence,
or fraud in its execution. Having executed the said deed and thereafter receiving the benefits under the SRP, he
is deemed to have waived the right to assail the same, hence, is estopped from insisting or retaining the said
amount of P963,619.28.
However, the CA ruled that the attachment made upon Rivera’s family home was void, and, pursuant to the
mandate of Article 155, in relation to Article 153 of the Family Code, must be discharged.
ISSUE:
Whether the employment ban incorporated in the Undertaking which petitioner executed upon his retirement is
unreasonable, oppressive, hence, contrary to public policy.
(minor issue: WON the ruling of the RTC through summary judgment was proper)
HELD:
We agree with petitioner’s contention that the issue as to whether the post-retirement competitive employment
ban incorporated in the Undertaking is against public policy is a genuine issue of fact, requiring the parties to
present evidence to support their respective claims. (summary judgment was wrong)
Article 1306 of the New Civil Code provides that the contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy. The freedom of contract is both a constitutional and statutory right. A
contract is the law between the parties and courts have no choice but to enforce such contract as long as it is
not contrary to law, morals, good customs and against public policy.
On the other hand, retirement plans, in light of the constitutional mandate of affording full protection to labor,
must be liberally construed in favor of the employee, it being the general rule that pension or retirement plans
formulated by the employer are to be construed against it. Retirement benefits, after all, are intended to help
the employee enjoy the remaining years of his life, releasing him from the burden of worrying for his financial
support, and are a form of reward for being loyal to the employer.
There is no factual basis for the trial court’s ruling, for the simple reason that it rendered summary judgment
and thereby foreclosed the presentation of evidence by the parties to prove whether the restrictive covenant
is reasonable or not. Moreover, on the face of the Undertaking, the post-retirement competitive employment
ban is unreasonable because it has no geographical limits; respondent is barred from accepting any kind of
employment in any competitive bank within the proscribed period. Although the period of one year may

appear reasonable, the matter of whether the restriction is reasonable or unreasonable cannot be ascertained
with finality solely from the terms and conditions of the Undertaking, or even in tandem with the Release,
Waiver and Quitclaim.
Undeniably, petitioner retired under the SRP and received P963,619.28 from respondent. However, petitioner is
not proscribed, by waiver or estoppel, from assailing the post-retirement competitive employment ban since
under Article 1409 of the New Civil Code, those contracts whose cause, object or purpose is contrary to law,
morals, good customs, public order or public policy are inexistent or void from the beginning. Estoppel cannot
give validity to an act that is prohibited by law or one that is against public policy.
(Even if he received the amount for retirement, that does not mean he was already estopped from questioning
the other provisions of the contract)
In Ferrazzini v. Gsell x x x There are two principal grounds on which the doctrine is founded that a contract in
restraint of trade is void as against public policy.
• The injury to the public by being deprived of the restricted party’s industry;
• The injury to the party himself by being precluded from pursuing his occupation, and thus being
prevented from supporting himself and his family.
In cases where an employee assails a contract containing a provision prohibiting him or her from accepting
competitive employment as against public policy, the employer has to adduce evidence to prove that the
restriction is reasonable and not greater than necessary to protect the employer’s legitimate business
interests. The restraint may not be unduly harsh or oppressive in curtailing the employee’s legitimate efforts to
earn a livelihood and must be reasonable in light of sound public policy
On the assumption that the competitive employment ban in the Undertaking is valid, petitioner is not
automatically entitled to return the P963,619.28 he received from respondent. To reiterate, 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; as such, restitution of the P963,619.28 will not follow as a matter of
course. Respondent is still burdened to prove its entitlement to the aforesaid amount by producing the best
evidence of which its case is susceptible.
Remanded to RTC
(9)
Duncan association of Detail man – PTGWO and Pedro Tecson vs Glaxo Wellcome Philippines Inc.
Facts:
Pedro A. Tecson was hired by Glaxo Wellcom Philippines Inc. as a medical representative on October 24, 1995
after his training and orientation. He had agreed to sign a contract where in he agreed to abide by existing
company policies, one of which was to inform Glaxo of any relationships or future relationships with co
Page |7
employees or employees of competing drug companies. Tecson was then assigned to camarines sur camarines
norte sales area. There he had a romantic relationship with Bettsy an employee of Astra Pharmaceuticals which
is a competitor of Glaxo. Bettsy was a branch coordinator of Astra in albay.
Even before they got married, Tecson was sent reminders from his district manager that his relationship with
Bettsy gave rise to a conflict of interest. Tecson married Bettsy in September 1998. In Januray 1999, Tecsons
supervisor informed him that his relation with Bettsy gave rise to a conflict of interest. He was told to discus with
Bettsy who among them would resign from their job to avoid conflict of interest. Tecson requested for time to
comply with the company policy stating that Astra had plans to merge with Zeneca where Bettsy was waiting to
avail of the redundancy package that would separate her from Astra solving the conflict of interest. In august
1999 Tecson requested more time to fix the conflict and on September 1999 he asked to be transferred to
Glaxo’s milk division which Astra did not have, his request was denied due to the company’s least movement
policy. In November 1999, Tecson was given orders to transfer to Butuan city Surigao City Agusan Del Sur.
Tecson did not comply and continued to represent Galaxo in Camarines sur Camarines Norte. He was paid his
salaray but was not issued samples and was not included in product conferences. He was offered half his
monthly salary for every year of his years in service amounting to P50,000 as separation pay, Tecson declined
the offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB) rendered
its Decision declaring as valid Glaxo’s policy on relationships between its employees and persons employed with
competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.
Tecson contended that Glaxo’s policy against employees marrying employees of competitor companies violates
the equal protection clause of the Constitution because it creates invalid distinctions among employees on
account only of marriage. They claim that the policy restricts the employees’ right to marry.
GLAXO argues: that the company policy prohibiting its employees from having a relationship with or marrying an
employee of a competitor company is a valid exercise of its management prerogatives and does not violate the
equal protection clause;
The policy is also aimed at preventing a competitor company from gaining access to its secrets, procedures and
policies; that Tecson can no longer question the assailed company policy because when he signed his contract of
employment, he was aware that such policy was stipulated therein.
ISSUE: 
WON Glaxo’s policy against its employees marrying employees from competitor companies is valid
HELD: 
The Court finds no merit in the petition.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential
programs and information from competitors, especially so that it and Astra are rival companies in the highly
competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s
employees is reasonable under the circumstances because relationships of that nature might compromise the
interests of the company. 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.

That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution
recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns
on investments and to expansion and growth.
Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of
labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes
that management has rights which are also entitled to respect and enforcement in the interest of fair play.21
EQUAL-PROTECTION: Glaxo does not impose an absolute prohibition against relationships between its
employees and those of competitor companies. Its employees are free to cultivate relationships with and marry
persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the
employee and the company that may arise out of such relationships.
Moreover, records show that Glaxo gave Tecson several chances to eliminate the conflict of interest brought
about by his relationship with Bettsy.
PETITION DENIED.
(10)
Ronilo Soleda vs Cambridge Electronics Corporation
Facts:
On May 8 1999, Ronillo Soleda was hired as a technician for a period of 5 months with minimum wage by
Cambridge Electronics Corporations. On June 15 1999 after 5 weeks of working he met an accident where his
hand was crushed and needed to be amputated. Shortly after his release from the hospital, he claimed that
officers of the company called him into a meeting with his wife, father and cousin. He was assured a place in the
company as a regular employee as long as the company existed and as soon as he recovers from injury. In
September 1999, after fully recovering he went to the company to work but was instead made to sign a
memorandum of resignation to formalize his separation from the company after the expiry of his 5-month
contract.
On November 16, 1999, he filed in the Regional Arbitration Branch of Dasmarinas Cavite a complaint for illegal
dismissal which was later changed to breach of contract. He claimed that Cambridge Electronic Corporation
failed to comply with the contract of perpetual employment that was offered to him when he was called for a
meeting wherein the respondent denied extending any regular employment to the petitioner. It was only words
of encouragement that was offered not perpetual employment. The labor arbiter held that he had jurisdiction to
hear and decide the case as it involved the employer- employee relationship of the contending parties. He ruled
that the petitioner who had been employed on a per project basis became a regular employee by virtue of
contract of perpetual employment and that the statement of the witnesses the wife, father and cousin present
at the meeting and the parole evidence was enough to support the claim. He ordered the petitoners
reinstatement and the payment of backwages, moral damages and exemplary damages as well as attorney’s
fees.
Page |8
Both petitioner and respondent appealed to the NLRC. Petitioner claimed that the labor arbiter erred in finding
that he was a regular employee, that the case was based on illegal dismissal and that reinstatement and
payment of backwages were the proper reliefs. Respondent, on the other hand, asked for the reversal of the
labor arbiter’s decision based on grave abuse of discretion for assuming jurisdiction over the case.
Issue:
WON the labor arbiter had the jurisdiction to take cognizance
Held:
Jurisdiction over the subject matter of a complaint is determined by the allegations of the complaint. In pioneer
Concrete Philippines, Inc. v. Todaro,20 the Court reiterated that where no employer-employee relationship
exists between the parties, and the Labor Code or any labor statute or collective bargaining agreement is not
needed to resolve any issue raised by them, it is the Regional Trial Court which has jurisdiction.Thus it has been
consistently held that the determination of the existence of a contract as well as the payment of damages is
inherently civil in nature.21 A labor arbiter may only take cognizance of a case and award damages where the
claim for such damages arises out of an employer-employee relationship. In this instance, petitioner, from the
period May 8, 1999 to October 8, 1999, was clearly a per-project employee of private respondent, resulting in an
employer-employee relationship. Consequently, questions or disputes arising out of this relationship fell under
the jurisdiction of the labor arbiter.
However, based on petitioner’s allegations in his position paper, his cause of action was based on an alleged
second contract of employment separate and distinct from the per-project employment contract. Thus,
petitioner insisted that there was a perfected contract of perpetual employment and that respondent was liable
to pay him damages. We note, however, that petitioner filed the case only when respondent refused to rehire
him.23 While there was an employer-employee relationship between the parties under their five-month per-
project contract of employment, the present dispute is neither rooted in the aforestated contract nor is it one
inherently linked to it. Petitioner insists on a right to be employed again in respondent company and seeks a
determination of the existence of a new and separate contract that established that right. As such, his case is
within the jurisdiction not of the labor arbiter but of the regular courts. The NLRC and the CA were therefore
correct in ruling that the labor arbiter erroneously took cognizance of the case. Even assuming arguendo that the
labor arbiter had the jurisdiction to decide the case, the Court cannot countenance petitioner’s claim that a
contract of perpetual employment was ever constituted. While the Constitution recognizes the primacy of labor,
it also recognizes the critical role of private enterprise in nation-building and the prerogatives of management. A
contract of perpetual employment deprives management of its prerogative to decide whom to hire, fire and
promote, and renders inutile the basic precepts of labor relations. While management may validly waive it
prerogatives, such waiver should not be contrary to law, public order, public policy, morals or good customs. An
absolute and unqualified employment for life in the mold of petitioner’s concept of perpetual employment is
contrary to public policy and good customs, as it unjustly forbids the employer from terminating the services of
an employee despite the existence of a just or valid cause. It likewise compels the employer to retain an
employee despite the attainment of the statutory retirement age, even if the employee has become a "non-
performing asset" or, worse, a liability to the employer. Moreover, aside from the self-serving claim of
petitioner, there was no concrete proof to establish the existence of such agreement. Petitioner cannot validly
force respondent to enter into a permanent employment contract with him. Such stance is contrary to the

consensuality principle of contracts as well as to the management prerogative of respondent company to choose
its employees.
WHEREFORE, the petition is hereby DENIED.
2. RESTRICTION TO MANAGEMENT RIGHTS
(11)
THE ORCHARD GOLF AND COUNTRY CLUB VS FRANCISCO
GR NO. 172927; MARCH 18, 2013
FACTS:
Petitioner, The Orchard Golf and Country Club (the Club), operates and maintains two golf courses in
Dasmariñas, Cavite for Club members and their guests.
On March 17, 1997, respondent Francisco was employed as Club Accountant, to head the Club’s General
Accounting Division and the four divisions under it. As General Accounting Division head, respondent reports
directly to the Club’s Financial Comptroller, Jose Ernilo P. Famy.
On May 18, 2000, Famy directed Francisco to draft a letter to SGV & Co., the Club’s external auditor, inquiring
about the accounting treatment that should be accorded property that will be sold or donated to the Club.
Francisco failed to prepare the letter, even after Famy’s repeated verbal and written reminders.
On June 27, 2000, Famy issued a memorandum requiring Francisco’s written explanation, relative to her failure
to prepare the letter. Instead of complying with the memorandum, Francisco went to the Club’s General
Manager, Tomas B. Clemente III, and personally explained that due to the alleged heavy volume of work that
needed her attention, she was unable to draft the letter. Clemente assured her that he would discuss the matter
with Famy personally. On this assurance, Francisco did not submit the required written explanation. For this
reason, Famy issued a memorandum suspending Francisco without pay for a period of 15 days.
Famy issued another memorandum informing Francisco that her suspension shall be effective from July 3 to 19,
2000.
Francisco wrote to the Club’s General and Administrative Manager questioning Famy’s act of charging,
investigating, and suspending her without coursing the same through the Club’s Personnel Department.
Nuevo replied, freeing Famy and justifying the latter’s actions as falling within his power and authority as
department head.
Nuevo said that Francisco was accorded due process when she was given the opportunity to explain her side and
that she was consulted by Famy and that she gave her assent to Famy’s proposed actions, which he later carried
out..
Page |9
Francisco wrote a letter to Clemente requesting an investigation into Famy’s possible involvement in the
commission alleged fraudulent acts relative to the questionable approval and release of Club checks in payment
of BIR taxes, in which her counter-signature though required was not obtained but this was belied by Famy.
After Francisco’s period of suspension expired, Famy issued separate memoranda to Francisco and Clemente
informing them of Francisco’s transfer, without diminution in salary and benefits, to the Club’s Cost Accounting
Section while the investigation on Famy’s alleged illegal activities is pending.
Yet again, in another memorandum addressed to Nuevo, Famy sought an investigation into Francisco’s alleged
insubordination, this time for her alleged unauthorized change of day-off from July 30 to August 4, 2000, and for
being absent on said date (August 4, 2000) despite disapproval of her leave/offset application therefor. In an
August 2, 2000 memorandum, Francisco replied claiming that her presence on July 30, 2000 which was a Sunday
and supposedly her day-off, was nonetheless necessary because it was the Club’s scheduled month-end
inventory, and she was assigned as one of the officers-in-charge thereof Francisco accused Famy of waging a
personal vendetta against her for her seeking an inquiry into claimed anomalies embodied in her July 5, 2000
letter. She also took exception to her transfer to Cost Accounting Section, claiming that the same was humiliating
and demeaning and that it constituted constructive dismissal.
Francisco filed a Complaint for illegal dismissal against the Club, impleading Famy, Clemente and Nuevo as
additional respondents. She prayed, among others, for damages and attorney’s fees.
Clemente handed her a Notice of Disciplinary Action dated August 16, 2000 relative to her unauthorized change
of day-off and her unauthorized leave/absence. She was suspended for another fifteen days.
Francisco amended her illegal dismissal Complaint to one for illegal suspension. Meanwhile, she continued to
report for work.
On the day after serving her suspension, Francisco again received memorandum from Nuevo, duly noted and
approved by Clemente, this time placing her on forced leave with pay for 30 days, or from September 7, 2000 up
to October 11, 2000, for the alleged reason that the case filed against her has strained her relationship with her
superiors consitituting breach of company trust according to Nuevo.
After her forced leave, she has been permanently transferred, without diminution of benefits, to the Club’s Cost
Accounting Section effective October 12, 2000. Notably, even as Clemente claimed in the memorandum that
Francisco’s transfer was necessary on account of the strained relations between her and Famy, Francisco’s
position at the Cost Accounting Section was to remain under Famy’s direct supervision.
Francisco protested her permanent transfer, claiming that it was made in bad faith. She also bewailed
Clemente’s inaction on her July 5, 2000 letter charging Famy with irregularities relative to BIR tax payments.
Likewise, on account of her transfer, Francisco once more amended her Complaint to include illegal/constructive
dismissal. And in her prayer, she sought to be reinstated to her former position as Club Accountant.
Ruling of the Labor Arbiter:
LA dismissed Francisco’s Complaint for lack of merit. The Labor Arbiter noted the "belligerence and animosity"
between Francisco and Famy, making short shrift of Francisco’s accusations against her superior and dismissing
them as nothing more than attempts to get back at Famy for his reproach at her failure to draft the SGV letter.

Ruling of the NLRC:
The NLRC held that while Francisco’s suspensions were valid, her subsequent permanent transfer on the ground
of strained relations to the Club’s Cost Accounting Section as Cost Controller was without just cause. It resulted
in Francisco’s demotion, since the position of Cost Controller was merely of a supervisory character, while the
position of Club Accountant was of managerial rank. The NLRC added that strained relationship is not a valid
ground for termination of employment under the Labor Code.
Ruling of the CA:
The CA sustained the NLRC ruling. The CA added that the right may not be used arbitrarily to rid the employer of
an undesirable. The CA characterized Francisco’s transfer as a demotion in the guise of a lateral transfer.
ISSUE:
Whether CA seriously erred and decided a question of substance in a manner not in accord with law and with
applicable decisions of the Court when it held that the transfer of respondent from the position of club
accountant to cost accountant was tantamount to a demotion.
RULING:
No, there was constructive dismissal when Francisco was transferred to the Cost Accounting Section. Records
show that when Francisco returned to work on July 20, 2000 fresh from her first suspension, she was
unceremoniously transferred by Famy, via his July 20, 2000 memorandum, to the Club’s Cost Accounting Section.
Famy stated the reason for her transfer: “This is to inform you that effective today, July 20, 2000, Management
has approved your temporary transfer of assignment pending the completion of the investigation you lodged
against the undersigned.”
His memorandum of even date to his superior Clemente reveals the same cause.
In other words, the cause of Francisco’s temporary transfer on July 20, 2000 was her pending complaint against
Famy.
The Court shares the CA’s observation that when Francisco was placed on forced leave and transferred to the
Cost Accounting Section, not once was Francisco given the opportunity to contest these company actions taken
against her. It has also not escaped our attention that just when one penalty has been served by Francisco,
another would instantaneously take its place. And all these happened even while the supposed case against her,
the alleged charge of "betrayal of company trust", was still pending and remained unresolved. In fact, one of the
memoranda was served even at Francisco’s residence.
Not even the claim that her relations with her superiors have been strained could justify Francisco’s transfer to
Cost Accounting Section. Indeed, it appears that her charge was never resolved. And if Famy, Nuevo and
Clemente truly believed that their relations with Francisco have been strained, then it puzzles the Court why,
despite her transfer, she continues to remain under Famy’s direct supervision. Such is the tenor of the
memoranda relative to her temporary and subsequently, permanent, transfer to the Cost Accounting Section:
Francisco’s temporary transfer and her permanent transfer to Cost Accounting Section must be invalidated. For
one, there was no valid reason to temporarily transfer Francisco to Cost Accounting Section on July 20, 2000. She
had already served her penalty for her failure to draft the SGV letter, through the 15-day suspension period
P a g e | 10
which she just completed on July 20, 2000. Secondly, the transfer was not even rooted in any new infraction she
is accused of committing. There was thus an absolute lack of basis for her July 20, 2000 temporary transfer. As
for her October 12, 2000 permanent transfer, the same is null and void for lack of just cause. Also, the transfer is
a penalty imposed on a charge that has not yet been resolved. Definitely, to punish one for an offense that has
not been proved is truly unfair; this is deprivation without due process. The court also agrees with the findings of
the NLRC, as affirmed by the CA, that Francisco’s transfer constituted a demotion.
The fact that Francisco continued to report for work does not necessarily suggest that constructive dismissal has
not occurred, nor does it operate as a waiver.
Constructive dismissal occurs not when the employee ceases to report for work, but when the unwarranted acts
of the employer are committed to the end that the employee’s continued employment shall become so
intolerable. In these difficult times, an employee may be left with no choice but to continue with his
employment despite abuses committed against him by the employer, and even during the pendency of a labor
dispute between them. This should not be taken against the employee. Instead, we must share the burden of his
plight, ever aware of the precept that necessitous men are not free men. Respondent is entitled to receive her
accrued salary differential, merit increases and productivity bonuses since 2001. The Orchard Golf and Country
Club, is ORDERED:
1.To immediately reinstate respondent Amelia R. Francisco to her former position as Club Accountant without
loss of seniority rights and other privileges;
2.Within 15 days from receipt of this Decision, to return and/or pay to the respondent, all her accrued salary
differential, merit increases and productivity bonuses due her, with 12o/o per annum interest55 on outstanding
balance from finality of this Decision until full payment; and
3.Within the same period, to pay the respondent attorney's fees in the amount of ₱50,000.
SECURITY OF TENURE VIS-A-VIS RIGHTS TO DUE PROCESS
SECURITY OF TENURE
(12)
GOPIO VS BAUTISTA
GR NO 205953, JUNE 06, 2018
FACTS:
ON Sept. 26, 2008, respondent Salvador B. Bautista was hired as a project manager for Shorncliffe (PNG) Limited
in Papua New Guinea through Job Asia Management Services, owned by petitioner Dionella A. Gopio.
Bautista’s contract was for 31 months with a net monthly salary of P40,000. Article 4.3 of the contract he signed
provided that the employer or employee may terminate the contract on other grounds. The employer should

give one month’s written notice of his intention to terminate or, in lieu thereof, pay the employee a sum
equivalent to one month’s salary.
On July 6, 2009, or just nine months after his deployment, Bautista was served a notice of termination effective
July 10, 2009 for unsatisfactory performance and failure to meet the standards of the company. Pursuant to said
Article 4.3, petitioner paid Bautista the equivalent of one month’s pay in lieu of a written notice.
ISSUE:
Is Bautista’s dismissal justified?
RULING:
No.
The due process requirement is not a mere formality that may be dispensed with at will. Its disregard is a matter
of serious concern, since it constitutes a safeguard of the highest order in response to man’s innate sense of
justice.
To meet the requirements of due process, the employer must furnish the worker sought to be dismissed with
two written notices before termination of employment can be legally effected, i.e.: a notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought; and the subsequent notice after
due hearing which informs the employee of the employer’s decision to dismiss him.
(13)
Philips Semiconducts (Phils.), Inc. v. Fadriquela
GR No. 141717; 14 April 2004
Facts:
The petitioner Philips Semiconductors is a domestic corporation engaged in the production and assembly of
semiconductors such as power devices, RF modules, CATV modules, RF and metal transistors and glass diods. It
caters to domestic and foreign corporations that manufacture computers, telecommunications equipment and
cars. Aside from contractual employees, the petitioner employed 1,029 regular workers. The employees were
subjected to periodic performance
appraisal based on output, quality, attendance and work attitude.[2] One was required to obtain a performance
rating of at least 3.0 for the period covered by the performance appraisal to maintain good standing as an
employee. Respondent, during her 5 consecutive contracts, got the following ratings: 3.15, 3.8, 3.4, and 2.8. The
reason for her failed mark on the last contract was her absences. She was then asked to
explain such absences but she failed to do the same. Subsequently, respondent’s supervisor recommended that
her employment be terminated due to habitual absenteeism. Thus, her contract
of employment was no longer renewed. Respondent then filed a complaint for illegal dismissal. On the other
hand, petitioner contends that respondent was not dismissed; her contract merely expired.
Issues and Ruling:
P a g e | 11
(a) whether or not the respondent was still a contractual employee of the petitioner as of June 4, 1993;
On the first issue, the petitioner contends that the policy of hiring workers for a specific and limited period on an
"as needed basis," as adopted by the petitioner, is not new; neither is it prohibited. According to the petitioner,
it had to resort to hiring contractual employees for definite periods because it is a semiconductor company and
its business is cyclical in nature. Its operation, production rate and manpower requirements are dictated by the
volume of business from its clients and the availability of the basic materials.
Article 280 of the Labor Code of the Philippines, as amended, which reads:
Art. 280. Regular and Casual Employment. – The provisions of written agreement to the contrary
notwithstanding and regardless of the oral argument of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the employment has been fixed for a specific project
or undertaking the completion or termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall
continue while such activity exists
It bears stressing that petitioner’s original contract of employment, dated May 8, 1992 to August 8, 1992, had
been extended through several contracts – The fact that the petitioner had rendered more than one year of
service at the time of his (sic) dismissal only shows that she is performing an activity which is usually necessary
and desirable in private respondent’s business or trade.
(b) whether or not the petitioner dismissed the respondent from her employment;
(c) if so, whether or not she was accorded the requisite notice and investigation prior to her dismissal; and,
On the second and third issues, we agree with the appellate court that the respondent was dismissed by the
petitioner without the requisite notice and without any formal investigation.
the respondent’s dismissal from employment for incurring five (5) absences in April 1993, three (3) absences in
May 1993 and four (4) absences in June 1993, even if true, is too harsh a penalty.
As to the alleged absences, we are convinced that the same do not constitute sufficient ground for dismissal.
(Meracap v. International Ceramics Manufacturing Co., Inc., 92 SCRA 412 [1979])
In this case, the respondent was employed by the petitioner on May 8, 1992 as production operator. She was
assigned to wirebuilding at the transistor division. There is no dispute that the work of the respondent was
necessary or desirable in the business or trade of the petitioner. 24 She remained under the employ of the
petitioner without any interruption since May 8, 1992 to June 4, 1993 or for one (1) year and twenty-eight (28)
days. The original contract of employment had been extended or renewed for four times, to the same position,
with the same chores. Such a continuing need for the services of the respondent is sufficient evidence of the

necessity and indispensability of her services to the petitioner’s business. 25 By operation of law, then, the
respondent had attained the regular status of her employment with the petitioner, and is thus entitled to
security of tenure as provided for in Article 279 of the Labor Code which reads:
Art. 279. Security of Tenure. – In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the
time his compensation was withheld from him up to the time of his actual reinstatement.
RIGHT TO LABOR, A PROPERTY RIGHT
(14)
Callanta v. Carnation Philippines, Inc.,
G.R. No. 70615; October 28, 1986
FACTS:
Petitioner Virgilio Callanta was employed by private respondent Carnation Philippines, Inc. [Carnation, for
brevity] in January 1974 as a salesman in the Agusan del Sur area. Five [5 years later or on June 1, 1979,
respondent Carnation filed with the Regional Office No. X of the Ministry of Labor and Employment [MOLE], an
application for clearance to terminate the employment of Virgilio Callanta on the alleged grounds of serious
misconduct and misappropriation of company funds amounting to P12,000.00, more or less.
Upon clearance approved by the MOLE Regional Office, respondent dismissed the petitioner in June 1979. On
July 1982, petitioner filed an illegal dismissal case with claim for reinstatement with the Labor Arbiter, who
granted it. On appeal, the NLRC reversed the judgment based on the contention that the action by the petitioner
has already prescribed, since Art. 291 & 292 of the Labor Code is expressed that offenses penalized under the
Code and all money claims arising from employer-employee relationships shall be filed within 3 years from when
such cause of action arises, otherwise it will be barred.
Issue:
Does the ruling of the NLRC to set aside the decision of the Labor Arbiter rendering the decision finding the
termination of Callanta's employment to be without valid cause. Respondent Carnation was therefore ordered
to reinstate Virgilio Callanta to his former position . It declared the complaint for illegal dismissal filed by Virgilio
Callanta to have already prescribed. correct?\
Ruling:
No. the dismissal without just cause of an employee from his employment constitutes a violation of the Labor
Code and its implementing rules and regulations.
P a g e | 12
It iis well-recognized in this jurisdiction that one's employment, profession, trade or calling is a "property right,"
and the wrongful interference therewith is an actionable wrong. 11 The right is considered to be property within
the protection of a constitutional guaranty of due process of law. 12 Clearly then, when one is arbitrarily and
unjustly deprived of his job or means of livelihood, the action instituted to contest the legality of one's dismissal
from employment constitutes, in essence, an action predicated "upon an injury to the rights of the plaintiff," as
contemplated under Art. 1146 of the New Civil Code, which must be brought within four [4] years.
In the instant case, the action for illegal dismissal was filed by petitioners on July 5, 1982, or three [3] years, one
[1] month and five [5] days after the alleged effectivity date of his dismissal on June 1, 1979 which is well within
the four [4]-year prescriptive period under Article 1146 of the New Civil Code
CHAPTER I: GENERAL PROVISIONS
ARTICLE 3: DECLARATION OF BASIC POLICY
II. FOUR-FOLD TEST (INDICA OF DETERMINATION)
(15)
Calamba Medical Center, Inc., v. National Labor Relations Commission, Ronaldo Lanzanas and Merceditha
Lanzanas
G.R. No. 176484, 25 August 2008
Second Division
Carpio Morales, J.:
Facts:
Calamba Medical Center (petitioner), a privately-owned hospital, engaged the services of medical doctors-
spouses Ronaldo Lanzanas (Dr. Lanzanas) and Merceditha Lanzanas (Dr. Merceditha) as part of its team of
resident physicians. Reporting at the hospital twice-a-week on twenty-four-hour shifts, the latter were paid a
monthly "retainer" of P4,800.00 each. It appears that resident physicians were also given a percentage share out
of fees charged for out-patient treatments, operating room assistance and discharge billings, in addition to their
fixed monthly retainer.
The work schedules of the members of the team of resident physicians were fixed by petitioner's medical
director Dr. Raul Desipeda (Dr. Desipeda). And they were issued identification cards by petitioner and were
enrolled in the Social Security System (SSS). Income taxes were withheld from them.
Events transpired leading to grievances and problems. These were not resolved amicably. Calamba later sent Dr.
Lanzanas a notice of termination which he received on April 25, 1998, indicating as grounds therefor his failure
to report back to work despite the DOLE order and his supposed role in the striking union. This prompted
Lanzanas to charge the hospital with illegal termination. Calamba’s defense is the absence of an employer-
employee relationship between them.

Issue:
Does the employer-employee relationship exist between Calamba and Dr. Lanzanas?
Ruling:
Yes.
From the control test perspective, the relationship yields positive based on these facts: 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.
Further, in the emergency room, the operating room, or any department or ward for that matter, respondents'
work is monitored through its nursing supervisors, charge nurses and orderlies. Without the approval or consent
of the petitioner or its medical director, no operations can be undertaken in those areas.
Finally, 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 training program is duly accredited or approved by the appropriate
government agency. In respondents' case, they were not undergoing any specialization training. They were
considered non-training general practitioners, assigned at the emergency rooms and ward sections.
(16)
Hydro Resources v. Pagalilauan
G.R. No. L-62909, 18 April 1989
THIRD DIVISION
GUTIERREZ, JR., J.
Facts:
This is a petition to review on certiorari the resolution of the National Labor Relations Commission (NLRC) which
affirmed the labor arbiter's decision ordering herein petitioner, Hydro Resources Contractors Corporation to
reinstate Rogelio A. Abanto his former position without loss of seniority rights, to pay him 12 months backwages
in the amount of P18,000.00 and to pay attorney's fees in the amount of P1,800.00.
On October 24, 1978, petitioner corporation hired the private respondent Aban as its "Legal Assistant." He
received a basic monthly salary of Pl,500.00 plus an initial living allowance of P50.00 which gradually increased
to P320.00.
On September 4, 1980, Aban received a letter from the corporation informing him that he would be considered
terminated effective October 4, 1980 because of his alleged failure to perform his duties well.
On October 6, 1980, Aban filed a complaint against the petitioner for illegal dismissal.
P a g e | 13
The labor arbiter ruled that Aban was illegally dismissed.
This ruling was affirmed by the NLRC on appeal.
Issue:
Whether or not there was an employer-employee relationship between the petitioner corporation and Aban.
Ruling:
Yes.
A lawyer, like any other professional, may very well be an employee of a private corporation or even of the
government. It is not unusual for a big corporation to hire a staff of lawyers as its in-house counsel, pay them
regular salaries, rank them in its table of organization, and otherwise treat them like its other officers and
employees. At the same time, it may also contract with a law firm to act as outside counsel on a retainer basis.
The two classes of lawyers often work closely together but one group is made up of employees while the other is
not. A similar arrangement may exist as to doctors, nurses, dentists, public relations practitioners, and other
professionals.
This Court is not without a guide in deciding whether or not an employer-employee relation exists between the
contending parties or whether or not the private respondent was hired on a retainer basis.
As stated in the case of Tabas v. California Manufacturing Co., (G.R. No. 80680, January 26, 1989):
This Court has consistently ruled that the determination of whether or not there is an employer-employee
relation depends upon four standards: (1) the manner of selection and engagement of the putative employee;
(2) the mode of payment of wages; (3) the presence or absence of a power of dismissal; and (4) the presence or
absence of a power to control the putative employee's conduct. Of the four, the right-of-control test has been
held to be the decisive factor.
Aban worked solely for the petitioner and dealt only with legal matters involving the said corporation and its
employees. He also assisted the Personnel Officer in processing appointment papers of employees. This latter
duty is not an act of a lawyer in the exercise of his profession but rather a duty for the benefit of the
corporation.
The above-mentioned facts show that the petitioner paid Aban's wages, exercised its power to hire and fire the
respondent employee and more important, exercised control over Aban by defining the duties and functions of
his work.
Considering that the private respondent was illegally dismissed from his employment in 1980, he is entitled to
reinstatement to his former or similar position without loss of seniority rights, if it is still feasible, to backwages
without qualification or deduction for three years, (D.M. Consunji, Inc. v. Pucan 159 SCRA 107 (1988); Flores v.
Nuestro, G.R. No. 66890, April 15, 1988), and to reasonable attorney's fees in the amount of P5,000.00. Should
reinstatement prove no longer feasible, the petitioner will pay him separation pay in lieu of reinstatement. (City
Trust Finance Corp. v. NLRC, 157 SCRA 87; Santos v. NLRC, 154 SCRA 166; Metro Drug v. NLRC, et al., 143 SCRA
132; Luzon Brokerage v. Luzon Labor Union, 7 SCRA 116). The amount of such separation pay as may be provided
by law or the collective bargaining agreement is to be computed based on the period from 24 October 1978
(date of first employment) to 4 October 1983 (three years after date of illegal dismissal). [Manila Midtown
Commercial Corporation v. Nuwhrain 159 SCRA 212 (1988)].

(17)
Feati University v. Bautista
G R. No. L-21278, December 27, 1966
En Banc
Zaldivar, J.:
Facts:
On January 14, 1963, the President of the Feati University Faculty Club-PAFLU (Faculty Club) wrote a letter to
Mrs. Victoria L. Araneta, President of Feati University (University), informing Araneta of the organization of the
Faculty Club into a registered labor union. The Faculty Club is composed of members who are professors and/or
instructors of the Feati University.
On January 22, 1963, the President of the Faculty Club sent another letter containing twenty-six demands that
have connection with the employment of the members of the Faculty Club by the University, and requesting an
answer within ten days from receipt thereof. The President of the University answered the two letters,
requesting that she be given at least thirty days to study thoroughly the different phases of the demands.
The lawyer for Feati University, to whom the demands were referred, wrote a letter to the President of the
Faculty Club demanding proof of Faculty Club organization’s majority status and designation as a bargaining
representative.
On February 1, 1963, the President of the Faculty Club again wrote a letter to the President of the University
rejecting the University’s request for extension of time, and on the same day President of the Faculty Club filed a
notice of strike with the Bureau of Labor alleging as reason therefor the refusal of the University to bargain
collectively. The parties were called to conferences at the Conciliation Division of the Bureau of Labor but efforts
to conciliate them failed.
On February 18, 1963, the members of the Faculty Club declared a strike and established picket lines in the
premises of the University, resulting in the disruption of classes in the University. Despite further efforts of the
officials from the Department of Labor to effect a settlement of the differences between the management of the
University and the striking faculty members no satisfactory agreement was arrived at.
On March 21, 1963, the President of the Philippines Diosdado P. Macapagal certified to the Court of Industrial
Relations (CIR) the dispute between the management of the University and the Faculty Club pursuant to the
provisions of Section 10 of Republic Act No. 875 (An Act to Promote Industrial Peace and for other purposes).
In connection with the dispute between the University and the Faculty Club and certain incidents related to the
dispute, various cases were filed with the Court of Industrial Relations. The three cases now before this Court
stemmed from those cases that were filed with the Court of Industrial Relations (Division).
• CIR Cases No. 41-IPA– Faculty Club’s petition to declare in contempt of court since University refused
to accept them back to work in violation of the return-to-work order of March 30, 1963 and has
employed professors and/or instructors to take their places.
• CIR Case No. 1183-MC  – Faculty Club’s petition for certification election praying that it be certified as
the sole and exclusive bargaining representative of the University. This case was later withdrawn by
Faculty Club since the Case 41-IPA had already been certified by the President to the CIR and has
absorbed the issues.
P a g e | 14
• CIR Case No. V-30 – PAFLU’s complaint for indirect contempt of court filed against the administrative
officials of the Feati University reiterating Case 41-IPA for alleged violation of the order dated March
30, 1963 by the CIR Judge Bautista.
On the strength of the presidential certification, Judge Bautista of Court of Industrial Relations (Division) set the
case for hearing on March 23, 1963. During the hearing, the Judge endeavored to reconcile the part and it was
agreed upon that the striking faculty members would return to work and the University would readmit them
under a status quo arrangement.
The CIR Judge Bautista believing that the dispute could not be decided promptly, ordered the strikers to return
immediately to work and for the University to take back the employees protesting under the last terms and
conditions existing before the dispute arose, as per agreement had during the hearing on March 23, 1963.
The University filed for a motion for reconsideration in CIR en banc in contention that the Court of Industrial
Relations’ lack of jurisdiction on the case because the University is an educational institution not under industrial
or labor sector which is not coverd by Republic Act No. 875 (An Act to Promote Industrial Peace and for other
purposes). Without the motion for reconsideration having been acted upon by the CIR en banc, respondent CIR
(Division) Judge Bautista set the case for hearing on the merits for May 8, 1963. The University moved for the
cancellation of said hearing upon the ground that CIR en banc should first hear the motion for reconsideration
and resolve the issues raised before the case is heard on the merits. Soon, the motion for cancellation of the
hearing was denied by the Court of Industrial Relations en banc.
Judge Bautista of Court of Industrial Relations, however, cancelled the scheduled hearing when the lawyer for
the University manifested that they would take up before the Supreme Court, by a petition for  certiorari, the
matter regarding the actuations of Judge Bautista and the issues raised in the motion for reconsideration,
specially the issue relating to the jurisdiction of the Court of Industrial Relations .
Before the above-mentioned order of March 30, 1963 was issued by Judge Bautista, the University had already
employed new and temporary professors and/or instructors to take the places or replace those professors
and/or instructors who had voluntarily strike against the University.
On April 6, 1963, Judge Bautista issued an order stating that "said replacements are hereby warned and
cautioned, for the time being, not to disturb nor in any manner commit any act tending to disrupt the effectivity
of the order of March 30, 1963, pending the final resolution of the same."
The principal allegation of the University in its petition for certiorari and prohibition with preliminary injunction,
is that respondent Judge Jose S. Bautista acted without, or in excess of, jurisdiction, or with grave abuse of
discretion, in taking cognizance of, and in issuing the questioned orders. Let it be noted that when the petition
for certiorari and prohibition with preliminary injunction was filed on May 10, 1963 in this case, the questioned
order in CIR Cases Nos. 41-IPA, 1183-MC and V-30 were still pending action by the Court of Industrial
Relations en banc upon motions for reconsideration filed by the University.
On June 5, 1963, the Court of Industrial Relations en banc issued a resolution denying the motion for
reconsideration.
On July 8, 1963, the University filed before the Supreme Court a petition for certiorari, by way of an appeal from
the resolution of the CIR en banc. The University prayed that the proceedings in Case No. 1183-MC and the order
of April 6, 1963 and the resolution of June 5, 1963 issued by the CIR en banc be annulled, and that the CIR be
ordered to dismiss Case No. 1183-MC on the ground of lack of jurisdiction.

Then Supreme Court, by resolution of September 26, 1963, ordered that these three cases be consolidated
altogether.
Issue:
Whether Feati University should be considered as an employer and PAFLU Faculty Club be considered as an
employee to be covered by R.A. 875 and that PAFLU Faculty Club have the right to unionize.
Ruling:
Yes.
Feati University should be considered as an employer and PAFLU Faculty Club should be considered as an
employee to be covered by R.A. 875 and also PAFLU Faculty Club have the right to unionize. Does the University
operate as an educational institution for profit? Does it declare dividends for its stockholders? If it does not, it
must be declared beyond the purview of Republic Act No. 875; but if it does, Republic Act No. 875 must apply to
it.
However, in this case, the University itself admits that it has declared dividends.  The CIR (Division) in its order
dated March 30, 1963 in CIR Case No. 41-IPA — which order was issued after evidence was heard — also found
that the University is not for strictly educational purposes and that "It realizes profits and parts of such earning is
distributed as dividends to private stockholders or individuals. Under this circumstance, and in consonance with
the rulings, it is obvious that Republic Act No. 875 (An Act to Promote Industrial Peace and for other purposes) is
applicable to petitioner Feati University.
The University claims that it is not an employer within the contemplation of Republic Act No. 875, because it is
not an industrial establishment. At most, it says, it is only a lessee of the services of its professors and/or
instructors pursuant to a contract of services entered into between them. The Supreme Court found no merit in
this claim. Let us clarify who is an "employer" under the Act. Section 2(c) of Republic Act 875 provides:
Sec. 2. Definitions.—As used in this Act —
(c) The term employer include any person acting in the interest of an employer, directly or indirectly,
but shall not include any labor organization (otherwise than when acting as an employer) or any one
acting in the capacity or agent of such labor organization.
As stated above, Republic Act No. 875 does not give a comprehensive but only a complementary definition of
the term "employer". The term encompasses those that are in ordinary parlance "employers." What is
commonly meant by "employer"? The term "employer" has been given several acceptations. The lexical
definition is "one who employs; one who uses; one who engages or keeps in service;" and "to employ" is "to
provide work and pay for; to engage one's service; to hire." (Webster's New Twentieth Century Dictionary, 2nd
ed., 1960, p. 595).
The Workmen's Compensation Act defines employer as including "every person or association of persons,
incorporated or not, public or private, and the legal representative of the deceased employer" and "includes the
owner or lessee of a factory or establishment or place of work or any other person who is virtually the owner or
manager of the business carried on in the establishment or place of work but who, for reason that there is an
independent contractor in the same, or for any other reason, is not the direct employer of laborers employed
there." [Sec. 39(a) of Act No. 3428.]
P a g e | 15
The Minimum Wage Law states that "employer includes any person acting directly or indirectly in the interest of
the employer in relation to an employee and shall include the Government and the government corporations".
[Rep. Act No. 602, Sec. 2(b)]. The Social Security Act defines employer as "any person, natural or juridical,
domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or activity of any
kind and uses the services of another person who is under his orders as regards the employment, except the
Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or
controlled by the Government." (Rep. Act No. 1161, Sec. 8[c]).
The Supreme Court, in the cases of the The Angat River Irrigation System, et al. vs. Angat River Workers' Union
(PLUM), et al., G.R. Nos. L-10934 and L-10944, December 28, 1957, which cases involve unfair labor practices and
hence within the purview of Republic Act No. 875, defined the term employer as follows:
An employer is one who employs the services of others; one for whom employees work and who pays
their wages or salaries (Black Law Dictionary, 4th ed., p. 618).
An employer includes any person acting in the interest of an employer, directly or indirectly (Sec. 2-c,
Rep. Act 875).
Under none of the above definitions may the University be excluded, especially so if it is considered that every
professor, instructor or teacher in the teaching staff of the University, as per allegation of the University itself,
has a contract with the University for teaching services, albeit for one semester only. The University engaged the
services of the professors, provided them work, and paid them compensation or salary for their services. Even if
the University may be considered as a lessee of services under a contract between it and the members of its
Faculty, still it is included in the term "employer". "Running through the word `employ' is the thought that there
has been an agreement on the part of one person to perform a certain service in return for compensation to be
paid by an employer. When you ask how a man is employed, or what is his employment, the thought that he is
under agreement to perform some service or services for another is predominant and paramount." (Ballentine
Law Dictionary, Philippine ed., p. 430, citing Pinkerton National Detective Agency v. Walker, 157 Ga. 548, 35 A. L.
R. 557, 560, 122 S.E. Rep. 202).
To bolster its claim of exception from the application of Republic Act No. 875, the University contends that it is
not state that the employers included in the definition of 2 (c) of the Act. This contention cannot be sustained. In
the first place, Sec. 2 (c) of Republic Act No. 875 does not state that the employers included in the definition of
the term "employer" are only and exclusively "industrial establishments"; on the contrary, as stated above, the
term "employer" encompasses all employers except those specifically excluded by Republic Act 875. In the
second place, even Republic Act 875 itself does not refer exclusively to industrial establishments and does not
confine its application thereto.
The term "industry", for the purposes of the application of our labor laws should be given a broad meaning so as
to cover all enterprises which are operated for profit and which engage the services of persons who work to earn
a living.
The word "industry" within State Labor Relations Act controlling labor relations in industry, cover labor
conditions in any field of employment where the objective is earning a livelihood on the one side and gaining of
a profit on the other. Labor Law Sec. 700 et seq. State Labor Relations Board vs. McChesney, 27 N.Y.S. 2d 866,
868." (Words and Phrases, Permanent Edition, Vol. 21, 1960 edition p. 510).
The University urges that even if it were an employer, still there would be no employer-employee relationship
between it and the striking members of the Faculty Club because the latter are not employees within the

purview of Sec. 2(d) of Republic Act No. 875 but are independent contractors. This claim is untenable as ruled by
the Supreme Court.
Section 2 (d) of Republic Act No. 875 provides:
(d) The term "employee" shall include any employee and shall not be limited to the employee of a
particular employer unless the act explicitly states otherwise and shall include any individual whose
work has ceased as a consequence of, or in connection with, any current labor dispute or because of
any unfair labor practice and who has not obtained any other substantially equivalent and regular
employment.
The contention of the University that the professors and/or instructors are independent contractors, because
the University does not exercise control over their work, is likewise untenable. The Supreme Court takes judicial
notice that a university controls the work of the members of its faculty; that a university prescribes the courses
or subjects that professors teach, and when and where to teach; that the professors' work is characterized by
regularity and continuity for a fixed duration; that professors are compensated for their services by wages and
salaries, rather than by profits; that the professors and/or instructors cannot substitute others to do their work
without the consent of the university; and that the professors can be laid off if their work is found not
satisfactory. All these indicate that the university has control over their work; and professors are, therefore,
employees and not independent contractors. There are authorities in support of this view.
The principal consideration in determining whether a workman is an employee or an independent contractor is
the right to control the manner of doing the work, and it is not the actual exercise of the right by interfering with
the work, but the right to control, which constitutes the test. (Amalgamated Roofing Co. v. Travelers' Ins. Co.,
133 N.E. 259, 261, 300 Ill. 487, quoted in Words and Phrases, Permanent ed., Vol. 14, p. 576).
Where, under Employers' Liability Act, A was instructed when and where to work . . . he is an employee, and not
a contractor, though paid specified sum per square. (Heine v. Hill, Harris & Co., 2 La. App. 384, 390, in Words and
Phrases, loc, cit.) .
Employees are those who are compensated for their labor or services by wages rather than by profits. (People
vs. Distributors Division, Smoked Fish Workers Union Local No. 20377, Sup. 7 N. Y. S. 2d 185, 187 in Words and
Phrases, loc, cit.)
Services of employee or servant, as distinguished from those of a contractor, are usually characterized by
regularity and continuity of work for a fixed period or one of indefinite duration, as contrasted with employment
to do a single act or a series of isolated acts; by compensation on a fixed salary rather than one regulated by
value or amount of work; . . . (Underwood v. Commissioner of Internal Revenue, C.C.A., 56 F. 2d 67, 71 in Words
and Phrases, op. cit., p. 579.)
Independent contractors can employ others to work and accomplish contemplated result without consent of
contractee, while "employee" cannot substitute another in his place without consent of his employer. (Luker
Sand & Gravel Co. v. Industrial Commission, 23 P. 2d 225, 82 Utah, 188, in Words and Phrases, Vol. 14, p. 576).
Moreover, even if university professors are considered independent contractors, still they would be covered by
Rep. Act No. 875. In the case of the Boy Scouts of the Philippines v. Juliana Araos, supra, this Court observed that
Republic Act No. 875 was modelled after the Wagner Act, or the National Labor Relations Act, of the United
States, and this Act did not exclude "independent contractors" from the orbit of "employees". It was in the
subsequent legislation — the Labor Management Relation Act (Taft-Harley Act) — that "independent
contractors" together with agricultural laborers, individuals in domestic service of the home, supervisors, and
others were excluded. (See Rothenberg on Labor Relations, 1949, pp. 330-331).
P a g e | 16
It having been shown that the members of the Faculty Club are employees, it follows that they have a right to
unionize in accordance with the provisions of Section 3 of the Magna Carta of Labor (Republic Act No. 875) which
provides as follows:
Section. 3. Employees' right to self-organization.—Employees shall have the right to self-organization
and to form, join or assist labor organizations of their own choosing for the purpose of collective
bargaining through representatives of their own choosing and to engage in concerted activities for
the purpose of collective bargaining and other mutual aid or protection. . . .
Certainly, professors, instructors or teachers of private educational institutions who teach to earn a living are
entitled to the protection of our labor laws — and one such law is Republic Act No. 875.
The contention of the University in the instant case that the members of the Faculty Club cannot unionize and
the Faculty Club cannot exist as a valid labor organization is, therefore, without merit. The record shows that the
Faculty Club is a duly registered labor organization and this fact is admitted by counsel for the University.
The return-to-work order cannot be considered as an impairment of the contract entered into with the
replacements. Besides, labor contracts must yield to the common good and such contracts are subject to the
special laws on labor unions, collective bargaining, strikes and similar subjects.
(18)
VILLAMARIA vs. CA
G.R. No. 165881, April 19, 2006
First Division
Callejo, Sr., J.:
FACTS:
Villamaria was the owner of Villamaria Motors engaged in assembling passenger jeepneys with a franchise to
operate. He started operating four jeepneys and employed drivers on a "boundary basis." One of the drivers
employed was respondent Bustamante who remitted P450.00 a day to Villamaria as boundary from driving the
vehicle. Villamaria verbally agreed to sell the jeepney to Bustamante under the "boundary-hulog scheme,"
where Bustamante would remit to him P550.00 a day for a period of four years. Bustamante would then become
the owner of the vehicle and continue to drive the same under Villamaria’s franchise.
Thereafter, a contract entitled "Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog" was
executed. The parties agreed that if Bustamante failed to pay the boundary-hulog for three days, Villamaria
Motors would hold on to the vehicle until Bustamante paid his arrears plus penalty, and in case of failure to
remit for a period of one week, the Kasunduan would cease to have legal effect and Bustamante would have to
return the vehicle to Villamaria Motors.
Bustamante and other drivers who also had the same arrangement with Villamaria Motors failed to pay their
respective boundary-hulog. This prompted Villamaria to serve a "Paalala," reminding them of the terms under
the Kasunduan. He warned the drivers that the Kasunduan would henceforth be strictly enforced and urged
them to comply with their obligation to avoid litigation.
Villamaria took back the jeepney driven by Bustamante and barred the latter from driving the vehicle. He alleged
that Bustamante abandoned the vehicle in a gas station.

Bustamante filed a Complaint for Illegal Dismissal against Villamaria and his wife Teresita before the Labor
Arbiter.
The Labor Arbiter rendered judgment in favor of the spouses Villamaria and ordered the complaint dismissed.
The Labor Arbiter held that Bustamante violated the terms of the contract and was not illegally dismissed.
Bustamante appealed the decision to the NLRC that rendered judgment dismissing the appeal for lack of merit. It
ruled that the juridical relationship between Bustamante and Villamaria was that of vendor and vendee, hence,
the Labor Arbiter had no jurisdiction over the complaint.
Bustamante appealed to the Court of Appeals. In its Decision, the CA reversed and set aside the NLRC decision
and ruled in favor of Bustamante. Villamaria was ordered to pay Bustamante separation pay and backwages.
The appellate court ruled that the Labor Arbiter had jurisdiction over Bustamante’s complaint. Under the
Kasunduan, the relationship between him and Villamaria was dual: that of vendor-vendee and employer-
employee. The CA ratiocinated that Villamaria’s exercise of control over Bustamante’s conduct in operating the
jeepney is inconsistent with the former’s claim that he was not engaged in the transportation business.
Villamaria sought relief from the Supreme Court via petition for review on certiorari under Rule 65 of the Rules
of Court.
ISSUE:
1. Whether the existence of a boundary-hulog agreement negates the employer-employee relationship between
the vendor and vendee.
HELD:
Under the boundary-hulog scheme incorporated in the Kasunduan, a dual juridical relationship was created
between petitioner and respondent: that of employer-employee and vendor-vendee. The Kasunduan did not
extinguish the employer-employee relationship of the parties extant before the execution of said deed.
The exercise of control by Villamaria over Bustamante’s conduct in operating the jeepney he was driving is
inconsistent with Villamaria’s claim that he was not engaged in the transportation business; that, even if
Bustamante was allowed to let some other person drive the unit, it was not shown that he did so; that the
existence of an employment relation is not dependent on how the worker is paid but on the presence or
absence of control over the means and method of the work; that the amount earned in excess of the "boundary
hulog" is equivalent to wages; and that the fact that the power of dismissal was not mentioned in the Kasunduan
did not mean that Villamaria never exercised such power, or could not exercise such power.
In requiring Bustamante to drive the unit for commercial use, or to wear an identification card, or to don a
decent attire, or to park the vehicle in Villamaria Motors garage, or to inform Villamaria Motors about the fact
that the unit would be going out to the province for two days of more, or to drive the unit carefully, etc.
necessarily related to control over the means by which the petitioner was to go about his work. The fact that the
"boundary" here represented installment payment of the purchase price on the jeepney did not withdraw the
relationship from that of employer-employee, in view of the overt presence of supervision and control by the
employer.
Villamaria retained supervision and control over the conduct of Bustamante as driver of the jeepney. He remains
the owner of the jeepney although its material possession was vested in Bustamante as its driver. In case
Bustamante failed to make his P550.00 daily installment payment for a week, the agreement would be of no
P a g e | 17
force and effect and he would have to return the jeepney to Villamaria; the employer-employee relationship
would likewise be terminated unless Villamaria would allow Bustamante to continue driving the jeepney on a
boundary basis of P550.00 daily despite the termination of their vendor-vendee relationship.
Moreover, well-settled is the rule that, the employer has the burden of proving that the dismissal of an
employee is for a just cause. The failure of the employer to discharge this burden means that the dismissal is not
justified and that the employee is entitled to reinstatement and back wages.
(19)
Manila Golf & Country Club v. IAC and Fermin Llamar
G.R. No. 64948, September 27, 1994
Second Division
Narvasa, C. J.
Facts:
Respondent Fermin Llamar and his fellow caddies filed with the Social Security Commission for coverage and
availment of benefits under the Social Security Act. Subsequently, all but two of the original 17 petitioners
withdrew their claim for social security coverage. The case continued and was adjudicated by the SSC only as
regards the 2 holdouts dismissing their petition and stating that the caddies were never employees of petitioner.
An appeal was taken to the IAC but the other caddy’s appeal was dismissed at his instance, leaving respondent
Llamar the lone appellant. The IAC found for Llamar finding employer-employee relationship between him and
petitioner.
Issue:
Whether or not respondent Llamar is an employee of petitioner.
Ruling: 
No.
The various matters of conduct, dress, language, etc. covered by the petitioner’s regulations, does not, in the
mind of the Court, so circumscribe the actions or judgment of the caddies concerned as to leave them little or no
freedom of choice whatsoever in the manner of carrying out their services.
The Court agrees with petitioner that the group rotation system so-called, is less a measure of employer control
than an assurance that the work is fairly distributed, a caddy who is absent when his turn number is called
simply losing his turn to serve and being assigned instead the last number for the day.
In the final analysis, petitioner has no way of compelling the presence of the caddies as they are not required to
render a definite number of hours of work on a single day. Even the group rotation of caddies is not absolute
because a player is at liberty to choose a caddy of his preference regardless of the caddy’s order in the rotation.
It can happen that a caddy who has rendered services to a player on one day may still find sufficient time to

work elsewhere. Under such circumstances, he may then leave the premises of petitioner and go to such other
place of work that he wishes. Or a caddy who is on call for a particular day may deliberately absent himself if he
has more profitable caddying, or another, engagement in some other place. These are things beyond petitioner’s
control and for which it imposes no direct sanctions on the caddies.
(20)
Andres Villavilla and Ester Gadiente Villavilla v. Court of Appeals, Social Security Commission, Reynaldo
Mercado, and Marcelo Cosuco, Social Security System
G.R. No. 79664, 11 August 1992
First Division
Bellosillo, J.:
Facts:
Arturo Villavilla was employed as "tripulante" (crew member) of the fishing boat "F/B Saint Theresa" from 1974
until September 11, 1977, when the boat sank off Isla Binatikan, Taytay, Palawan and had been missing since
then. In 1979, petitioners Villavilla, parents of Arturo, filed a petition with the Social Security Commission against
Reynaldo Mercado and Marcelino Cosuco, owners of the fishing boat, for death compensation benefits of Arturo
whom respondents failed to register as their employee. In 1981, the Social Security System (SSS) filed a petition
in intervention alleging that records from the SSS Production Department showed that "F/B Saint Theresa",
owned by Marcelino Cosuco and operated by Reynaldo Mercado, was a registered member-employer, and that
in the event petitioners succeeded in proving the employment of Arturo with private respondents, the latter
should be held liable in damages equivalent to the benefits due the petitioners. Respondent Cosuco then filed
his answer denying all allegations in the petition and claiming that he already sold the fishing boat to respondent
Mercado and from then on, he did not participate anymore in the operation and management of the boat nor in
the hiring of its crewmembers.
Petitioners argue that it was private respondent Reynaldo Mercado who recruited Arturo Villavilla sometime in
1974 to be a crew member of the fishing boat "F/B Saint Theresa" with a daily wage of P20.00. Petitioners thus
contend that since Arturo was recruited by Mercado himself sometime in 1974 as one of his fishermen-crew
members and that the crew members were uniformly paid by Mercado, there can be no other conclusion but
that Arturo was an employee of Mercado at the time his fishing boat sank. However, the records disclose that
the relationship between Mercado and the crew members of the ship shows the existence of a joint venture, as
the crew members did not receive fixed compensation for they only share in their catch. The boat owners did
not hire them but simply joined the fishing expedition upon invitation of the ship master, even without the
knowledge of the boat owner. In short, there was neither right of control nor actual exercise of such right on the
part of the boat owner over his crew members.
Issue:
Whether there was an employer – employee relationship between Arturo Villavilla and Reynaldo Mercado.
Ruling:
No.
P a g e | 18
The bases for the existence of employer-employee relationships are not present in the case at bar. As mentioned
earlier, private respondent Reynaldo Mercado had no connection with the selection and engagement of Arturo
Villavilla; exercised no power of dismissal over Arturo Villavilla; neither had he any power of control or had
reserved the right to control Arturo Villavilla as to the result of the work to be done as well as the means and
methods by which the same is to be accomplished, and there was no such uniform salary involved. The boat-
owners obviously are not responsible for the wage, salary, or fee of the pilot and crew-members. Their sole
participation in the venture is the furnishing or delivery of the equipment used for fishing, after which, they
merely wait for the boat's return and receive their share in the catch, if there is any. In the present case, neither
the pilots nor the crew-members receive compensation from boat-owners. They only share in their own catch
produced by their own efforts. There is no showing that outside of their one third share, the boat-owners have
anything to do with the distribution of the rest of the catch among the pilots and the crew members. The latter
perform no service for the boat-owners, but mainly for their own benefit. It is clear that there was no employer-
employee relationship between petitioner's son Arturo and private respondent Mercado, much less private
respondent Cosuco. As such, Arturo could not be made subject to compulsory coverage under the Social Security
Act; hence, private respondents cannot be said to have violated said law when they did not register him with the
Social Security System.
(21)
Ramos vs. Court of Appeals
G.R. No. 124354 29, December 1999
First Division
Kapunan, J.
Facts:
Erlinda Ramos, a 47-year old robust woman, was normal except for her experiencing occasional pain due to the
presence of stone in her gall bladder. She was advised to undergo an operation for its removal. The results in the
examinations she underwent indicate that she was fit for the operation. She and her husband Rogelio met Dr.
Hosaka, one of the defendants, who advised that she should undergo cholecystectomy. Dr. Hosaka assured them
that he will get a good anaesthesiologist. At 7:30 a.m. on the day of the operation at Delos Santos Medical
Center, Herminda Cruz, Erlinda’s sister-in-law and the dean of the College of Nursing in Capitol Medical Center,
was there to provide moral support. Dr. Perfecta Gutierrez was to administer the anaesthesia. Dr. Hosaka arrived
only at 12:15 p. m. Herminda saw Dr. Gutierrez intubating the patient, and heard the latter say “Ang hirap ma-
intubate nito, mali yata ang pagkakapasok. O, lumalaki ang tiyan.” Herminda saw bluish discoloration of the
nailbeds of the patient. She heard Dr. Hosaka issue an order for someone to call Dr. Calderon. The doctor arrived
and placed the patient in trendelenburg position, wherein the head of the patient is positioned lower than the
feet, which indicates a decrease of blood supply in the brain. Herminda knew and told Rogelio that something
wrong was happening. Dr. Calderon was able to intubate the patient. Erlinda was taken to the ICU and became
comatose.
Rogelio filed a civil case for damages. The trial court ruled in his favor, finding Dr. Gutierrez, Dr. Hosaka, and the
hospital, guilty of negligence, but the Court of Appeals reversed the decision. Hence, petitioner filed a Motion for
Reconsideration, which the Court of Appeals denied for having been filed beyond the reglementary period.
However, it was found that the notice of the decision was never sent to the petitioner’s counsel. Rather, it was

sent to the petitioner, addressing him as Atty. Rogelio Ramos, as if he was the legal counsel. The petitioner filed
the instant petition for certiorari. On the procedural issue, the Supreme Court rules that since the notice did not
reach the petitioner’s then legal counsel, the motion was filed on time.
Issue:
Whether a surgeon, an anaesthesiologist, and a hospital, should be made liable for the unfortunate comatose
condition of a patient scheduled for cholecystectomy.
Ruling:
Yes.
Res ipsa loquitur is a Latin phrase which literally means "the thing or the transaction speaks for itself." The
phrase "res ipsa loquitur'' is a maxim for the rule that the fact of the occurrence of an injury, taken with the
surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a
plaintiff's prima facie case, and present a question of fact for defendant to meet with an explanation. Where the
thing which caused the injury complained of is shown to be under the management of the defendant or his
servants and the accident is such as in ordinary course of things does not happen if those who have its
management or control use proper care, it affords reasonable evidence, in the absence of explanation by the
defendant, that the accident arose from or was caused by the defendant's want of care. It is grounded in the
superior logic of ordinary human experience and on the basis of such experience or common knowledge,
negligence may be deduced from the mere occurrence of the accident itself. However, much has been said
that res ipsa loquitur is not a rule of substantive law and, as such, does not create or constitute an independent
or separate ground of liability. Mere invocation and application of the doctrine does not dispense with the
requirement of proof of negligence. It is simply a step in the process of such proof, permitting the plaintiff to
present along with the proof of the accident, enough of the attending circumstances to invoke the doctrine,
creating an inference or presumption of negligence, and to thereby place on the defendant the burden of going
forward with the proof. Still, before resort to the doctrine may be allowed, the following requisites must be
satisfactorily shown.
(1) The accident is of a kind which ordinarily does not occur in the absence of someone's negligence;
(2) It is caused by an instrumentality within the exclusive control of the defendant or defendants; and
(3) The possibility of contributing conduct which would make the plaintiff responsible is eliminated.
A case strikingly similar to the one before us is Voss vs. Bridwell, where the Kansas Supreme Court in applying
the res ipsa loquitur stated: The plaintiff herein submitted himself for a mastoid operation and delivered his
person over to the care, custody and control of his physician who had complete and exclusive control over him,
but the operation was never performed. At the time of submission he was neurologically sound and physically fit
in mind and body, but he suffered irreparable damage and injury rendering him decerebrate and totally
incapacitated. The injury was one which does not ordinarily occur in the process of a mastoid operation or in the
absence of negligence in the administration of an anesthetic, and in the use and employment of an
endoctracheal tube.  Opinion of Expert Witness
Medical malpractice cases do not escape the application of this doctrine. Thus, res ipsa loquitur has been applied
when the circumstances attendant upon the harm are themselves of such a character as to justify an inference
of negligence as the cause of that harm. Although generally, expert medical testimony is relied upon in
malpractice suits to prove that a physician has done a negligent act or that he has deviated from the standard
medical procedure, when the doctrine of res ipsa loquitur is availed by the plaintiff, the need for expert medical
P a g e | 19
testimony is dispensed with because the injury itself provides the proof of negligence. Hence, in cases where
the res ipsa loquitur is applicable, the court is permitted to find a physician negligent upon proper proof of injury
to the patient, without the aid of expert testimony, where the court from its fund of common knowledge can
determine the proper standard of care. When the doctrine is appropriate, all that the patient must do is prove a
nexus between the particular act or omission complained of and the injury sustained while under the custody
and management of the defendant without need to produce expert medical testimony to establish the standard
of care. Resort to res ipsa loquitur is allowed because there is no other way, under usual and ordinary
conditions, by which the patient can obtain redress for injury suffered by him.
Res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a rule to be cautiously applied,
depending upon the circumstances of each case. A distinction must be made between the failure to secure
results, and the occurrence of something more unusual and not ordinarily found if the service or treatment
rendered followed the usual procedure of those skilled in that particular practice. The real question, therefore, is
whether or not in the process of the operation any extraordinary incident or unusual event outside of the
routine performance occurred which is beyond the regular scope of customary professional activity in such
operations, which, if unexplained would themselves reasonably speak to the average man as the negligent cause
or causes of the untoward consequence. The Supreme Court finds the doctrine of res ipsa loquitur appropriate in
the case at bar. Erlinda submitted herself for cholecystectomy and expected a routine general surgery to be
performed on her gall bladder. On that fateful day she delivered her person over to the care, custody and
control of private respondents who exercised complete and exclusive control over her. At the time of
submission, Erlinda was neurologically sound and, except for a few minor discomforts, was likewise physically fit
in mind and body. However, during the administration of anesthesia and prior to the performance of
cholecystectomy she suffered irreparable damage to her brain. Thus, without undergoing surgery, she went out
of the operating room already decerebrate and totally incapacitated. Obviously, brain damage, which Erlinda
sustained, is an injury which does not normally occur in the process of a gall bladder operation. In fact, this kind
of situation does not in the absence of negligence of someone in the administration of anesthesia and in the use
of endotracheal tube. Furthermore, the instruments used in the administration of anesthesia, including the
endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in-
charge. Likewise, petitioner Erlinda could not have been guilty of contributory negligence because she was under
the influence of anesthetics which rendered her unconscious.
Negligence of the Anaesthesiologist
The pre-operative evaluation of a patient prior to the administration of anesthesia is universally observed to
lessen the possibility of anesthetic accidents. Respondent Dra. Gutierrez' act of seeing her patient for the first
time only an hour before the scheduled operative procedure was, therefore, an act of exceptional negligence
and professional irresponsibility. Her failure to follow this medical procedure is, therefore, a clear  indicia of her
negligence. Erlinda's case was elective and this was known to respondent Dra. Gutierrez. Thus, she had all the
time to make a thorough evaluation of Erlinda's case prior to the operation and prepare her for anesthesia.
However, she never saw the patient at the bedside. She herself admitted that she had seen petitioner only in the
operating room, and only on the actual date of the cholecystectomy. She negligently failed to take advantage of
this important opportunity. As such, her attempt to exculpate herself must fail.
An anesthetic accident caused by a rare drug-induced bronchospasm properly falls within the fields of
anesthesia, internal medicine-allergy, and clinical pharmacology. The resulting anoxic encephalopathy belongs to
the field of neurology. While admittedly, many bronchospastic-mediated pulmonary diseases are within the
expertise of pulmonary medicine, Dr. Jamora's field, the anesthetic drug-induced, allergic mediated
bronchospasm alleged in this case is within the disciplines of anesthesiology, allergology and pharmacology. On

the basis of the foregoing transcript, in which the pulmonologist himself admitted that he could not testify about
the drug with medical authority, it is clear that the appellate court erred in giving weight to Dr. Jamora's
testimony as an expert in the administration of Thiopental Sodium. Generally, to qualify as an expert witness,
one must have acquired special knowledge of the subject matter about which he or she is to testify, either by the
study of recognized authorities on the subject or by practical experience. Clearly, Dr. Jamora does not qualify as
an expert witness based on the above standard since he lacks the necessary knowledge, skill, and training in the
field of anesthesiology. Oddly, apart from submitting testimony from a specialist in the wrong field, private
respondents' intentionally avoided providing testimony by competent and independent experts in the proper
areas.
Proximate Cause
Proximate cause has been defined as that which, in natural and continuous sequence, unbroken by any efficient
intervening cause, produces injury, and without which the result would not have occurred. An injury or damage
is proximately caused by an act or a failure to act, whenever it appears from the evidence in the case, that the
act or omission played a substantial part in bringing about or actually causing the injury or damage; and that the
injury or damage was either a direct result or a reasonably probable consequence of the act or omission. Instead
of the intended endotracheal intubation what actually took place was an esophageal intubation. During
intubation, such distention indicates that air has entered the gastrointestinal tract through the esophagus
instead of the lungs through the trachea. Entry into the esophagus would certainly cause some delay in oxygen
delivery into the lungs as the tube which carries oxygen is in the wrong place. That abdominal distention had
been observed during the first intubation suggests that the length of time utilized in inserting the endotracheal
tube (up to the time the tube was withdrawn for the second attempt) was fairly significant. Due to the delay in
the delivery of oxygen in her lungs Erlinda showed signs of cyanosis.
Responsibility of the Surgeon
As the so-called "captain of the ship," it is the surgeon's responsibility to see to it that those under him perform
their task in the proper manner. Respondent Dr. Hosaka's negligence can be found in his failure to exercise the
proper authority in not determining if his anesthesiologist observed proper anesthesia protocols. In fact, no
evidence on record exists to show that respondent Dr. Hosaka verified if respondent Dra. Gutierrez properly
intubated the patient. Furthermore, it does not escape us that respondent Dr. Hosaka had scheduled another
procedure in a different hospital at the same time as Erlinda's cholecystectomy, and was in fact over three hours
late for the latter's operation. Because of this, he had little or no time to confer with his anesthesiologist
regarding the anesthesia delivery. This indicates that he was remiss in his professional duties towards his
patient. Thus, he shares equal responsibility for the events which resulted in Erlinda's condition.
Responsibility of the Hospital
Hospitals hire, fire and exercise real control over their attending and visiting "consultant" staff. While
"consultants" are not, technically employees, a point which respondent hospital asserts in denying all
responsibility for the patient's condition, the control exercised, the hiring, and the right to terminate consultants
all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of
wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the
basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an
employer-employee relationship in effect exists between hospitals and their attending and visiting physicians.
The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article
2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of
others based on the former's responsibility under a relationship of patria potestas. Such responsibility ceases
P a g e | 20
when the persons or entity concerned prove that they have observed the diligence of a good father of the family
to prevent damage. In the instant case, respondent hospital, apart from a general denial of its responsibility over
respondent physicians, failed to adduce evidence showing that it exercised the diligence of a good father of a
family in the hiring and supervision of the latter. It failed to adduce evidence with regard to the degree of
supervision which it exercised over its physicians. In neglecting to offer such proof, or proof of a similar nature,
respondent hospital thereby failed to discharge its burden under the last paragraph of Article 2180. Having failed
to do this, respondent hospital is consequently solidarily responsible with its physicians for Erlinda's condition.
Damages
Petitioner Erlinda Ramos was in her mid-forties when the incident occurred. She has been in a comatose state
for over fourteen years now. The burden of care has so far been heroically shouldered by her husband and
children, who, in the intervening years have been deprived of the love of a wife and a mother. Meanwhile, the
actual physical, emotional and financial cost of the care of petitioner would be virtually impossible to quantify.
Even the temperate damages herein awarded would be inadequate if petitioner's condition remains unchanged
for the next ten years.  The husband and the children, all petitioners in this case, will have to live with the day to
day uncertainty of the patient's illness, knowing any hope of recovery is close to nil. They have fashioned their
daily lives around the nursing care of petitioner, altering their long term goals to take into account their life with
a comatose patient. They, not the respondents, are charged with the moral responsibility of the care of the
victim. The family's moral injury and suffering in this case is clearly a real one. For the foregoing reasons, an
award of P2,000,000.00 in moral damages would be appropriate.
Finally, by way of example, exemplary damages in the amount of P100,000.00 are hereby awarded. Considering
the length and nature of the instant suit we are of the opinion that attorney's fees valued at P100,000.00 are
likewise proper.
WHEREFORE, the decision and resolution of the appellate court appealed from are hereby modified so as to
award in favor of petitioners, and solidarily against private respondents the following: 1) P1,352,000.00 as actual
damages computed as of the date of promulgation of this decision plus a monthly payment of P8,000.00 up to
the time that petitioner Erlinda Ramos expires or miraculously survives; 2) P2,000,000.00 as moral damages, 3)
P1,500,000.00 as temperate damages; 4) P100,000.00 each as exemplary damages and attorney's fees; and, 5)
the costs of the suit.
CONTROL TEST
(22)
RAQUEL P. CONSULTA, v. COURT OF APPEALS, PAMANA PHILIPPINES, INC., RAZUL Z. REQUESTO, and ALETA
TOLENTINO
G.R. No. 145443. March 18, 2005
Ponente. CARPIO, J.:
Facts.

PAMANA Philippines is engaged in health care business. A person named Raquel Consulta was offered a
promotional position of Managing Associate of PAMANA. If the position is accepted by Raquel Consulta, there is
a stipulation in the agreement that there no -Emloyer and Employee relationship between the parties.
In one task, Raquel Consulta negotiated, in behalf of PANAMA, with the Federation of Filipino Civilian Employees
Association (FFCEA) covering its members under the PAMANA health care plans. Eventually, PAMANA and U.S
Naval Supply Depot signed the Federation of Filipino Civilian Employees Association (FFCEA) account. After the
execution of the contracts, Consulta claimed that PAMANA did not pay her commission for the successful
agreement of Federation of Filipino Civilian Employees Association (FFCEA) account and filed a complaint for
unpaid wages before the LA.
LA ordered PAMANA to pay Consulta which was affirmed by NLRC.
On appeal, the decision of the NLRC was reversed by the CA on the ground that there is no Employer – Employee
Relationship but the appellate court found out that Consulta was a commission agent not a regular employee of
PAMANA.
Issue.
Control Test - Whether or not the Labor Arbiter has jurisdiction over Consulta‘s money claims against Pamana?
Ruling of the SC:
No, the Labor Arbiter has no jurisdiction over Consulta‘s money claims against Pamana. The court adopted in,
applied the four fold test of Employer – Employer Relationship:
The Supreme Court first laid down the four-fold test in the case of Viaña v. Al-Lagadan it to determine the
existence of an employer-employee relationship. The four elements of an employer-employee relationship,
which have since been adopted in subsequent jurisprudence, are :
• power to hire;
• payment of wages;
• power to dismiss;
• power to control, wherein the power to control is the most important.
In the present case, the power to control is missing. Consulta‘s action was not subject to the control of the
company PAMANA Philippines.
Consulta failed to show that she had to report for work at definite hours which is 8 hours per day. The amount of
time she devoted was left entirely to her discretion. The means and methods of performing her job were left to
her judgment as a commissioned agent of Pamana.
In the present case, the power to control is missing. Pamana Corporation tasked Consulta to organize, develop,
manage, and maintain a sales division, submit a number of enrollments and revenue attainments in accordance
with company policies and guidelines, and to recruit, train and direct her Supervising Associates and Health
Consultants.
Consulta’s appointment had an exclusivity provision. The appointment provided that Consulta must represent
Pamana on an exclusive basis. She must not engage directly or indirectly in activities of other companies that
P a g e | 21
compete with the business of Pamana. However, the fact that the appointment required Consulta to solicit
business exclusively for Pamana did not mean that Pamana exercised control over the means and methods of
Consulta’s work as the term control is understood in labor jurisprudence. 20 Neither did it make Consulta an
employee of Pamana. Pamana did not prohibit Consulta from engaging in any other business, or from being
connected with any other company, for as long as the business or company did not compete with Pamana’s
business.
It was established that Consulta only received suggestions from PAMANA regarding the sales. Hence, there is no
Employer – Employee Relationship between parties. Thus, the Court of Appeals is correct. The Labor Arbiter and
National Labor Relations Commission have no jurisdiction on Consulta‘s money claims because in this case there
was no Employer – Employee Relationship, Consulta is a commissioned agent of Pamana.
Morever, Consulta filed her action under Article 217(a)(6) of the Labor Code. However, since there was no
employer-employee relationship between Pamana and Consulta, the Labor Arbiter should have dismissed
Consulta’s claim for unpaid commission. Consulta’s remedy is to file an ordinary civil action to litigate her claim.
(23)
Sonza v. ABS-CBN GR.no. 138051 June 10, 2004
Carpio,J.:
Facts:
ABS-CBN and Sonza signed an agreement, wherein Jose Sonza as President and General Manager being the
representative of the talent agency Mel and Jay Management and Development Corporation (MJMDC) to hire
Jose Sonza as talent for radio and television. ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of
₱310,000 for the first year and ₱317,000 for the second and third year of the Agreement. ABS-CBN would pay
the talent fees on the 10th and 25th days of the month. Jose Sonza and Mel and Jay Management and
Development Corporation were paid agreed on the talent fees.
Later, Jose Sonza as President and General Manager wrote a letter to inform the ABS-CBN’s President, Eugenio
Lopez about Sonza’s irrevocable resignation concerning his programs and career. In this contract, Sonza
renounced the recovery of the benefits.
However, Jose Sonza filed a complaint before the Department of Labor and Employment, in Quezon City for non-
payment of his salaries and other benefits by ABS - CBN. In the answer of ABS- CBN, ABS - CBN contended that
there was no benefits as there was no employer- employee relationship to speak with.
In a Decision The Labor Arbiter dismissed the complaint of Jose Sonza for lack of jurisdiction. and was affirmed
by the NLRC and the Court of Appeals. For one similar reason, there was no employer-employee relationship
existed between SONZA and ABS-CBN.
Issue:
Control Test - Whether or not Sonza is entitled to the benefits indicated in the agreement.
Ruling:

No, Sonza is not entitled to the benefits indicated in the agreement The entitlement of benefits is a question
relating to employer- employee relationship. The court adopted in, applied the four fold test of Employer –
Employer Relationship:
• power to hire;
• payment of wages;
• power to dismiss;
• power to control, wherein the power to control is the most important.
In this case, petitioner Jose Sonza failed to prove existence of an Employer- Employee Relationship under the
forth requisite of EER Test which is Control. JoseSonza is an independent contractor. His unique skills, talent and
celebrity status are not possessed by ordinary employees. He is not bound by the ABS-CBN‘s control in the
conduct of his work. He is paid only on his talent fees and not wages for ordinary employees. Under the
Agreement of ABS CBN and talent agency Mel and Jay Management and Development Corporation, Mel and Jay
Management and Development Corporation is the AGENT of SONZA, to whom MJMDC would have to turn over
any talent fee accruing under the Agreement Whatever benefits that the complainant enjoyed is from a specific
agreement of the parties and, not by any reason of employer- employee relationship.
We find that ABS-CBN was not involved in the actual performance that produced the finished product of
SONZA’s work.33 ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to
modify the program format and airtime schedule "for more effective programming." 34 ABS-CBN’s sole concern
was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the
means and methods of performance of SONZA’s work.
A radio broadcast specialist who works under minimal supervision is an independent contractor. 40 SONZA’s work
as television and radio program host required special skills and talent, which SONZA admittedly possesses. The
records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and
talent in his shows. Therefore, there is no Employer – Employee Relationship.
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive
leave, signing bonus, travel allowance, and amounts due under the Employee Stock Option Plan
(24)
R TRANSPORT CORPORATION v ROGELIO EJANDRA
G. R. No. 148508 May 20. 2004
CORONA. J. :
Facts:
Rogelio Ejandra worked as a bus driver of R Transport Corporation for 6 consecutive years from 1990 to 1996
and was paid on a 10 % commission on his daily earnings. One day, Ejandra informed R Transport’s general
director that his license was confiscated after he was apprehended for a traffic misdemeanor. His manager gave
him 500 pesos money to recover his license from the Land Transportation Office.
P a g e | 22
Ejandra went to the LTO office everyday but it was merely after a week that he was able to acquire back his
license it was known that the delay was because the apprehending officer did not turn over his license at the
LTO. When he reported back to work. However, he was told that the company was still studying whether to
allow him to drive again. Rogelio Ejandra was accused of causing damage to the bus he used to drive. Ejandra
denied the charges, Ejandra blamed the person who drove the bus during his absence, considering that the
damage was sustained during the week that he did not drive the bus. The manager told him to wait or to have
his vacation leave until his services were needed once more. When asked how long he had to rest, the manager
did not give a definite date.
Ejandra observing his situation of not being called to work back, considered himself to be illegally dismissed by R
Transport. Ejandra filed for illegal dismissal against R Transport.
R Transport denied Ejandra’s allegations and claimed that he abandoned his occupation; that Ejandra lied about
his license being confiscated; and that Ejandra is considered as not an employee because there was a contract of
rental and non -employment being paid on committee footing.
The Labor Arbiter rendered in favor of Ejandra. Decising the dismissal of Ejandra to be without just cause
ORDERING R-Transport to REINSTATE Ejandra to his former position without loss of senior status and other
benefits and to pay Ejandra backwages from the clip of his dismissal until existent reinstatement.
The NLRC affirmed this determination.
R Transport appealed to the Court of Appeals. The CA denied the request for lack of merit.
Issues: Control Test
1. Won Ejandra abandon his occupation?
2. WON was there an employer-employee relationship between R Transport and Ejandra?
3. WON Ejandra was legally dismissed by R Transportation?
Rulings:
1. No.
Ejandra did not abandon his occupation. Ejandra’s absence was justified because the Land Transportation Office
did not let go of his license until a week after. Ejandra never intended to break up his employment as he
reported for work every bit shortly as he got his license back. If Ejandra abandoned his work. R Transport should
hold reported such fact to the nearest Regional Office of the Department of Labor and Employment in
conformity with Section 7. Rule XXIII. Book V of Department Order No. 9. series of 1997.
2. Yes.
There was an empoyer employee relationship .
R Transportation maintained that private respondent was justifiably dismissed due to abandonment of work. By
adopting said rulings, R Transport impliedly admitted that it was in fact they are the employer of private
respondent Ejandra. According to the control test, the power to dismiss an employee is one of the indications of
an employer-employee relationship. 13 R Transport claim that private respondent was legally dismissed for
abandonment.14 An acknowledgement that there was no mutual termination of the alleged contract of lease and
that private respondent Ejandra was its employee. The fact that petitioner R Tranport paid private respondent

Ejandtra on commission basis did not rule out the presence of an employee-employer relationship. Article 97(f)
of the Labor Code clearly provides that an employees wages can be in the form of commissions.
3. No.
Ejandra was illegaly dismissed by his employer. It besides violated Ejandra’s right to procedural due by not giving
him the needed notice and hearing provided for in Section 2. Rule 23. Book 5 ( Rules Implementing Book V of the
Labor Code ).
(25)
ABANTE v. LAMADRID BEARING
[ G. R. No. 159890 May 28. 2004 ]
Facts:
Petitioner was a salesman of respondent company gaining a committee of 3 % of the sum paid up gross revenues
covering the whole country of Mindanao. Aside from selling. he was besides tasked with aggregation. Answering
corporation through its president. frequently needed Abante to describe to a peculiar country and on occasion
required him to travel to Manila to go to conferences.
Subsequently on. bad blood ensued between the parties due to some bad histories that Lamadrid forced
suppliant to cover. Later suppliant found out that respondent had informed his clients not to cover with
suppliant since it no longer recognized him as a committee salesman. Petitioner filed a ailment for illegal
dismissal with money claims against answering company and its president. Jose Lamadrid.
By manner of defence. respondents countered that suppliant was non its employee but a free-lance salesman on
committee footing.
Issue:
Whether or non petitioner. as a commissioned salesman is an employee of answering corporation.
HELD:
No, not an employee
To find the being of an employee-employer relationship. the SC applied the four fold trial: 1 ) the mode of choice
and battle ; ( 2 ) the payment of rewards ; ( 3 ) the presence or absence of the power of dismissal ; and ( 4 ) the
presence or absence of the power of control.
Using the aforesaid trial. an employer-employee relationship is notably absent in this instance. It is true that he
was paid in committee yet no quota was imposed hence a blue public presentation would non justify a land for
dismissal. There was no specific office hours he was required to detect. He was non designated to carry on
services at a peculiar country or clip. He pursued his merchandising without intervention or supervising from the
company. The company did non order the mode of selling ware. While he was sometimes required to describe to
P a g e | 23
Manila. these were merely intended to steer him. Furthermore. suppliant was free to offer his services to other
companies.
Art. 280 is non a important factor because it merely determines two sorts of employees. It doesn’t use where
there is no employer-employee relationship. While the term committee under Article 96 of the LC was construed
as being included in the term “wage” . There is no categorical dictum that the payment of committee is
conclusive cogent evidence of the being of an employee-employer relationship.
(26)
Dy Keh Beng v. ILMUP, GR No. L-32245, 23 May 1979 (De Castro, J.:)
G.R. No. L-32245 May 25, 1979
DE CASTRO, J.:
Facts:
Carlos N. Solano and Ricardo Tudla ( former employees) FILED unfair labor practice against Dy Keh Beng,
proprietor of a basket factory, for discriminatory acts for their union activities.
After preliminary investigation was conducted, a case was filed in the Court of Industrial Relations for in behalf of
the International Labor and Marine Union of the Philippines and two of its members, Solano and Tudla In his
answer, Dy Keh Beng contended that he did not know Tudla and that Solano was not his employee because the
Solano and Tulda came to the establishment only when there was work which he did on pakiaw basis, each piece
of work being done under a separate contract. Moreover, Dy Keh Beng countered with a special defense of
simple extortion committed by the head of the labor union, Bienvenido Onayan.chanroblesvirtu
After trial, the Hearing Examiner prepared a report which was subsequently adopted in toto by the Court of
Industrial Relations. An employee-employer relationship was found to have existed between Dy Keh Beng and
complainants Tudla and Solano, although Solano was admitted to have worked on piece basis. 4 
According to the Hearing Examiner, the evidence for the complainant Union tended to show that Solano and
Tudla became employees of Dy Keh Beng from May 2, 1953 and July 15, 1955, 5 respectively, and that except in
the event of illness, their work with the establishment was continuous although their services were
compensated on piece basis. Evidence likewise showed that at times the establishment had eight (8) workers
and never less than five (5); including the complainants, and that complainants used to receive ?5.00 a day.
sometimes less. 6chanrobles virtual law library
According to Dy Keh Beng, however, Solano was not his employee for the following reasons:
(1) Solano never stayed long enought at Dy's establishment; chanrobles virtual law library
(2) Solano had to leave as soon as he was through with the chanrobles virtual law library
 P a g e | 24

(3) order given him by Dy; chanrobles virtual law library
(4) When there were no orders needing his services there was nothing for him to do; chanrobles virtual law
library
(5) When orders came to the shop that his regular workers could not fill it was then that Dy went to his address
in Caloocan and fetched him for these orders; and chanrobles virtual law library
(6) Solano's work with Dy's establishment was not continuous. , 7chanrobles virtual law library
According to petitioner, these facts show that respondents Solano and Tudla are only piece workers, not
employees under Republic Act 875, where an employee 8  the employees concerned were receiving at the time of dismissal. The execution of this award is entrusted to the
Petitioner really anchors his contention of the non-existence of employee-employer relationship on the control
test.
At this juncture, it is worthy to note that Justice Perfecto, concurring with Chief Justice Ricardo Paras who
penned the decision in "Sunrise Coconut Products Co. v. Court of Industrial Relations" (83 Phil..518, 523), opined
that
judicial notice of the fact that the so-called "pakyaw" system mentioned in this case as generally practiced in our
country, is, in fact, a labor contract -between employers and employees, between capitalists and laborers.
Dispositive Portion:
WHEREFORE; the award of backwages granted by the Court of Industrial Relations is herein modified to an
award of backwages for three years without qualification and deduction at the respective rates of compensation
National Labor Relations Commission. Costs against petitioner.chanroblesvirtualawlibrary chanrobles virtual law
library

Petitioner contends that the private respondents "did not meet the control test in the fight of the ... definition of
the terms employer and employee, because there was no evidence to show that petitioner had the right to
direct the manner and method of respondent's work. 10 Moreover, it is argued that petitioner's evidence
showed that "Solano worked on a pakiaw basis" and that he stayed in the establishment only when there was (27)
work.chanroblesvirtualawlibrary chanrobles virtual law library
PHILIPPINE REFINING CO., INC.  vs. COURT OF APPEALS
While this Court upholds the control test 11 under which an employer-employee relationship exists "where the
person for whom the services are performed reserves a right to control not only the end to be achieved but also G.R. No. L-29590 September 30, 1982
the means to be used in reaching such end, " it finds no merit with petitioner's arguments as stated above.
GUTIERREZ, JR., J.:
Issues: Whether or not there is an employer and employee relationship between Dy Keh Band with Solano and
Tudla.
Facts:
RULING:
The Philippine Refining Company is engaged in the business of extracting and refining oil from copra and using
Yes, there is an employer- employee relationship.
the refined oil in the manufacture of various products.
 12Considering the finding by the Hearing Examiner that the establishment of Dy Keh Beng is "engaged in the
Respondent Vicente Garcia started working for the company in 1922 as a copra carrier. In 1931, he was
manufacture of baskets known as kaing, 13it is natural to expect that those working under Dy would have to
promoted to foreman with 21 or 22 men working under him. By 1948, these men were employed under pakiao
observe, among others, Dy's requirements of size and quality of the kaing. Some control would necessarily be
arrangements but the company paid the workers directly and the function of their foreman insofar as wages
exercised by Dy as the making of the kaing would be subject to Dy's specifications. Parenthetically, since the
were concerned was to distribute the money. In 1955, the pakiao arrangement were formalized in writing
work on the baskets is done at Dy's establishments, it can be inferred that the proprietor Dy could easily exercise
through a series of written agreement and Garcia, the former copra carrier and foremen, was given the authority
control on the men he employed.chanroblesvirtualawlibrary chanrobles virtual law library
to choose and hire the men to do the work assigned to him. Instead of the company paying the workers directly
As to the contention that Solano was not an employee because he worked on piece basis, this Court agrees with with Garcia merely distributing their wages, the work was compensated on a volume basis at so many centavos
the Hearing Examiner that per metric ton handled by all of them in the various phases of the job - receipt, storage, and distribution of copra
- with the money being given to Garcia.
circumstances must be construed to determine indeed if payment by the piece is just a method of compensation
and does not define the essence of the relation. Units of time ... and units of work are in establishments like The work of the 22 laborers represented by the respondent union is an essential, permanent and indispensable
respondent (sic) just yardsticks whereby to determine rate of compensation, to be applied whenever agreed process in the business of the petitioner company. It is not an incidental or one time operations such as
upon. We cannot construe payment by the piece where work is done in such an establishment so as to put the construction a company facility or repairing a plant or machinery where the workers' job ends upon completion
worker completely at liberty to turn him out and take in another at pleasure. of the project. Copra is the basic raw material in the manufacture of lard, cooking oil, soap, and various other

products of the employer company and its handling, storage, and distribution are an integral part of company
operations.
When the Social Security Act was implemented on September 1, 1957 and up to April 27, 1961 when the
respondent Labor union filed a petition for compulsory coverage with the Social Security Commission, the
Philippine Refining Commission took no steps to report the 22 workers to the SSS for coverage in the belief the
Vicente Garcia was an independent contractor and the workers he employed pursuant to the pakiao agreement
were his own employees for whom the company was not accountable in any manner.
The argument of the petitioner and the findings of the Social Security Commission are summarized by the Court
of Appeals as follows:
The Philippine Refining Company contends that the petitioners are not its laborers, because:
1. It did not select, much less hire them.
2. Vicente Garcia pays their wages.
3. Vicente Garcia has control and supervision over them.
4. They do not have any service record on file with the company.
5. They are not in the payrolls of the company.
6. They are not members of the union with whom the company had entered into a collective
bargaining.
On the other hand, the Social Security Commission maintains that:
1. Vicenta Garcia is not a bona fide contractor; he cannot carry on the burden of social security.
2. He is subject to the control of the company as to result.
3. He has no investment of his own; he assumes no risk of loss.
4. He merely sells his labor to the company.
5. The equipment used by the petitioners belong to the company.
6. He collects from the company the salary of petitioners.
7. The service rendered constitutes an integral part of the business operation of the company.
8. He services nobody but the company.
The grounds for this petition are:
First. —
P a g e | 25
That the finding of the respondent Court of Appeals that an employer-employee relationship exists between the
petitioner and Vicente Garcia and his workers, notwithstanding the intervention of said Vicente Garcia as an
independent contractor is contrary to the law and the evidence;
However, all of the above is behind us now. All major employers have accepted the fact, if not the wisdom, of
social security. Protection and compulsory coverage through successive amendments to the 'law, have become
more and more universal while benefit payment have increased. The Constitution now mandates in Article II,
Section 7 that "The State shall establish, maintain, and ensure adequate social services in the field of .... social
security to guarantee the enjoyment by the people of a decent standard of living."
There is a strong presumption in favor of greater coverage and protection.
At the same time, the possibility that a company may use bona fide independent contractors to undertake
certain projects or to furnish certain requirements of its business is not entirely discounted. In ascertaining
whether or not an intervening employer is a bona fide independent contractor who bears the obligation of
registering his workers and paying the employer's share of the SSS premium contributions, We have applied the
"control" test. (Social Security System vs. Court of Appeals, 39 SCRA 629).
Under the control test, We ascertain whether the employer controls or has reserved the right to control the
employee not only as to the result of the work to be done but also as to the means and methods by which the
same is accomplished. (Investment Planning Corporation vs. Social Security System, 21 SCRA 924; Social Security
System vs. Court of Appeals, 30 SCRA 210).
ISSUE:
Whether or not there is an empoyer – employee relationship between Garcia and his employees with Philippine
Refining Co.
RULING:
Yes, there is an empoyer – employee relationship between Garcia and his employees with Philippine Refining Co.
We affirm the factual findings of the Social Security Commission, sustained by the Court of Appeals.
Copra is the basic raw material of the petitioner-appellant's business. The company must have, and the facts
show that it has, positive and direct control over the handling of copra immediately prior to its being fed into the
manufacturing process. The conveyor is owned by the company. The load it may carry and the time and manner
of its operation are controlled by the appellant. A company employee ordered the supposed independent
contractor where to store copra, when to bring out copra, how much to load and where, and what class of copra
to handle. The appellant limited the number of workers which Mr. Garcia could hire to assure that statutory
minimum wages were paid from the lump sum payments, given for the "pakiao " work. Mr. Garcia had no office
of his own. He had no independent funds to pay the men working under him. He could not work for any other
company but was completely dependent on the appellant. Mr. Vicente Garcia denies that he is an independent
contractor. The control test is more than satisfactorily met.
Dispositive Portion:

WHEREFORE, the petition is hereby dismissed for lack of merit. The September 12, 1968 decision of the Court of
Appeals is affirmed with costs against the petitioner-appellant.
(28)
JO,  vs. NATIONAL LABOR RELATIONS COMMISSION
G.R. No. 121605           February 2, 2000
QUISUMBING, J.:
Facts:
Private respondent Peter Mejila worked as barber on a piece rate basis at Dina's Barber Shop. In 1970, the
owner, Dina Tan, sold the barbershop to petitioners Paz Martin Jo and Cesar Jo. All the employees, including
private respondent, were absorbed by the new owners. The name of the barbershop was changed to Windfield
Barber Shop.
The owners and the barbers shared in the earnings of the barber shop. The barbers got two-thirds (2/3) of the
fee paid for every haircut or shaving job done, while one-third (1/3) went to the owners of the shop.
In 1977, petitioners designated private respondent as caretaker of the shop because the former caretaker
became physically unfit. Private respondent's duties as caretaker, in addition to his being a barber, were: (1) to
report to the owners of the barbershop whenever the airconditioning units malfunctioned and/or whenever
water or electric power supply was interrupted, (2) to call the laundry woman to wash dirty linen; (3) to
recommend applicants for interview and hiring; (4) to attend to other needs of the shop. For this additional job,
he was given an honorarium equivalent to one-third (1/3) of the net income of the shop.1âwphi1.nêt
When the building occupied by the shop was demolished in 1986, the barbershop closed. But soon a place
nearby was rented by petitioners and the barbershop resumed operations as Cesar's Palace Barbershop and
Massage Clinic. In this new location, private respondent continued to be a barber and caretaker, but with a fixed
monthly honorarium as caretaker, to wit: from February 1986 to 1990 — P700; from February 1990 to March
1991 — P800; and from July 1992 P1,300.
In November 1992, private respondent had an altercation with his co-barber, Jorge Tinoy. The bickerings,
characterized by constant exchange of personal insults during working hours, became serious so that private
respondent reported the matter to Atty. Allan Macaraya of the labor department. The labor official immediately
summoned private respondent and petitioners to a conference. Upon investigation, it was found out that the
dispute was not between private respondent and petitioners (employer – employee); rather, it was between the
former and his fellow barber. Accordingly, Atty. Macaraya directed petitioners' counsel, Atty. Prudencio Abragan,
to thresh out the problem.
During the mediation meeting held at Atty. Abragan's office a new twist was added. Despite the assurance that
he was not being driven out as caretaker-barber, private respondent demanded payment for several thousand
pesos as his separation pay and other monetary benefits. In order to give the parties enough time to cool off,
Atty. Abragan set another conference but Mejila did not appear in such meeting anymore.
P a g e | 26
Meanwhile, private respondent Mejila continued reporting for work at the barbershop. But, on January 2, 1993,
he turned over the duplicate keys of the shop to the cashier and took away all his belongings therefrom. On
January 8, 1993, he began working as a regular barber at the newly opened Goldilocks Barbershop also in Iligan
City.
On January 12, 1993, private respondent filed a complaint2 for illegal dismissal with prayer for payment of
separation pay, other monetary benefits, attorney's fees and damages. Significantly, the complaint did not seek
reinstatement as a positive relief.
In a Decision dated June 15, 1993, the Labor Arbiter found that private respondent was an employee of
petitioners, and that private respondent was not dismissed but had left his job voluntarily because of his
misunderstanding with his co-worker.3 The Labor Arbiter dismissed the complaint, but ordered petitioners to
pay private respondent his 13th month pay and attorney's fees.
Both parties appealed to the NLRC. In a Decision dated November 21, 1994, it set aside the labor arbiter's
judgment.
The NLRC sustained the labor arbiter's finding as to the existence of employer-employee relationship between
petitioners and private respondent, but it ruled that private respondent was illegally dismissed. Hence, the
petitioners were ordered to reinstate private respondent and pay the latter's backwages, 13th month pay,
separation pay and attorney's fees, thus:
Petitioners contend that public respondent gravely erred in declaring that private respondent was their
employee. They claim that private respondent was their "partner in trade" whose compensation was based on a
sharing arrangement per haircut or shaving job done. They argue that private respondent's task as caretaker
could be considered an employment because the chores are very minimal.
Issues:
1. Whether or not there exists an employee-employee relationship between petitioners and private respondent.
2. Whether or not private respondent was dismissed from or had abandoned his employment.
Ruling:
In determining the existence of an employer-employee relationship, the following elements are considered:
(1) the selection and engagement of the workers;
(2) power of dismissal;
(3) the payment of wages by whatever means; and
(4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration. The
power of control refers to the existence of the power and not necessarily to the actual exercise thereof. It is not
essential for the employer to actually supervise the performance of duties of the employee; it is enough that the
employer has the right to wield that power.6

Absent a clear showing that petitioners and private respondent had intended to pursue a relationship of
industrial partnership, the SC entertain no doubt that private respondent was employed by petitioners as
caretaker-barber. Initially, petitioners, as new owners of the barbershop, hired private respondent as barber by
absorbing the latter in their employ. Undoubtedly, the services performed by private respondent as barber is
related to, and in the pursuit of the principal business activity of petitioners. Later on, petitioners tapped private
respondent to serve concurrently as caretaker of the shop. Certainly, petitioners had the power to dismiss
private respondent being the ones who engaged the services of the latter. In fact, private respondent sued
petitioners for illegal dismissal, albeit contested by the latter.
As a caretaker, private respondent was paid by petitioners wages in the form of honorarium, originally, at the
rate of one-third (1/3) of the shop's net income but subsequently pegged at a fixed amount per month. As a
barber, private respondent earned two-thirds (2/3) of the fee paid per haircut or shaving job done. Furthermore,
the following facts indubitably reveal that petitioners controlled private respondent's work performance, in that:
(1) private respondent had to inform petitioners of the things needed in the shop; (2) he could only recommend
the hiring of barbers and masseuses, with petitioners having the final decision; (3) he had to be at the shop at
9:00 a.m. and could leave only at 9:00 p.m. because he was the one who opened and closed it, being the one
entrusted with the key.7 These duties were complied with by the private respondent upon instructions of
petitioners. Moreover, such task was far from being negligible as claimed by petitioners. On the contrary, it was
crucial to the business operation of petitioners as shown in the preceding discussion. Hence, there was enough
basis to declare private respondent an employee of petitioners.
Accordingly, there is no cogent reason to disturb the findings of the labor arbiter and NLRC on the existence of
employer-employee relationship between herein private parties.
With regard to the second issue, jurisprudence has laid out the rules and valid ground for termination of
employment. To constitute abandonment, there must be concurrence of the intention to abandon and some
overt acts from which it may be inferred that the employee concerned has no more interest in working.8 In
other words, there must be a clear, deliberate and unjustified refusal to resume employment and a clear
intention to sever the employer-employee relationship on the part of the employee.9
In the case at bar, the labor arbiter was convinced that private respondent was not dismissed but left his work
on his own volition because he could no longer bear the incessant squabbles with his co-worker. Nevertheless,
public respondent did not give credence to petitioners' claim that private respondent abandoned his job. On this
score, public respondent gravely erred as hereunder discussed.
At the outset, we must stress that where the findings of the NLRC contradict those of the labor arbiter, the
Court, in the exercise of its equity jurisdiction, may look into the records of the case and reexamine the
questioned findings.10
In this case, the following circumstances clearly manifest private respondent's intention to sever his ties with
petitioners. First, private respondent even bragged to his co-workers his plan to quit his job at Cesar's Palace
Barbershop and Massage Clinic as borne out by the affidavit executed by his former co-workers.11 Second, he
surrendered the shop's keys and took away all his things from the shop. Third, he did not report anymore to the
shop without giving any valid and justifiable reason for his absence. Fourth, he immediately sought a regular
employment in another barbershop, despite previous assurance that he could remain in petitioners'
employ. Fifth, he filed a complaint for illegal dismissal without praying for reinstatement.
P a g e | 27
Moreover, public respondent's assertion that the institution of the complaint for illegal dismissal manifests
private respondent's lack of intention to abandon his job12 is untenable. The rule that abandonment of work is
inconsistent with the filing of a complainant for illegal dismissal is not applicable in this case. Such rule applies
where the complainant seeks reinstatement as a relief. Corollarily, it has no application where the complainant
does not pray for reinstatement and just asks for separation pay instead13 as in the present case. It goes
without saying that the prayer for separation pay, being the alternative remedy to reinstatement,14 contradicts
private respondent's stance. That he was illegally dismissed is belied by his own pleadings as well as
contemporaneous conduct.
We are, therefore, constrained to agree with the findings of the Labor Arbiter that private respondent left his job
voluntarily for reasons not attributable to petitioners. It was error and grave abuse of discretion for the NLRC to
hold petitioners liable for illegal dismissal of private respondent.
Dispositive Portion:
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of public respondent NLRC are
reversed and set aside. The decision of the Labor Arbiter dated June 15, 1993, is hereby reinstated. No costs.
(29)
Great Pacific Life v. Judico
G.R. No. 73887, December 21, 1989
Second Division
Paras J.:
Facts:
Great Pacific Life Assurance Corp. (Grepalife) admits that on June 9, 1976, Honorato Judico entered into an
agreement of agency with Grepalife to become a debit agent attached to the industrial life agency in Cebu City.
Grepalife defines a debit agent as "an insurance agent selling/servicing industrial life plans and policy holders.
Industrial life plans are those whose premiums are payable either daily, weekly or monthly and which are
collectible by the debit agents at the home or any place designated by the policy holder.
Grepalife argues that Judico's compensation was not based on any fixed number of hours he was required to
devote to the service of Grepalife company but rather it was the production or result of his efforts or his work
that was being compensated and that the so-called allowance for the first thirteen weeks that Judico worked as
debit agent, cannot be construed as salary but as a subsidy or a way of assistance for transportation and meal
expenses of a new debit agent during the initial period of his training which was fixed for thirteen (13) weeks.
Grepalife contends that Judico's compensation, in the form of commissions and bonuses, was based on actual
production, (insurance plans sold and premium collections).
Grepalife contentions of Judico are strongly rejected by Judico himself. Judico maintains that he received a
definite amount as his Wage known as "sales reserve" the failure to maintain the same would bring Judico back
to a beginner's employment with a fixed weekly wage of P 200.00 regardless of production. Judico was assigned
a definite place in the office to work on when he is not in the field; and in addition to canvassing and making

regular reports, Judico was burdened with the job of collection and to make regular weekly report thereto for
which an anemic performance would mean dismissal. Judico earned out of his faithful and productive service, a
promotion to Zone Supervisor with additional supervisor's allowance, (a definite or fixed amount of P110.00)
that he was dismissed primarily because of anemic performance and not because of the termination of the
contract of agency substantiate the fact that he was indeed an employee of the petitioner and not an insurance
agent in the ordinary meaning of the term.
Both parties appealed to the NLRC when a decision was rendered by the Labor Arbiter dismissing the complaint
on the ground that the employer-employee relations did not exist between the parties but ordered Grepalife to
pay complainant the sum of Pl,000.00 by reason of Christian Charity.
On appeal, said decision was reversed by the NLRC ruling that complainant is a regular employee as defined
under Art. 281 of the Labor Code and declaring the appeal of Grepalife questioning the legality of the payment
of Pl,000.00 to complainant moot and academic. Such admission is in line with the findings of the NLRC that as
such debit agent, Judico had definite work assignments including but not limited to collection of premiums from
policy holders and selling insurance to prospective clients. The NLRC also found out that Judico was initially paid
Php 200. 00 as allowance for thirteen (13) weeks regardless of production and later a certain percentage
denominated as sales reserve of his total collections but not lesser than P 200.00. Sometime in September 1981,
Judico was promoted to the position of Zone Supervisor and was given additional (supervisor's) allowance fixed
at P110.00 per week. During the third week of November 1981, Judico was reverted to his former position as
debit agent but, for unknown reasons, not paid so-called weekly sales reserve of at least P 200.00. Finally on
June 28, 1982, Judico was dismissed by way of termination of his agency contract.
Petitioner Honorato Judico filed a complaint for illegal dismissal against Grepalife, a duly organized insurance
firm, before the NLRC. Said complaint prayed for award of money claims consisting of separation pay, unpaid
salary and 13th month pay, refund of cash bond, moral and exemplary damages and attorney's fees.
Issue:
Whether employer-employee relationship existed between petitioner Grepalife and private respondent Judico.
Ruling:
Yes.
There was employer-employee relationship between Grepalife and Judico. That Judico was an agent of the
petitioner is unquestionable. But, the Supreme Court have held in Investment Planning Corp. vs. SSS, 21 SCRA
294, an insurance company may have two classes of agents who sell its insurance policies: (1) salaried
employees who keep definite hours and work under the control and supervision of the company; and (2)
registered representatives who work on commission basis. The agents who belong to the second category are
not required to report for work at anytime, they do not have to devote their time exclusively to or work solely
for the company since the time and the effort they spend in their work depend entirely upon their own will and
initiative; they are not required to account for their time nor submit a report of their activities; they shoulder
their own selling expenses as well as transportation; and they are paid their commission based on a certain
percentage of their sales. One salient point in the determination of employer-employee relationship which
cannot be easily ignored is the fact that the compensation that these agents on commission received is not paid
by the insurance company but by the investor (or the person insured). After determining the commission earned
by an agent on his sales the agent directly deducts it from the amount he received from the investor or the
person insured and turns over to the insurance company the amount invested after such deduction is made. The
test therefore is whether the "employer" controls or has reserved the right to control the "employee" not only
P a g e | 28
as to the result of the work to be done but also as to the means and methods by which the same is to be
accomplished.
Applying the aforementioned test to the case at bar, the Supreme Court can readily see that the element of
control by the petitioner Grepalife on private respondent Judico was very much present. The record shows that
Judico received a definite minimum amount per week as his wage known as "sales reserve" wherein the failure
to maintain the same would bring him back to a beginner's employment with a fixed weekly wage of P 200.00
for thirteen weeks regardless of production. Judico was assigned a definite place in the office to work on when
he is not in the field; and in addition to his canvassing work he was burdened with the job of collection. In both
cases he was required to make regular report to the company regarding these duties, and for which an anemic
performance would mean a dismissal. Conversely faithful and productive service earned him a promotion to
Zone Supervisor with additional supervisor's allowance, a definite amount of P110.00 aside from the regular P
200.00 weekly "allowance". Furthermore, his contract of services with petitioner Grepalife is not for a piece of
work nor for a definite period.
On the other hand, an ordinary commission insurance agent works at his own volition or at his own leisure
without fear of dismissal from the company and short of committing acts detrimental to the business interest of
the company or against the latter, whether he produces or not is of no moment as his salary is based on his
production, his anemic performance or even dead result does not become a ground for dismissal. Whereas, in
private respondent's case, the undisputed facts show that he was controlled by petitioner insurance company
not only as to the kind of work; the amount of results, the kind of performance but also the power of dismissal.
Undoubtedly, private respondent Judico, by nature of his position and work, had been a regular employee of
petitioner Grepalife and is therefore entitled to the protection of the law and could not just be terminated
without valid and justifiable cause.
TOPIC: “Whole Economic Activity”/ “Totality of Economic Circumstances” Test
(30)
FRANCISCO vs. NLRC
G.R. No. 170087, August 31, 2006
First Division
Ynares-Santiago, J.
Facts:
Petitioner was hired by Kasei Corporation as a Corporate Secretary and later on performed the duties of a
manager. She was replaced by Liza Fuentes but the company assured that she will still be connected with the
corporation as Technical assistant Her salary was reduced and she was not paid a mid-year bonus allegedly
because the company is not earning well. She made repeated follow-ups with the company cashier but she was
advised that the company is still not earning well. On October 15, 2001, petitioner asked for her salary from
Acedo and the rest of the officers but she was informed that she is no longer connected with the company. As a
result, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter.
Private respondents alleged that petitioner is not an employee of Kasei Corporation and her designation as
technical consultant depended solely upon the will of management. As such, her consultancy may be terminated
any time considering that her services were only temporary in nature and dependent on the needs of the
corporation.

The Labor Arbiter decided in favor of petitioner and ruled that the latter was illegally dismissed. NLRC affirmed
the decision while CA reversed it.
ISSUE: WON employer-employee relationship exists so as to prove that the petitioner was illegally dismissed
HELD: YES
The court held that in this jurisdiction, there has been no uniform test to determine the existence of an
employer-employee relation Generally, courts have relied on the so-called right of control test where the person
for whom the services are performed reserves a right to control not only the end to be achieved but also the
means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic
conditions prevailing between the parties, like the inclusion of the employee in the payrolls, can help in
determining the existence of an employer-employee relationship. The better approach would therefore be to
adopt two-tiered test involving: (1) the putative employer's power to control the employee with respect to the
means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the
activity or relationship
The determination of the relationship between employer and employee depends upon the circumstances of the
whole economic activity, such as: (1) the extent to which the services performed are an integral part of the
employer's business, (2) the extent of the worker's investment in equipment and facilities; (3) the nature and
degree of control exercised by the employer (4) the worker's opportunity for profit and loss; (5) the amount of
initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7) the degree of
dependency of the worker upon the employer for his continued employment in that line of business. The proper
standard of economic dependence is whether the worker is dependent on the alleged employer for his
continued employment in that line of business. By applying the control test, there is no doubt that petitioner is
an employee of Kasel Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporation's Technical Consultant. It is therefore apparent that petitioner is economically dependent on
respondent corporation for her continued employment in the latter's line of business. Under the broader
economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because
she had served the company for six years before her dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and allowances, well as deductions and Social Security
contributions from August 1, 1999 to December 18, 2000. When petitioner was designated General Manager,
respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioner's membership in the SSS
as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei
Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent corporation.
NON-SUSPENSION OF EMPLOYER-EMPLOYEE RELATIONSHIP
(31)
Manila Hotel Company v. Court of of Industrial Relations
G.R. No. L-18873, September 30, 1963
En Banc
Bautista, Angelo, J.
Facts:
P a g e | 29
A petition before the Court of Industrial Relations was filed by the Pines Hotel Employees Association praying,
among other things, that its employees who were working at the Pines Hotel be paid additional compensation
for overtime services rendered due to the exigencies of the business, as well as additional compensation for
Sunday, legal holiday and night time work. The Manila Hotel in its answer denied the material averments of the
petition and alleged that if overtime services rendered were unauthorized and voluntary for the employees were
interested in the “tips” offered by the patrons of the hotel.
After the trial, judgment was promulgated in favor of the employees for they were entitled to compensation,
including that for overtime work even if he rendered such service without prior authority. A motion for
reconsideration was filed on the ground that the order was contrary to law and the evidence, but the same was
denied by the Industrial Court en banc.
In compliance with the order of the court, the Examining Division submitted a report in which it stated the
amount due to the employees. The management filed its objection for the report included 22 names of
employees who were not employees of the Pines Hotel at the time the petition was filed. The trial judge,
however, overruled this objection holding that, while the 22 employees were actually not in the service at the
time of the filing of the petition, they were however subsequently employed during the pendency of the
incident, and so their claims comes within the jurisdiction of the Court of Industrial Relations.
Issue:
Are the 22 employees listed in the report entitled to the money claims even if their names are not included in
the list during the petition was filed?
Ruling::
Yes.
While it is true that the 22 employees whose claim is objected to were not actually in their service at the time
the instant petition was filed, they were however subsequently re-employed even while the present incident
was pending consideration by the trial court. Moreover, it appears that the questioned employees were never
separated from the service. Their status is that of regular seasonal employees who are called to work from time
to time, mostly during summer season. They are not strictly speaking separated from the services but are merely
considered as on leave of absence without pay until they are re- employed. Their employment relationship is
never severed but only suspended. As such, these employees can be considered as in the regular employment of
the hotel.
(32)
Industrial Commercial Agricultural Workers Organization (Icawo) v.
Court of Industrial Relations (CIR), Azucarera De Pilar
G.R. No. L-21465, 31 March 1966
En Banc
Reyes, J.B.L., J.:
Facts:

On 9 February 1956, the petitioner, ICAWO, declared a strike against the respondent Central Azucarera de Pilar.
Among the strikers were 101 seasonal workers, some of whom have worked as such for the company since pre-
war years.
On the opening of the milling season for the year 1956-1957, the respondent company refused to re-admit these
101 seasonal workers of the ICAWO on the ground that it was precluded by the closed-shop clause in its
collective bargaining agreement with the CAPAWA entered into in 1955.
On 8 May 1958, the ICAWO filed an unfair labor practice charge against the company. The Court of Industrial
Relations, in its decision dated 27 November 1961, ordered the reinstatement, with back wages, of these
laborers; but on a motion for reconsideration, the said court, en banc, reversed the said decision in its resolution
dated 13 August 1962.
The status of the seasonal workers was questioned with petitioner maintaining that they are regular workers
and old employees, while respondents contended that their employment ceased at the end of each milling
season.
Issue:
Whether the CIR’s reversal of its decision in a resolution is merited.
Ruling:
No.
Private respondent took notice of the case of Hind Sugar Company vs CIR L-13364, 26 July 1960, but the Court
did not consider it authoritative enough because it did not rule on the temporary character of seasonal workers,
in this case, the plight of the strikers.
The Court took cognizance of Manila Hotel Company vs CIR L-18873 30 September 1963 where it declared the
workers are not, strictly speaking, separated from the service but are merely considered as on leave of absence
without pay until they are recalled for employment, in essence the employee relationship was not severed but
only suspended. The suspension of work has always been foreseeable that there would be no compensation and
that during the temporary layoff laborers were free to seek other employment but always anticipating re-
employment once the milling season starts.
The Court reached a conclusion that petitioners are not new workers within the scope of the closed shop clause
in its collective bargaining agreement between the sugar central and the union.
The resolution under review was set aside and the court of origin directed to reinstate the seasonal workers to
their former positions.
(33)
Philippine Fishing Boat Officers v. CIR
P a g e | 30
G.R. No. L-30592, 25 February 1982
FIRST DIVISION
TEEHANKEE, J.
Facts:
Respondent San Diego Fishery Enterprises, Inc. is a domestic corporation engaged in deep-sea fishing and
respondents Bartolome A. San Diego and Anatolio Llido are the manager and an employee thereof while
petitioners Philippine Fishing Boat Officers and Engineers Union and Samahan ng Mangdaragat sa Filipinas are
duly registered labor unions. Petitioners Francisco Visayas and Ambrocio Bergado were the President and
Treasurer, respectively, of the first named union. The Philippine Fishing Boat Officers and Engineers Union is
composed of officers and engineers, while Samahan ng Mangdaragat sa Filipinas is composed of crew members,
in the employ of respondent corporation.
On charges instituted by herein petitioners, the prosecution staff of respondent court, after conducting a
preliminary investigation filed a complaint for unfair labor practices against herein respondents. The complaint
shows that petitioners unions sent letters of demands and proposals to respondent corporation on May 6, 1958
and June 12, 1958 but respondent corporation failed to answer the said letters within the reglementary period
as provided for in Section 14 of Republic Act No. 875 and also refused to talk with representatives of petitioners-
unions. It also appears that on May 9, 1958, respondent corporation, through its manager Bartolome A. San
Diego dismissed petitioners Visayas and Bergado because of their union activities and their refusal to resign from
the Philippine Fishing Boat Officers and Engineers Union and join the union being organized by respondents San
Diego and Llido. Consequently, on or about June 24, 1958, petitioners unions declared a strike.
In their answer, respondents denied all the substantial allegations of the complaint and maintained that
complainants do not constitute representative groups for collective bargaining purposes and therefore the strike
declared by the employees was not legal. Respondents likewise denied that petitioners Visayas and Bergado
were employees of the corporation.
What transpired during the hearing of the case can well be seen from the appealed decision. Petitioners
introduced evidence that Visayas and Bergado had continuously been employed by respondent San Diego
Fishery Enterprises, Inc. since April 1952 and September 1956, respectively. In the course of their employment,
they joined the Philippine Fishing Boat Officers and Engineers Union and were duly elected, respectively, as its
vice-president and treasurer. On May 6. 1958 and June 12, 1958, petitioners-unions sent letters of demand to
respondent corporation which remained unanswered inspite of the lapse of the reglementary period provided in
Section 14, Republic Act 8 5. Sometime thereafter, respondent San Diego, with the cooperation and assistance of
Llido started gathering information on the employees' affiliations with the two complaining unions. This was
heightened when on May 8 and 9, 1958 respondent San Diego allegedly called into his office petitioners Visayas
and Bergado and interrogated, coerced and required them to resign from their union and to cooperate with the
company by joining the union being organized by respondents San Diego and Llido. When they refused to heed
the demands of the management, Visayas and Bergado were dismissed. As an offshoot of their dismissal, the
two unions staged a strike and threw, picketlines in the premises of the respondent corporation.
Issue:

Whether or not there is no employer-employee relationship between petitioners Visayas and Bergado and the
company in view of the peculiar feature of the fishing industry.
Ruling:
Yes.
It is settled that tenure of employment is not considered as the test of employment. All that is required is hiring.
1
For it not the continuity of employment that renders the employer responsible, but whether the work of the
laborer is part of the regular business or occupation of the employer. 2 In the case at bar, the employer-
employee relationship is merely suspended during the time the vessels are dry docked or undergoing repairs or
being loaded with the necessary provisions for the next fishing trip. All these activities form part of the regular
operation of the company's fishing business. Thus, in the analogous case of Manila Hotel Co. vs. CIR, 3 the Court
held that:
Where the nature of the employees' relationship with the hotel is such that during off season they are
temporarily laid off and during summer season they are reemployed, or their services may be needed, their
status is that of regular seasonal employees. They are not strictly speaking separated from the service but are
merely on leave of absence without pay until they are reemployed. Their employment relationship is never
severed but merely suspended As such these employees can be considered as in the regular employment of the
hotel .
The temporary suspension of the business due to some foreseeable events, say, the scarcity of ice for the fishing
trips or when the fishing vessels cannot go out to sea due to repairs or strong typhoons does not sever the
employer-employee relationship between the parties. Under similar circumstances, the Court likewise held in
Industrial Commercial-Agricultural Worker's Organization vs. CIR, 4 that:
... The cessation of the Central's milling activities at the end of the season is certainly not permanent or
definitive; it is a foreseeable suspension of work, and both Central and laborers reason to expect that such
activities will be resumed, as they are in fact resumed, when sugar cane ripe for milling is available. There is,
therefore, merely a temporary cessation of the manufacturing process due to passing shortage of raw materials
that by itself alone, is not sufficient, in the absence of other justified reasons, to sever the employment or labor
relationship between the parties, since the shortage is not permanent. The proof of this assertion is the
undenied fact that many of the petitioner members of the ICAWO Union have been laboring for the Central, and
reengaged for many seasons without interruption. Nor does the Central interrupt completely its operations in
the interval between milling seasons; the office and sales force are maintained, precisely because operations are
to be later resumed.
That during the temporary layoff the laborers are considered free to seek other employment is natural, since the
laborers are not being paid, yet must find means of support. A period during which the Central is forced to
suspend or cease operation for a time (whether by reason of lack of cane or by some accident to its machinery)
should not mean starvation for employees and their families. Of course, the stopping of the milling at the end of
the season, and before the next sugar crop is ready, being regular and foreseen by both parties to the labor
relation, no compensation is expected nor demanded during the seasonal layoff.
The Court holds, therefore, that the employer- employee relationship existed between the parties
notwithstanding evidence to the fact that petitioners Visayas and Bergado, even during the time that they
worked with respondent company alternated their employment on different vessels when they were not
assigned on the company's vessels. For, as was stressed in the above-quoted case of Industrial-Commercial-
P a g e | 31
Agricultural Workers Organization vs. CIR, "that during the temporary layoff the laborers are considered free to
seek other employment is natural, since the laborers are not being paid, yet must find means of support" and
such temporary cessation of operations "should not mean starvation for employees and their families." The fact
that on the date of the individuals petitioners dismissal on May 9, 1958, they were not on board any of the
company's fishing vessels does not exonerate respondents from the charge of unjust dismissal.
It was shown that at the time of the dismissal of said petitioners Visayas and Bergado, respondent San Diego was
not the general manager of the corporation. The power to hire and dismiss employees was then exercised by
Enrique Diaz, who approved or disapproved contracts of employment as acting general manager of respondent
corporation. Respondent court ruled that even assuming that respondents San Diego and Llido coerced the
officers and engineers regarding their union affiliations under threat of dismissal, no evidence existed to warrant
a conclusion that San Diego was acting for and in behalf of respondent firm as an employer. Respondent court
thus ruled that since respondent San Diego was not, at the time of petitioners' dismissal, the general manager
and president of respondent corporation but merely a stockholder, he had no power to hire and dismiss
employees and any act imputed to him, even if assumed to be true, could not bind the corporation. Whatever be
the case, the Court has found the dismissal of petitioners to be unjustified, and it is not San Diego nor Diaz who
are herein held personally liable but respondent corporation itself as the employer.
Moreover, respondent corporation is undeniably a family corporation and Bartolome A. San Diego is one of the
incorporators and directors. In Emilio Cano Enterprises, Inc. vs. CIR, 5 the Court ruled that where the
incorporators and directors belong to a single family, the corporation and its members can be considered as one
in order to avoid its being used as an instrument to commit injustice, and held that —
A judgment of unfair labor practice rendered against two individuals in their capacity as officials of the
corporation may be made against the property of said corporation, notwithstanding the fact that the
corporation was not a partv to the unfair labor practice charged, it appearing that the corporation is a closed
family corporation where the incorporators and directors belong to a single family. This is an instance where the
corporation and its members can be considered, and to hold such entity liable for the acts of its members is not
to ignore the legal fiction but merely to give meaning to the principle that such fiction cannot be invoked if it is
used as a shield to further an end subversive of justice.
The fact that the hiring and dismissal of employees was exercised by Enrique Diaz, the acting general manager of
respondent corporation, does not alter the employer-employee relationship between the parties and mean that
he personally was the employer. It is obvious that respondent corporation is the statutory employer of
petitioners. 6 The intervention of Enrique Diaz, in this case, was merely that of an agent or intermediary between
the owner of the fishing boat and the members of its crew. In short, Diaz was merely the person charged by
respondent corporation to recruit its officers and crew members to work on its vessels in pursuance of its regular
fishing business.
APPLICABILITY AND NON-APPLICABILITY
EMPLOYEES OF GOVERNMENT CORPORATIONS CREATED BY SPECIAL OR ORIGINAL CHARTER
(34)
National Service Corporation (NASECO) v.
National Labor Relations Commission (NLRC)
G.R. No. L-69870, November 29, 1988

En Banc
Padilla, J.:
Facts:
Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic corporation which
provides security guards as well as messengerial, janitorial and other similar manpower services to the Philippine
National Bank (PNB) and its agencies. She was first employed with NASECO as a lady guard. Through the years,
she was promoted to Clerk Typist, then Personnel Clerk until she became Chief of Property and Records.  original charter which is not covered by the Civil Service rules and regulations.
Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren, Manager of Finance
and Special Project and Evaluation Department of NASECO, because Credo’s non-compliance with Lloren's
memorandum, regarding certain entry procedures in the company's Statement of Billings Adjustment.
The charges alleged that Credo "did not comply with Lloren's instructions to place some corrections/additional
remarks in the Statement of Billings Adjustment; and when [Credo] was called by Lloren to his office to explain
further the said instructions, [Credo] showed resentment and behaved in a scandalous manner by shouting and
uttering remarks of disrespect in the presence of her co-employees."  As guidelines for employers in the exercise of their power to dismiss employees for just causes, the law provides
On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager of NASECO, to
explain her side before Perez and NASECO's Committee on Personnel Affairs in connection with the
administrative charges filed against her. After the meeting, Credo was placed on "Forced Leave" status for 15
days, effective 8 November 1983. Before the expiration of said 15-day leave, Credo filed a complaint against
NASECO for placing her on forced leave without due process at the Ministry of Labor and Employment.
While Credo was on forced leave, NASECO's Committee on Personnel Affairs deliberated and evaluated a
number of past acts of misconduct or infractions committed by Credo. Finally, the committee recommended
Credo's termination, with forfeiture of benefits.  the worker ample opportunity to be heard and to defend himself with the assistance of his
On 1 December 1983, Credo was called again to the office of Perez to be informed that she was being charged
with certain offenses. In Perez's office, and in the presence of NASECO's Committee on Personnel Affairs, Credo
was made to explain her side in connection with the charges filed against her; however, due to her failure to do
so, she was handed a Notice of Termination, dated 24 November 1983, and made effective 1 December
1983. Hence, on 6 December 1983, Credo filed a supplemental complaint for illegal dismissal, alleging absence of
just or authorized cause for her dismissal and lack of opportunity to be heard.
The Labor Arbiter rendered a decision: 1) dismissing Credo's complaint, and 2) directing NASECO to pay Credo
separation pay equivalent to one half month's pay for every year of service.
Both parties appealed to National Labor Relations Commission (NLRC) which rendered a decision: 1) directing
NASECO to reinstate Credo to her former position, or substantially equivalent position, with six (6) months'
backwages and without loss of seniority rights and other privileges appertaining thereto, and 2) dismissing
Credo's claim for attorney's fees, moral and exemplary damages.
In NASECO belatedly argued that the NLRC has no jurisdiction to order Credo's reinstatement. NASECO claims
that, as a government corporation (by virtue of its being a subsidiary of the National Investment and
Development Corporation (NIDC), a subsidiary wholly owned by the Philippine National Bank (PNB), which in
turn is a government owned corporation), the terms and conditions of employment of its employees are
governed by the Civil Service Law, rules and regulations.
P a g e | 32
Issue:
Whether the NLRC has appropriate jurisdiction to order Credo's reinstatement wherein NASECO is a government
corporation without original charter.
Ruling:
Yes.
NLRC has jurisdiction to order Credo's reinstatement wherein NASECO is a government corporation without
In the case at bar, NASECO did not comply with these guidelines in effecting Credo's dismissal. Although Credo
was apprised and "given the chance to explain her side" of the charges filed against her, this chance was given so
perfunctorily, thus rendering illusory Credo's right to security of tenure. Credo was not given ample opportunity
to be heard and to defend herself is evident from the fact that the compliance with the injunction to apprise her
of the charges filed against her and to afford her a chance to prepare for her defense was dispensed in only a
day. This is not effective compliance with the legal requirements aforementioned.
that:
Section 2. Notice of dismissal. — Any employer who seeks to dismiss a worker shall furnish him a
written notice stating the particular acts or omission constituting the grounds for his dismissal.
xxx xxx xxx
Section 5. Answer and Hearing. — The worker may answer the allegations stated against him in the
notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford
representative, if he so desires.
Section 6. Decision to dismiss. — The employer shall immediately notify a worker in writing of a
decision to dismiss him stating clearly the reasons therefor. 
These guidelines mandate that the employer furnish an employee sought to be dismissed two (2) written notices
of dismissal before a termination of employment can be legally effected. These are the notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought and the subsequent notice which
informs the employee of the employer's decision to dismiss him.
Likewise, a reading of the guidelines in consonance with the express provisions of law on protection to
labor (which encompasses the right to security of tenure) and the broader dictates of procedural due process
necessarily mandate that notice of the employer's decision to dismiss an employee, with reasons therefor, can
only be issued after the employer has afforded the employee concerned ample opportunity to be heard and to
defend himself.
The fact also that the Notice of Termination of Credo's employment (or the decision to dismiss her) was dated 24
November 1983 and made effective 1 December 1983 shows that NASECO was already bent on terminating her
services when she was informed on 1 December 1983 of the charges against her, and that any hearing which
NASECO thought of affording her after 24 November 1983 would merely be pro forma or an exercise in futility.

If such acts of misconduct were indeed committed by Credo, they are deemed to have been condoned by
NASECO. For instance, sometime in 1980, when Credo allegedly "reacted in a scandalous manner and raised her
voice" in a discussion with NASECO's Acting head of the Personnel Administration no disciplinary measure was
taken or meted against her. Nor was she even reprimanded when she allegedly talked 'in a shouting or yelling
manner" with the Acting Manager of NASECO's Building Maintenance and Services Department in 1980 or when
she allegedly "shouted" at NASECO's Corporate Auditor "in front of his subordinates displaying arrogance and
unruly behavior" in 1980, or when she allegedly shouted at NASECO's Internal Control Consultant in 1981. But
then, in sharp contrast to NASECO's penchant for ignoring the aforesaid acts of misconduct, when Credo
committed frequent tardiness in August and September 1983, she was reprimanded.
Even if the allegations of improper conduct (discourtesy to superiors) were satisfactorily proven, NASECO's
condonation thereof is gleaned from the fact that on 4 October 1983, Credo was given a salary adjustment for
having performed in the job "at least [satisfactorily]"  and she was then rated "Very Satisfactory" as regards job
performance, particularly in terms of quality of work, quantity of work, dependability, cooperation,
resourcefulness and attendance. And, as a result of having been wrongfully dismissed, Credo is entitled to three
(3) years of backwages without deduction and qualification.
However, while Credo's dismissal was effected without procedural fairness, an award of exemplary damages in
her favor can only be justified if her dismissal was effected in a wanton, fraudulent, oppressive or malevolent
manner. A judicious examination of the record manifests no such conduct on the part of management. However,
in view of the attendant circumstances in the case, i.e., lack of due process in effecting her dismissal, it is
reasonable to award her moral damages. And, for having been compelled to litigate because of the unlawful
actuations of NASECO, a reasonable award for attorney's fees in her favor is in order.
Furthermore, NASECO belatedly argued that the NLRC has no jurisdiction to order Credo's reinstatement.
NASECO claims that, as a government corporation (by virtue of its being a subsidiary of the National Investment
and Development Corporation (NIDC), a subsidiary wholly owned by the Philippine National Bank (PNB), which in
turn is a government owned corporation), the terms and conditions of employment of its employees are
governed by the Civil Service Law, rules and regulations. In support of this argument, NASECO cites National
Housing Corporation vs. JUCO, where this Court held that "There should no longer be any question at this time
that employees of government-owned or controlled corporations are governed by the civil service law and civil
service rifles and regulations."
It would appear that, in the interest of justice, the holding in said case should not be given retroactive effect,
that is, to cases that arose before its promulgation on 17 January 1985. To do otherwise would be oppressive to
Credo and other employees similarly situated, because under the same 1973 Constitution ,but prior to the ruling
in National Housing Corporation vs. Juco, this Court had recognized the applicability of the Labor Code to, and
the authority of the NLRC to exercise jurisdiction over, disputes involving terms and conditions of employment in
government owned or controlled corporations, among them, the National Service Corporation (NASECO).
In the matter of coverage by the civil service of government-owned or controlled corporations, the 1987
Constitution starkly varies from the 1973 Constitution, upon which National Housing Corporation vs. Juco is
based. Under the 1973 Constitution, it was provided that:
The civil service embraces every branch, agency, subdivision, and instrumentality of the Government,
including every government-owned or controlled corporation. ...  Therefore, the NLRC has jurisdiction on the case to reinstate Credo.
On the other hand, the 1987 Constitution provides that:
P a g e | 33
The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled corporations with original charter. 
(Emphasis supplied)
The proceedings in the 1986 Constitutional Commission also shed light on the Constitutional intent and meaning
in the use of the phrase "with original charter." Thus
RESUMPTION OF SESSION OF CONGRESS
At 7:21 p.m., the session was resumed.
THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.
Commissioner Romulo is recognized.
MR. ROMULO. Mr. Presiding Officer, I am amending my original proposed amendment to
now read as follows: "including government-owned or controlled corporations WITH
ORIGINAL CHARTERS." The purpose of this amendment is to indicate that government
corporations such as the GSIS and SSS, which have original charters, fall within the ambit
of the civil service. However, corporations which are subsidiaries of these chartered
agencies such as the Philippine Airlines, Manila Hotel and Hyatt are excluded from the
coverage of the civil service.
THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?
MR. FOZ. Just one question, Mr. Presiding Officer. By the term "original charters," what
exactly do we mean?
MR. ROMULO. We mean that they were created by law, by an act of Congress, or by
special law.
MR. FOZ. And not under the general corporation law.
MR. ROMULO. That is correct. Mr. Presiding Officer.
MR. FOZ. With that understanding and clarification, the Committee accepts the
amendment.
MR. NATIVIDAD. Mr. Presiding officer, so those created by the general corporation law
are out.
MR. ROMULO. That is correct.
On the premise that it is the 1987 Constitution that governs the instant case because it is the Constitution in
place at the time of decision thereof, the NLRC has jurisdiction to accord relief to the parties. As an admitted
subsidiary of the National Investment and Development Corporation (NIDC), in turn a subsidiary of the Philippine
National Bank (PNB), the NASECO is a government-owned or controlled corporation without original charter.
THE MANNER-OF-CREATION TEST (ORIGINAL CHARTER TEST)

(35)
PNOC-EDC vs. NLRC
G.R. No. 100947 May 31, 1993
Second Division
Narvasa, C.J.:
FACTS:
Manuel S. Pineda was employed with the Philippine National Oil Co. Energy Development Corp. (PNOC-EDC), as
subsidiary of the Philippine National Oil Co., from September 17, 1981, when he was hired as clerk to January 26,
1989, when his employment was terminated. The events leading to his dismissal from his job are not disputed.
In November, 1987, while holding the position of Geothermal Construction Secretary, Engineering and
Construction Department, at Tongonan Geothermal Project, Ormoc City, Pineda filed his candidacy for the
councilor position and succeeded on the local election held on February 1, 1998.Thereafter, Pineda took his oath
of office as councilor-elect and despite so qualifying as councilor, he continued working for PNOC-EDC. The Legal
Department rendered an opinion to the effect that Manuel S. Pineda should be considered ipso facto resigned
upon the filing of his Certificate of Candidacy in November, 1987, in accordance with Section 66 of the Omnibus
Election Code. In his letter of appeal, Pineda invoked a "court ruling in the case of Caagusan and Donato
vs. PNOC-Exploration Corp. . . . (to the effect that) while the government-owned or controlled corporations are
covered by the Civil Service Law (as is taken to mean in Sec. 66 of the Omnibus Election Code of 1985) ( sic), the
subsidiaries or corporate offsprings are not."
On January 26, 1989, the PNOC-EDC, through Marcelino Tongco, Department Manager of the Engineering and
Construction Department, PNOC-EDC notified Manuel S. Pineda in writing (1) that after having given him "ample
time" to make some major adjustments before . . . separation from the company," his employment was being
terminated pursuant to Section 66 of the Omnibus Election Code, effective upon receipt of notice, and (2) that
he was entitled to "proper compensation" for the services rendered by him from the time he filed his certificate
of candidacy until his actual separation from the service.
Later, on October 16, 1989, Pineda lodged a complaint for illegal dismissal in the Regional Arbitration Branch No.
VIII, NLRC, Tacloban City. After due proceedings, Labor Arbiter Araceli H. Maraya, to whom the case was
assigned, rendered a decision on December 28, 1990, declaring Manuel S. Pineda's dismissal from the service
illegal, and ordering his reinstatement to his former position without loss of seniority rights and payment of full
back wages corresponding to the period from his illegal dismissal up to the time of actual reinstatement. The
Arbiter pointed out that the ruling relied upon by PNOC-EDC to justify Pineda's dismissal from the service,
i.e., NHA v. Juco, had already been abandoned; and that "as early as November 29, 1988," the governing
principle laid down by case law— in light of Section 2 (1), Article IX-B of the 1987 Constitution— has been that
government-owned or controlled corporations incorporated under the Corporation Code, the general law — as
distinguished from those created by special charter — are not deemed to be within the coverage of the Civil
Service Law, and consequently their employees, like those of the PNOC-EDC, are subject to the provisions of the
Labor Code rather than the Civil Service Law.
In a decision dated April 24, 1991 the National Labor Relations Commission (NLRC) dismissed the appeal filed by
PNOC-EDC for lack of merit. PNOC-EDC sought reconsideration its motion was denied by the Commission in a
Resolution dated June 21, 1991. It is this decision of April 24, 1991 and the Resolution of June 21, 1991 that the
PNOC-EDC seeks to be annulled and set aside in the special civil action for certiorari at bar.  (36)
P a g e | 34
ISSUE:
Whether an employee of a government-owned or controlled corporation without an original charter (and
therefore not covered by Civil Service Law) nevertheless falls within the scope of Section 66 of the Omnibus
Election Code, Sec. 66. viz.:
 Candidates holding appointive office or position. — Any person holding a public appointive office or
position, including active members of the Armed Forces of the Philippines, and officers and employees in
government-owned or controlled corporations, shall be considered ipso facto resigned from his office upon the
filing of his certificate of candidacy.
RULING:
YES.
Section 66 of the Omnibus Election Code applies to officers and employees in government-owned or controlled
corporations, even those organized under the general laws on incorporation and therefore not having an original
or legislative charter, and even if they do not fall under the Civil Service Law but under the Labor Code. In other
words, Section 66 constitutes just cause for termination of employment in addition to those set forth in the
Labor Code, as amended.
When the Congress of the Philippines reviewed the Omnibus Election Code of 1985, in connection with its
deliberations on and subsequent enactment of related and repealing legislation — i.e., Republic Acts Numbered
7166: "An Act Providing for Synchronized National and Local Elections and for Electoral Reforms, Authorizing
Appropriations Therefor, and for Other Purposes" (effective November 26, 1991), 6646: "An Act Introducing
Additional Reforms in the Electoral System and for Other Purposes" (effective January 5, 1988) and 6636: "An
Act Resetting the Local Elections, etc., (effective November 6, 1987), it was no doubt aware that in light of
Section 2 (1), Article IX of the 1987 Constitution: (a) government-owned or controlled corporations were of two
(2) categories — those with original charters, and those organized under the general law — and (b) employees of
these corporations were of two (2) kinds — those covered by the Civil Service Law, rules and regulations because
employed in corporations having original charters, and those not subject to Civil Service Law but to the Labor
Code because employed in said corporations organized under the general law, or the Corporation Code. Yet
Congress made no effort to distinguish between these two classes of government-owned or controlled
corporations or their employees in the Omnibus Election Code or subsequent related statutes, particularly as
regards the rule that any employee "in government-owned or controlled corporations, shall be considered ipso
facto resigned from his office upon the filing of his certificate of candidacy."
Be this as it may, it seems obvious to the Court that a government-owned or controlled corporation does not
lose its character as such because not possessed of an original charter but organized under the general law. If a
corporation's capital stock is owned by the Government, or it is operated and managed by officers charged with
the mission of fulfilling the public objectives for which it has been organized, it is a government-owned or
controlled corporation even if organized under the Corporation Code and not under a special statute; and
employees thereof, even if not covered by the Civil Service but by the Labor Code, are nonetheless " employees
in government-owned or controlled corporations," and come within the letter of Section 66 of the Omnibus
Election Code, declaring them "ipso facto resigned from . . . office upon the filing of . . . (their) certificate of
candidacy."
 P a g e | 35

employees are allowed under the 1987 Constitution to organize and join unions of their choice, there is as yet no
law permitting them to strike. In case of a labor dispute between the employees and the government, Section 15
Republic of the Philippines, represented by the National Parks Development Committee v. Court of Appeals of Executive Order No. 180 dated June 1, 1987 provides that the Public Sector Labor- Management Council, not
and the National Parks Development Supervisory Association & their Members the Department of Labor and Employment, shall hear the dispute. Clearly, the Court of Appeals and the lower
G. R. No. 87676, December 20, 1989 court erred in holding that the labor dispute between the NPDC and the members of the NPDSA is cognizable by
First Division the Department of Labor and Employment.
Griño-Aquino, J.
The petition for review is granted. The private respondents' complaint should be filed in the Public Sector Labor-
Facts: Management Council as provided in Section 15 of Executive Order No. 180.

The NPDC was originally created in 1963 under Executive Order No. 30, as the Executive
Committee for the development of the Quezon Memorial, Luneta and other national parks, and later renamed
as the National Parks Development Committee under Executive Order No. 68, on September 21, 1967, it was
registered in the Securities and Exchange Commission (SEC) as a non-stock and nonprofit corporation, known as
"The National Parks Development Committee, Inc."

However, in August, 1987, the NPDC was ordered by the SEC to show cause why its Certificate of Registration
should not be suspended for. The NPDC Chairman, Amado Lansang, Jr., informed SEC that his Office had no
objection to the suspension, cancellation, or revocation of the Certificate of Registration of NPDC.
GOD BLESS US ALL
By virtue of Executive Order No. 120, the NPDC was attached to the Ministry (later Department) of Tourism and
provided with a separate budget subject to audit by the Commission on Audit and pursuant to Executive Order
No. 120, all appointments and other personnel actions shall be submitted through the Civil Service Commission
Commission. Meanwhile, the Rizal Park Supervisory Employees Association, consisting of employees holding
supervisory positions in the different areas of the parks, was organized and it affiliated with the Trade Union of
the Philippines and Allied Services (TUPAS) under Certificate No. 1206. Two collective bargaining agreements
were entered into between NPDC and NPDCEA (TUPAS local Chapter No. 967) and NPDC and NPDCSA (TUPAS
Chapter No. 1206), for a period of two years or until June 30, 1989.

On March 20, 1988, these unions staged a stake at the Rizal Park, Fort Santiago, Paco Park, and Pook ni Mariang
Makiling at Los Banos, Laguna, alleging unfair labor practices by NPDC. On March 21, 1988, NPDC filed in the
Regional Trial Court in Manila, Branch III, a complaint against the union to declare the strike illegal and to
restrain it on the ground that the strikers, being government employees, have no right to strike although they
may form a union. The Regional Trial Court of Manila, Branch III, dismissed for lack of jurisdiction, the
petitioner's complaint in Civil Case No. 88- 44048 praying for a declaration of illegality of the strike of the private
respondents and to restrain the same. The Court of Appeals denied the petitioner's petition for certiorari, hence,
this petition for review.

Issue:

Whether the petitioner, National Parks Development Committee (NPDC), is a government

agency, or a private corporation, for on this issue depends the right of its employees to strike.

Ruling:

Yes.

NPDC is a government agency, its employees are covered by civil service rules and regulations (Sec. 2, Article IX,
1987 Constitution). Its employees are civil service employees (Sec. 14, Executive Order No. 180). While NPDC